RealTime IT News

Still No Hunger for High-Tech

How many IPOs last week? Zero. That's right. Nothing.

Then again, Nasdaq continued to plunge and investors continued to be risk-averse. Although, by Friday, Nasdaq did stage a small come-back - as rumors swept the Street that Greenspan would surprise us again with another rate reduction.

But, last week there were two companies that had their quiet periods expire. The quiet period is the 25-days following an IPO when the underwriters are forbidden from publishing research reports

First of all, there was Peet's Coffee , which is a small chain of coffee houses. The IPO was priced at $8 using the OpenIPO Dutch auction system of WR Hambrecht (the co-manager was Pacific Growth Equities). The stock hit a high of $17-3/4. And, yes, both underwriters published bullish reports on the company last week. The stock traded at $8-1/2 by the close on Friday.

Next, there was Align Technologies , which develops clear braces for misaligned teeth. The IPO was priced at $13 and hit a high of $19-7/16.

Of course, the company's underwriters - Bear Stearns, Deutsche Banc, JP Morgan, and Robertson Stephens - all put either "buy" or "strong buy" recommendations on the stock. But it was not enough to get the stock above its former offering price. The stock ended the week at $11-1/16.

Bad News

The telecom sector has undergone a tremendous beating this year - and it is, of course, affecting IPOs. Last week, Motorola withdrew its registration statement for its Propel spin-off. The company is a wireless service provider.

The company planned to offer 23.5 million shares at $17-$19. The lead underwriter was Goldman Sachs. The IPO was filed in June.

This Week

So any IPOs for this week? Actually, there are. But there are none that even come close to being considered high tech.

There is AFC Enterprise. Haven't heard of them? Well, it is a holding company for well-known restaurant franchises, such as Church's Chicken, Cinnabon, Seattle's Best Coffee and Popeye's Chicken & Biscuits.

Such a company - with real brand names and revenues - is something that investors are willing to bet on. For example, the venerable restaurant California Pizza Kitchen went public last summer at $15 per share. The stock is now trading at $29-3/8.

In fact, AFC has strong sponsorship; that is, the underwriter is Goldman Sachs. Also, in the past year, the company had $725 million in revenues and $26.8 million in earnings.

In all, the company intends to sell 9.3 million shares between the price range of $15-$17. The proposed ticker symbol is AFCE.

So, expect many more such deals in the future. High-tech? I think we'll need to wait quite a while for that.