Diamonds in the IPO Rough

Last week was pitiful for the IPO market. The only company that could make
its ticker symbol active was Rigel. And it wasn’t pretty.

Simply put, investors are deathly scared of newfangled companies. And, no
question, Rigel is newfangled. It is in the esoteric business of
post-genomics combinatorial biology.

The IPO price range was sliced (as was the number of shares to be issued).
When the IPO hit the Street, the company raised only $34 million. On its
first day of trading, the stock price was up 11 cents to $7.11.

Unfortunatley, expect more gloom-and-doom from IPOs this week. Then again,
it could be an opportunity to buy companies at enticing valuations.

Perhaps the most interesting play is
Garmin. The company
is a leading developer of products that use global positioning systems
(GPS). Basically, GPS allows for location-based services, such as car
navigation systems.

In the first nine months of 2000, revenues increased 58.1% to $260.1
million. The company had profits of about $78.1 million in 2000.

Actually, there appears to be signs of acceleration in the growth curve of
the GPS industry. This year, the U.S. government opened up the GPS system to
allow for accuracy to be improved from 100+ meters to 10+ meters.

What’s more, auto markets as well as wireless companies are getting much
more aggressive with GPS. There is also much more growth from overseas

But despite the fact the company has strong fundamentals, the demand is weak
for the IPO.

The lead underwriter is CS First Boston and the price range is $15-$17 (the
company plans to issue 10.5 million shares). The proposed ticker symbol is

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