With Nasdaq plunging 5.3% on Friday, it was amazing that there were any
IPOs. Yet, Computer Access Technology
was able to post a valiant gain. Priced at $12, the
stock ended the day at $15.44.
But then again, the company has intriguing technology. Basically, it
develops sophisticated verification and connectivity tools for the myriad
data communications standards, such as IEEE 1394, Universal Serial Bus
(USB), Bluetooth and Ethernet.
The company has been showing strong results. In the first six months of
2000, revenues were $14.7 million, which was up 75% from the same period a
year ago. Profits were $3.7 million. The company’s top customers include
3Com, Microsoft, Sun and Toshiba.
Another hot IPO last week was Transmeta
. On its first day of trading, the stock soared 115% to
$45.25. The company develops whiz-bang computer chips – which meld software
and hardware. The chips are particularly useful for Internet devices,
because of the flexibility and low battery usage. The company has a
top-notch management team; for example, its CEO was formerly the CTO of Sun.
What’s more, the R&D staff is 218 employees (out of 313 total employees).
Even the inventor of Linux, Linus Torvalds, is part of the team.
Although, for the most part, last week was another tough week for IPOs.
Take Luminent. Priced at
$12, the stock ended the day at $12.13.
In fact, this performance is yet another ominous sign for the IPO market.
Why? Because Luminent is a fiber optic company, specializing in lasers,
receivers, modulators and transmitters. And aren’t these types of companies
supposed to do well on their IPOs?
Without a doubt, Luminent has strong financials. Last year, the company had
$65.2 million in sales and $4 million in net income. Customers include
Cisco, Marconi and General Instrument.
But apparently the markets are getting nervous about valuations.
Another concern is the potential dilution. You see, Luminent is a unit of
MRV Communications, which plans to divest its complete holdings within the
next six to twelve months.