Basket of IPOs Will Test the Market’s Purchasing Power
The largest U.S. staffing firm, one of the oldest online players and a famous mutual fund business will test investors’ interest in new stock issues today, as a flurry of deals begin trading on Wall Street.
Amid slumping prices for most stocks in recent weeks, the reception the new shares receive could be a barometer of the securities market’s overall trend--in particular for the fading Internet sector.
Five long-awaited initial public offerings, or IPOs, were priced Wednesday after the market closed in one of the busiest nights for new issues so far this year.
Among the cluster of stocks, all of which will begin trading today, were three Internet-related offerings:
* Prodigy Communications Inc., an online pioneer, raised $120 million in its deal, as the company sold 8 million shares at $15 apiece--the lower end of the $15-to-$17 range that was expected.
The White Plains, N.Y.-based company was founded in 1984 with backing from CBS Inc., IBM Corp. and Sears, Roebuck & Co. After that early start, it languished when Internet use exploded in the 1990s and competitors such as America Online Inc. emerged as leaders.
Now, Prodigy, with 671,000 subscribers, is looking for growth among the 28 million Americans of Hispanic descent--a market in which one of its current owners, Mexican phone giant TelMex, has experience.
* Healtheon Corp., an Internet health-care company founded by the chairman of Netscape Communications, raised $40 million by selling 5 million shares at $8 each, which was higher than the $6 to $7 expected.
The Santa Clara, Calif.-based company processes health-care transactions through the Internet.
* Vertical.net Inc., which specializes in online commerce for business, sold 3.5 million shares at $16 each, raising $56 million. That was $2 a share above the expected range. The company, based in Horsham, Pa., runs business-to-business Web sites.
Prodigy will trade under the ticker symbol PRGY, Healtheon will be HLTH and Vertical.net will be VERT. All will trade on Nasdaq.
Some analysts questioned whether the stocks will soar today to the heights that were typical of new Internet stocks last fall.
With Net stocks in general having fallen sharply in recent weeks--including a deep dive on Tuesday after search engine Lycos received a smaller-than-expected takeover offer--the bloom may be off the Internet rose, some experts say.
“Investors, especially retail investors, are apprehensive to pay high prices on some of these Internet deals after what we’ve seen this week,” said Vincent Slavin, an IPO analyst at Cantor Fitzgerald & Co. Still, he said, “the quality deals will remain with quality premiums.”
A rousing reception for the stocks could suggest that investor interest in Net shares is still strong.
But some analysts say the deals actually could hurt other, more established Net stocks by siphoning money away from them.
Two other IPOs priced Wednesday also will be closely watched:
* Los Angeles-based Korn/ Ferry International Inc., the nation’s largest staffing firm, sold 11.75 million shares at $14 each, in the mid-range of expectations. The deal raised $164.5 million.
The stock will trade under the symbol KFY on the New York Stock Exchange.
* Gabelli Asset Management Inc., a New York-based mutual fund firm run by famous stock picker Mario Gabelli, raised $105 million. Gabelli Asset sold 6 million shares at $17.50 each. The stock will trade under the symbol GBL on the NYSE.
Several of Wednesday’s IPOs were planned before the stock market plunge of last August and September but were canceled amid the market chaos.
In other IPO news, E-Offering, a fledging investment bank partly owned by online brokerage E-Trade Group, said it has lined up 30 companies that will offer their IPOs over the Internet beginning in the spring.
