Novatel Wireless

Isn’t pornography supposed to sell very well online? Perhaps not. This
week, Playboy Enterprises withdrew its IPO for its online division.

In fact, the IPO market is starting to change its complexion — going away
from, well, less sexy businesses. We are seeing more and more traditional
companies in this market. This week, there was
Orion Power , which
traded flat on its first day of trading. The company issued a whopping 27.5
million shares at $20 each (the price range was $17-$20). The company is a
power generator based in Baltimore. It was definitely helpful that
electricity prices are rising.

Another deal for the week was Adolor
. The company issued 6 million shares at $15. For its
first day of trading, the stock closed at $17.38. The company develops
biotech solutions for pain treatments.


So does anything look good for this week in the tech market? Actually,
things look pretty dry. Although, there may be some action with
Novatel Wireless.

Basically, the company is a developer of modems for 2-way wireless
communications. Late last year, the company launched products for the
popular Casio and Palm devices. In fact, Novatel has been able to strike
deals with such biggies as Verizon, AT&T Wireless and OmniSky. There are
also pending deals with Intel and Metricom.

But there are major danger signs. Gross margins are skimpy – at about 3
percent. In other words, the company may be giving away the product so as
to create market share.

In the first nine months of 2000, revenues increased 505.9 percent to $33.4
million, but losses were $24.3 million.

While there may be a pop on the this IPO, it will likely be short-term.
This is a company that will ultimately need to show it can be profitable.
And it looks like this could take a long time – if ever.

The lead underwriter is CS First Boston and the price range is $10-$12 (the
company intends to issue 7 million shares). The proposed ticker symbol is
NVTL.

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