Analyst Sees a Loser in Urban Cool IPO

Even in this rocky market, analysts who cover initial public offerings, or IPOs, tend to be bullish about the new stocks’ prospects.

But Ben Holmes, president of IpoPros.com in Boulder, Colo., said one of this week’s scheduled offerings already has at least three strikes against it.

Urban Cool Network Inc. (UBN) of Dallas, operator of an online communications information and e-commerce network targeted to urban consumers, plans to offer 2 million shares at $9 to $11 each via Kashner Davidson.

Scoffed Holmes: “The company will be listed on Amex, and statistically speaking, deals listed there don’t do as well as those listed on Nasdaq or the New York Stock Exchange. In addition, Urban Cool has no revenues and the deal is led by an underwriter not known for launching IPOs. Also, the company’s Web site was broken when I visited it.”

Meanwhile, one of the IPOs that Holmes and other analysts seem to like best was postponed Monday amid Nasdaq’s turbulence.

San Jose-based ONI Systems Corp. (ONIS), a maker of fiber-optic equipment, delayed its $176-million IPO after the Nasdaq composite fell more than 6% before recovering much of the loss.

But the company may complete the deal after the market closes today, said Goldman, Sachs & Co., which is handling the sale of the 8 million shares at a projected $21 to $23 each.

Investment bankers are usually loath to bring companies public when the market is volatile, although a delay may also mean that investor interest in an IPO has slackened.

Still, analysts expect shares of ONI Systems to rise when trading begins, especially after New Focus Inc. (NUFO), also a maker of fiber-optic equipment, more than doubled in its debut last week.

“I think it’s going to be a hot deal--even in this market,” said Wit SoundView’s Truc Do. “We believe they have a good product.”

ONI’s equipment transmits phone, data and video traffic on regional, or so-called metro, optical networks.