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A comeback for technology IPOs?
Investors are reflecting interest in profitable techs, however don"t suppose a flood of IPO activity.July 23, 2003: 4:54 afternoon EDTBy Paul R. La Monica, an elderly Writer
NEW YORK ( - The initial public offering window for technology companies has opened sufficient to permit in a crack of new air. Yet it"s premature birth to speak to this a large comeback.

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There have been 4 tech-related offerings that have actually done reasonably well in the past couple of months, and two more are early in the coming week. That might not sound choose a lot yet it"s a great sign provided the drought of the previous three years.

IPayment, a credit transaction card handling company, walk public in May and surged 32 percent ~ above its an initial day that trading. Critical month, semiconductor testing firm FormFactor acquired 26 percent on its debut day. And also most recently, two consumer electronics companies, Digital theatre Systems and also InterVideo, which makes DVD software, popped 47 percent and 33 percent, respectively.

IPOs with profits? Imagine that.

Sure, none of these offerings came everywhere close come the triple-digit percentage gains enjoyed in the so late 1990s by the likes the, VA Linux and also Akamai Technologies.

But that"s most likely a great thing.

tech IPOs take offFour tech offerings have actually done fairly well in the past few months.
Company & IPO date�1st job price change�Price readjust since IPO*�
iPayment (5/12)�31.7%�63.9%�
FormFactor (6/12)�25.7%�31.9%�
Digital Theater systems (7/10)�46.8%�30%�
InterVideo (7/17)�33%�41.2%�
�* together of 2pm ~ above 7/23
�Sources:�Renaissance Capital,�

The few tech suppliers that room going public space not just fly-by-night firms through little much more than attractive sales gimmicks (, anyone?).

FormFactor, Digital theater Systems and InterVideo all are financially rewarding and iPayment is intended to short article a profit this year.

"The apples room riper. Tech companies going public are much more established compared to the persons at the time of the bubble," claimed Kathy Smith, research analyst with Renaissance Capital, which operation the IPO plus Aftermarket fund.

The two technology firms collection to go public before the finish of the month likewise are profitable. IPass, which makes software for businesses that allows workers come remotely affix to a corporate network, is set to price its offering Wednesday evening, and also start trading Thursday. The company posted a $29.8 million profit on sales that $92.8 million in 2002. IPass wishes to advanced $70 million.

And Netgear, which makes computer system networking equipment for homes and also businesses, is ~ above tap to go public following week. This firm is in a warm area (Cisco purchase its contender Linksys in March) and earned $8.1 million critical year. Netgear plans to raise $84 million in the offering.

Not a go back to the so late 1990s frenzy

Still, investor shouldn"t count on a substantial wave of tech IPOs, said David Menlow, chairman of That"s since many exclusive companies tho are shedding and also investors are an ext discriminating 보다 they were 3 years ago.

"There"s to be a wholesale transition in investor mentality," Menlow said.

In addition, some exclusive companies may find that offering out is still a better option 보다 going public. For example, software company Crystal decisions agreed to sell out to company Objects last week ~ registering for an IPO in May. The company, a spinoff of storage firm Seagate, had a most buzz behind it.

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And the course, the wounds investors endured from IPOs the were hyped by the firms that carried them public and subsequently tanked throughout the bear market are still fresh.

Menlow said that regardless of increased scrutiny on wall Street firms for their roles in various IPO scandals, which among other things consisted of doling the end stocks of warm IPOs come high-profile corporate executives in stimulate to win investment bank business, people still have a hard time acquiring shares that IPOs at their giving price.

When a firm goes public, commonly a small amount the shares room sold and the bulk of them are generally given come institutional investor at the giving price. Therefore the individual is often compelled to to buy IPOs in ~ a much greater price once the stock starts trading. InterVideo, for example, priced at $14 a share yet opened at almost $20 a share.

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Tech IPOs, also the lucrative ones, remain risky. And no matter exactly how well they carry out in their first few days of trading it"s usually more secure to wait and also see just how the company does in the first pair of quarters before making a bet on it.


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