IPO Logjam: 400-Plus On Tap

A logjam of initial public offerings has more than 400 IPOs in a holding pattern waiting to be priced. The backlog indicates that recent market fluctuations have badly shaken investor confidence, said industry observers.

"The market has made a strong recovery, but the IPO market still hasn't bounced back," said Steve Lacey, editor of newsletter IPO Reporter.

IPO Reporter estimates that there are 411 IPOs on the waiting list, while competing newsletter IPO Maven puts the number at 453. Another newsletter, IPO Financial, has a more conservative estimate of 367 potential IPOs.

A turbulent market has slowed IPO filings to a trickle. Those brave enough to make their IPO debut are lowering revenue expectations. However, some financial experts believe the market has rebounded enough to make filing an IPO a less risky venture.

"The worst is behind us," said IPS Millennium Fund Portfolio Manager Robert Loest.

Loest pointed to the end of September when the Nasdaq was at 2,747 before a huge run-up on Oct. 2, which peaked at more than 5,000 on March 10.

"Absent the artificial economic stimulus [during] the last half of 1999 caused by [Federal Reserve Chairman Alan] Greenspan and the Fed due to Y2K fears of a run on the banking system, the Nasdaq is about where it would be if it had half a year's average growth for the last five years," Loest said.

Patience is all that is required to recover from "Greenspan-induced market trauma," he said.

Michael Murphy, editor of the California Technology Stock Letter, also sees a possible break in the clouds.

"When the Nasdaq Composite pulls back 35 [percent] to 40 percent from a high, that's usually as bad as it gets. It's hard to believe there's much more downside in the Nasdaq, although we may bounce and then retest the lows in July and/or August when Greenspan raises rates again," Murphy said.

"Valuations got way out of whack," said Curt Monash, president of Lexington, Mass.-based Monash Information Services.

"IPOs are being pulled left and right, and the number of offerings will be pared down by the end of June, said IPO Financial senior research analyst Kim Garibaldi.

Ten to 15 fillings routinely crossed the desk of Marjorie Reid, IPO Maven stock researcher, during the IPO heyday in March. Now, Reid finds the offerings down to two or three.

Waiting to make their IPO debuts are Handspring Inc. and StorageNetworks Inc., both on the board for June arrivals.

Handheld computer vendor Handspring, Mountain View, Calif., is scheduled for the week of June 19 and is expected to raise $180 million. The price range for the 10-million-share Credit Suisse First Boston-led offering was lowered to between $17 a share and $19 a share from the original range of $19 to $22 a share.

StorageNetworks, Waltham, Mass., which postponed its pricing from May 25, is also expected to have a June launch.

The storage service provider focuses on enterprises as well as dot-com businesses. Goldman, Sachs & Co. will lead the 9-million-share offering, which is expected to be priced between $17 and $19 per share and raise $162 million.

The dog days of summer may slow the market, but it will pick up again in September when the Nasdaq Composite is above 4,300, predicted Chris McCleary, chairman and chief executive of Usinternetworking Inc., Annapolis, Md.CRN

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