MARKET SAVVY : SAVVY CONFIDENTIAL: A Briefing for Investors : Market for IPOs Awakes From Late-Summer Slumber
With the late-summer lull over, the IPO market’s fall scramble is intensifying.
Investor interest in initial public offerings--particularly those from so-called Internet-backbone companies--was strong Tuesday as three California deals were priced above their expected range and another was bumped up in projected size:
* Palo Alto-based Kana Communications Inc. (ticker symbol: KANA), whose software helps companies manage volumes of customer e-mail, sold 3.3 million shares at $15 each, above the target range of $11 to $13, in a deal led by Goldman Sachs.
* San Mateo, Calif.-based E.piphany Inc. (EPNY), whose software helps companies analyze and profile their customers, sold 4.15 million shares at $16, well above the target of $9 to $11, in a deal headed by Credit Suisse First Boston.
* Menlo Park, Calif.-based Broadbase Software Inc. (BBSW), which develops software for analyzing customer data, sold 4 million shares at $14, compared with its expected range of $10 to $12, in a deal headed by Deutsche Banc Alex. Brown.
* And San Jose-based Alteon WebSystems Inc. (ATON), which makes software and equipment for managing Web site traffic, increased the amount it plans to raise in its initial stock sale Thursday by 60%. Alteon expects to sell 4 million shares at $17 to $19 each, raising $72 million, in a deal led by Lehman Bros. It had originally planned to sell 3 million shares at $14 to $16, raising $45 million.
Another of the week’s most anticipated offerings could come Thursday, when Westlake Village-based NetZero Inc. (NZRO) expects to sell 10 million shares at $9 to $11 each in a Goldman Sachs deal. The company provides free Internet access to consumers, who can’t escape its window displaying advertisements--no matter where they go on the Web.
These sales come after a week in which five out of six IPOs--all by Internet-related companies --closed at least 50% higher than their initial price in first-day trading. During August and September, many deals saw their prices reduced amid tepid demand.
Now, “investors are waiting to pounce on the next IPO that hits the market,” said Paul Bard, an analyst at Renaissance Capital Corp. in Greenwich, Conn., which runs a mutual fund specializing in new offerings.
Santa Monica-based Digital Entertainment Network Inc., which produces and airs online shows designed to appeal to viewers between the ages of 14 and 24, is joining the action, announcing plans for an initial stock sale that could raise as much as $75 million.
The start-up runs Web sites that broadcast sports shows, dramas and comedies that are similar to television programs but that have interactive content.
“Advertisers are trying to reach this audience at an early age because they are reaching for brand allegiance for a lifetime,” said Patrick Keane, a senior analyst at Jupiter Communications Inc. in New York.
But, he cautioned, “I still question if the Internet is ready for video entertainment.”
Digital, which launched programming May 10, runs 13 original shows. Its competition includes Viacom Inc.’s MTV Networks Online unit; Walt Disney Co.’s Go Network; traditional cable and TV networks; and online services such as Yahoo Inc., whose GeoCities pages offer community activities.
