Handspring Stock May Be Litmus Test for IPOs
Handspring Inc. raised $200 million late Tuesday in a high-profile initial public offering sure to test the shaky IPO market when trading begins today.
The Mountain View, Calif.-based maker of hand-held computers sold 10 million shares at $20 each, $1 above the top of the $17 to $19 range set by underwriter Credit Suisse First Boston Corp.
The sale of the 8% stake gave the company, which will begin trading on Nasdaq today under the ticker symbol HAND, a market value of $2.51 billion.
Buyers of Handspring shares hope the 2-year-old company--whose co-founders once led Palm Inc. (PALM), maker of the most popular hand-held computers--will benefit from an expected surge in the use of such devices.
“The entire wireless sector is going crazy right now because of the potential for Internet-like activities on non-PC devices,” said Bruce Kasrel, an analyst with Forrester Research Inc.
Worldwide shipments of hand-held computers are expected to grow to 35.5 million units in 2003 from 8.2 million units last year, according to Handspring’s filing with the Securities and Exchange Commission.
The sale gave Handspring co-founders Jeffrey Hawkins and Donna Dubinsky multimillion-dollar paper fortunes, with Hawkins’ stake worth $818.6 million and Dubinsky’s stake worth $440.6 million at the stock’s offering price.
But investors may prove cautious this morning when Handspring begins trading because of the disappointing performance of Palm shares since that company’s March IPO, along with the rocky new-offerings market in general.
After reaching an intraday high of $165 in their March 2 debut, Palm shares have sunk to $27.13 as of Tuesdasy--almost one-third below their $38-a-share IPO price.
Palm’s recent history may seem especially relevant because of the close connections between Handspring and Palm. The Handspring hand-helds, while they sport a novel “Springboard” expansion slot for applications such as games and paging, resemble the Palm hand-helds. Indeed, the Handsprings use the Palm operating system.
Handspring’s expectations for its IPO have diminished as Palm shares have fallen. When Handspring first filed its going-public plans on the last day of March, it said it might raise $300 million.
