Three of Australia’s newest dot coms selected what may prove to be the worst day in the past decade to list on the Australian Stock Exchange, with all three
suffering relative losses.
With dire predictions forecasting a very ‘Black Monday’ following the
plummet of the U.S. NASDAQ technology stocks on Friday, the companies went
ahead with their planned listings in the face of a market which is strongly
expected to follow Wall Street’s lead.
Online department store Bigshop’s stocks opened at AUS$0.25
(US$0.15) and fell to AUS$0.14 (US$0.084) at the end of the day’s trading.
It was a less dramatic story for telecommunications recruitment and
information technology firm HiTech
shares, which were issued at AUS$0.70 (US$0.24) each and closed at AUS$0.57
(US$0.34).
Meanwhile, paper manufacturer and marketer PaperlinX dropped AUS$0.51
(US$0.306).
Despite apparent market chaos, executives at the companies managed to
remain optimistic.
HiTech’s managing director Ray Hazouri said that compared to the rest of
the market he felt HiTech had done well.
“Yes – our timing was atrocious,
but it’s not our choosing that the US technology stock market crashed on
Friday. If we had to try really, really hard we couldn’t have chosen a more
miserable day, but again it was completely out of our control,” he said.
Hazouri said that with BNP Equities as underwriters, HiTech had to go
ahead with the 35 per cent company float, but that in the end the timing
was “not all that bad”.
“If we had listed earlier we would have been faced with a worse drop.
It’s better for investors that we’re starting from day one in this position
where it can’t get any worse. From my point of view, there is definitely an
upside,” said Hazouri.
HiTech hopes to use the cash raised by the listing to fund acquisitions
and mergers, as well as the company’s long-term growth.
Hazouri said both he and investors had faith in HiTech, which is not
strictly a dot com. “There is seven years profit and growth history behind
HiTech,” he said. “At the end of the day, people have to decide what is a
profitable company and what is not. We are in the highest growth sector and
we’re in it for the long haul,” said Hazouri.
Paperlinx chief financial officer Darryl Abotemey also preferred not to
focus on the fluctuation in the short-term, but look at the day’s trading
as a stumbling block in the long-term growth of the company.
“You can’t change the ups and downs, so we’re not going to do anything
different,” he said. “Obviously we loomed at what happened today, but we
would probably tend to take a longer term view. We have strong eight per
cent yielding stock and we expect demand for our services and products to
continue,” said Abotemey.
Paperlinx shares, which form 18 per cent of the Amcor demerger, opened
at AUS$3.36 and closed at AUS$3.15.
“It wasn’t as bad as we would have expected,” said Abotemey. “Obviously
we did consider calling the float off, but in reality it was an Amcor
decision which had been scheduled for some time. We know that the market is
going to move around, you could say today may not have necessarily been a
good day, but no-one could have predicted what happened last week”.
Bigshop may have reason to consider today a bad day, coming off worse
than both of the other companies. The e-tailer raised AUS$6 million
(AUS$3.6 million) at IPO, issuing 24 million AUS$0.25 shares. Just after
opening at midday, Bigshop was trading at 15 cents and closed down one cent
at the end of the day.
The company currently exists without delivered earnings or profit
projecti
ons, and its Web site is not due to launch for another two
months.
Media reports indicate that Bigshop also considered calling off the
listing, but in the end deferred to investor opinion to move ahead as
planned.
In other share news, prices for Internet Service Provider (ISP) eisa slumped by more than 50 per cent in
afternoon trade, which could be attributed to a lack of market confidence
in the company’s ability to fund for its acquisition of ISP OzEmail.
At close of trade today, eisa shares had fallen to AUS$0.98 (US$0.588),
the lowest since February, when they closed at AUS$0.83 (US$0.50). The
company’s shares fell by more than 18 per cent on Friday, as drops on the
Nasdaq interfered with the company’s plans to take on the ISP.
