The IPO market is all about buzz. While investors anxiously await Google, they’re looking for anything else that has people talking.
Atheros Communications (Nasdaq: ATHR) isn’t profitable, but it makes wireless chips – one of the most talked about tech trends this year – and its sales are on the rise. Its stock is trading up about 25% from its $14 IPO price.
Global Signal Inc. hopes to cash in on the wireless buzz, too. The company, financed by Morgan Stanley and Greenhill Capital Partners, has filed for a $170 million IPO. It operates wireless towers.
Another sector benefiting from buzz is chips. Tessera Technologies (Nasdaq: TSRA), a relatively small, profitable company that helps make semiconductor packaging, is trading up nearly 50% from its $13 offering price. Tessera may soon be joined by another chipmaker, Jazz Semiconductor, which has been in registration since January. Jazz – backed by The Carlyle Group in a leveraged buyout – operates an independent wafer foundry. The company, which reported a loss of $6 million on $185 million in revenue last year, has filed to raise $150 million.
If you’ve got buzz, you don’t necessarily have to be profitable to get a warm reception from Wall Street. Unprofitable Callidus Software makes software in the hot sales-force automation sector. The company’s $70 million IPO last November is viewed by many as a bellwether for the planned $115 million IPO of Salesforce.com. In mid-March, Callidus was trading about 15% above its $14 offering price. Not bad, considering tech shares took a hit in early March.
Another software offering that promises to receive a fair amount of attention is Motive, which provides customer service software for large companies. Motive, backed by Accel Partners, Austin Ventures and others, filed to raise $70 million. It isn’t profitable, but its sales nearly doubled during the first nine months of last year.
All indications are that IPOs will have their best year since 2000. In the first 11 weeks in 2004, 23 companies launched IPOs, raising $6.7 billion, compared to just four new issues raising $1 billion during the same time last year. Of course, a $4 billion Google IPO will make the market spike, but don’t forget that a lot of other new issues are moving the aftermarket upward.
– Alastair Goldfisher, Managing Editor