Do people really read IPO documents filed with the SEC? Maybe not.
Well, at least potentially bad stuff is not scaring investors away.
Take this week’s SkillSoft. The company is in a cool industry – online
courses. But if you look closely at the prospectus there is a big Red
Flag. Here’s the story: Several of the top executives (including the
CEO) are involved in a major lawsuit with National Training Group. The
charges include misappropriation of trade secrets and breach of a licensing
agreement. The compensatory damages are for $400 million, exemplary
damages are for $400 million and punitive damages are for $10 million.
Yet, the IPO rose on its first day, going up $4 to $18. Oh, well….
Telaxis , another IPO, doubled on its first day. The
company is an equipment provider for the red-hot wireless market (the
technology helps to speed-up the transmission of video, voice and data
services). For the first nine months of 1999, the company had losses of
$5.9 million on sales of $5.5 million.
Speaking of wireless, AT&T filed with the SEC to issue tracking stocks
for its wireless divisions. The reason is to increase its “economic
performance” (that is, the company wants a better stock price). Estimates
are that AT&T could raise a cool $10 billion (or more). Yep, this would
make it the biggest IPO in history.
The new company would definitely be substantial. There are 12 million
wireless subscribers. Last year, revenues were $5.5 billion and net
income was $44 million.
The markets, however, were not very excited. AT&T shares fell 1-9/16 to 50-15/16.
Centra Software had a strong debut, climbing 130 percent on its first
day. Basically, the company develops software solutions that allow for better
communications within the enterprise. The company has more than 170
customers, like MCI WorldCom (WCOM) and Compaq Computer Corp. (CPQ)
But it was Turnstone Systems that had the best IPO (it is a provider of solutions to install DSL quickly). The company raised its price range aggressively, going from $15-$17 to $23-$25. The IPO was priced at $29 and, on its first day of trading, the stock surged to $97. Then, on its second day, the stock surged another $50-1/4. But Thursday, things calmed down. The stock fell $15-1/4.
