Internet Stocks Drove Record Year of IPOs, Led Markets in ’99
Sexy new Internet stocks such as Commerce One and VA Linux helped make 1999 a record year for initial public stock offerings, and the year’s hottest stocks overall came from none other than the Internet sector.
Investors poured $69 billion into 546 first-time stock offerings in the United States--almost half of them technology companies--an 88% jump from 1998. The figure easily eclipsed the record of $50 billion set in 1996, when there were 872 IPOs, according to Thomson Financial Securities Data.
The average IPO, both foreign and domestic, produced a return of 187%, according to Renaissance Capital.
One of the year’s big winners is Commerce One, which is helping companies such as General Motors Corp. put its auto parts purchasing system on the Internet. Shares of Commerce One rose as much as 3,400% since July to a high of $993 this week before a 3-for-1 split. The largest first-day gain goes to VA Linux, which rose 698% to $239.25 a share on its debut this month.
Stars in Stocks: The top stock-market gainers for the year were led by Xcelera.com, an Internet equipment provider that surged an eye-popping 11,060% to end at $139.50 a share. Software maker Puma Technology Inc. shot up 3,769% to $130.63 a share, and Flightserv.com, a provider of aviation services on the Net, soared 3,450% to $8.88 a share.
Sensar Corp., a maker of technical measuring devices, rose 3,376% to $59.50, and the celebrated wireless-phone maker Qualcomm Corp. skyrocketed 2,599% to $176.13 a share.
All of those stocks either trade on Nasdaq or the American Stock Exchange. The biggest gainer on the New York Stock Exchange was Entrade Inc., a provider of business services via the Net, which jumped 876% to finish at $40.88 a share.
Dell Tops S&P; for the ‘90s: Dell Computer Corp. is the best-performing stock this decade in the Standard & Poor’s 500 index. A $5,000 investment in the Round Rock, Texas, company at the end of 1989 now would be worth $4.5 million. The stock returned 88,918% in that time. Accounting for stock splits, Dell shares sold for 5.7 cents each at the end of 1989. Friday, the stock fell $1.06 to close at $51 on Nasdaq. “They have the best business model for selling PCs,” said Alan Loewenstein, co-manager of John Hancock Global Technology Fund, which held 451,000 Dell shares at the end of April. It was up 129% for the year. Dell sells for about 50 times expected earnings per share, and the company is expected to post 40% growth.
Mutual Fund Winners: Mutual funds that focus on the stocks of mid-size companies outperformed all other categories of big, diverse funds in 1999 on the strength of investors’ ongoing fascination with start-up Internet companies. Mid-cap growth funds rose an average of 70.1% in 1999, according to preliminary figures released Friday by Lipper Inc..
Following closely behind were small-cap growth funds, with an average gain of 59.3%. In a reversal of a decade-long trend, large-cap growth funds brought up the rear in the category of diversified funds, gaining an average of 37.5%, according to Lipper.
The gains recorded by small-capitalization mutual funds represented a stirring comeback for the sector after spending several years in the doldrums.
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Bloomberg News and Associated Press contributed to this report.
