RealTime IT News

Black-and-Blue Christmas for IPOs

Not long ago, IPOs were destined to surge - defying any semblance of reality. Of course, in the second half of 2000, the IPO market has mostly been destined for failure. Nothing seems to work.

With Christmas fast-approaching, the IPO market has become nonexistent. Rather, much of the action has been withdrawals. There was Diva Systems. This company had to sing the blues, as it pulled its S1 filing. The company, which is a provider of interactive TV technologies, was hoping to raise $75 million.

Next, there was MoreDirect.com. The company is a B2B marketplace for, well, computer stuff. Not necessarily exciting, huh? Kind of passe? In the current brutal IPO market, the company definitely had no chance of survival. Yet, MoreDirect.com did have a host of strong customers, such as IBM, Compaq and Cisco.

Despite all this, there was an IPO that had the power to withstand the extreme negativity: Resources Connection . The company sold 6.5 million shares at $12 a piece. The lead underwriter was CS First Boston. On its first day of trading, Resources Connection surged about 33%.

What makes Resources special? Perhaps it's the fact the company has a viable business model. In the past year, revenues were $126 million and profits were $6.5 million.

Resources Connection is a professional services firm - a traditional one. The focus is on accounting, HR, M&A, and taxation. Resources Connection has more than 1,500 clients.

The company was a part of Deloitte & Touche. But in April 1999, there was a management-led buyout.

Boring Is Hot

While high-tech IPOs melted down in 2000, there was strength in mega insurance company IPOs. Examples include MetLife and John Hancock.

Jumping on the bandwagon is Prudential, which this week announced its intentions to go public. In anticipation of this, Prudential has been restructuring its business. For example, the investment banking division will be scaled-down. There will be 160 investment bankers looking for jobs this holiday season.

In all, Prudential has about 11 million policy holders and $363 billion in assets under management.