RealTime IT News

Novatel Wireless

Isn't pornography supposed to sell very well online? Perhaps not. This week, Playboy Enterprises withdrew its IPO for its online division.

In fact, the IPO market is starting to change its complexion -- going away from, well, less sexy businesses. We are seeing more and more traditional companies in this market. This week, there was Orion Power , which traded flat on its first day of trading. The company issued a whopping 27.5 million shares at $20 each (the price range was $17-$20). The company is a power generator based in Baltimore. It was definitely helpful that electricity prices are rising.

Another deal for the week was Adolor . The company issued 6 million shares at $15. For its first day of trading, the stock closed at $17.38. The company develops biotech solutions for pain treatments.

So does anything look good for this week in the tech market? Actually, things look pretty dry. Although, there may be some action with Novatel Wireless.

Basically, the company is a developer of modems for 2-way wireless communications. Late last year, the company launched products for the popular Casio and Palm devices. In fact, Novatel has been able to strike deals with such biggies as Verizon, AT&T Wireless and OmniSky. There are also pending deals with Intel and Metricom.

But there are major danger signs. Gross margins are skimpy - at about 3 percent. In other words, the company may be giving away the product so as to create market share.

In the first nine months of 2000, revenues increased 505.9 percent to $33.4 million, but losses were $24.3 million.

While there may be a pop on the this IPO, it will likely be short-term. This is a company that will ultimately need to show it can be profitable. And it looks like this could take a long time - if ever.

The lead underwriter is CS First Boston and the price range is $10-$12 (the company intends to issue 7 million shares). The proposed ticker symbol is NVTL.