Profitable ASP withdraws public offering

Metavante, an application service provider that has been profitable since at least 1995, withdraws its IPO, indicating that even somewhat attractive companies are having a tough time under current market conditions.

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Metavante, a profitable company in the fast-growing application service provider industry, withdrew its initial public offering Wednesday.

The move by Metavante indicates that even relatively attractive companies are finding it difficult to launch an IPO under current market conditions. The Nasdaq composite index, which has fallen 20 percent since Sept. 1, has been roiled by a procession of earnings warnings. The pessimism recently has washed over two favored industries: fiber optics and semiconductors.

As a result, investors seem to be protecting their portfolios and turning away from the risky IPO market, which has slimmed down in recent weeks from 20 offerings in the last week of September, to five scheduled this week, according to New York-based market research company Commscan.

Despite the cloud hanging over the IPO market, Metavante was one company that some investors thought was ripe for public trading.

"It was the only company that I really liked that was scheduled for the week because it was profitable and in a high-growth industry," said Steven Tuen, a portfolio manager with the Kinetics Internet Fund.

Metavante, which began as the data services division of Milwaukee-based Marshall & Ilsley, makes software that enables banks and other financial institutions to initiate electronic transactions.

Founded in 1964, Metavante is an Internet banking industry veteran, completing the world's first Internet banking transaction in October 1995, according to its Securities and Exchange Commission filing.

According to its prospectus, the company has earned money every year since 1995, the earliest year that its finances are listed. The company earned $19.9 million on revenue of $286 million for the first six months of 2000.

Still, its withdrawal did not shock investors or analysts given that Metavante twice reduced its price range, first from $11 to $13, down to $10 to $12, and the second time down to $8 to $9. Credit Suisse First Boston was handling the sale.

"Whether or not a company is a good company doesn't matter," Tuen said. "I think investors are just focusing on what they have on their plate for the moment."