If the New Year were a bottle of champagne, you’d have to send it back because it was flat. As of Feb. 12, there was no pop! Not a single company had gone public. That’s in contrast to 10 IPOs in the same period last year, including two by venture-backed companies: Synaptics Inc. (Nasdaq: SYNA) and Zymogenetics Inc. (Nasdaq: ZGEN).
Certainly talk of war with Iraq and tensions with North Korea have been an issue, but maybe the lack of new issues is just a reaction to what happened to the venture-backed IPOs during the same time last year. Or what didn’t happen.
Synaptics, which sold 5 million shares on Jan. 28, 2002, closed at $6.70 on Feb. 12, down 49% from its first-day close of $13.11. The company, based in San Jose, Calif., makes touch-input devices and character recognition software for desktop and laptop computers.
Synaptics’ backers, including Oak Investment Partners, Sprout Group and Technology Venture Investors, probably wished they had held off on the IPO until the economy turned around and created potential buyers for Synaptics’ products. The stock climbed as high as $20.75 in May 2002, but by July, when the six-month lockup period for insiders expired, it was trading well below its offering price of $11 per share. At one point it fell as low as $3.13.
Zymogenetics is another story. It was battered right out of the shoot, closing at just 5 cents above its offering price of $12 on Jan. 31, 2002, its first day of trading. Zymo, which makes protein-based drugs, has definitely not been a boon for the company’s venture backers, which include Apax Partners, Mayfield Warburg Pincus Equity Partners.
By the time the six-month lockup period expired, Zymo’s stock was trading at its 52-week low of $4.98. Since last July the stock hasn’t made it past $11. It closed at $9.75 on Feb. 12.
The lack of pop from Zymogenetics and Synaptics has been apparent with the majority of last year’s venture-backed IPOs. Of the 20 VC-backed companies that went public between February 2002 and January of this year, only eight (or 40%) were trading at or above their IPO prices.
Just three companies showed price increases of 58.1% or greater. Dick’s Clothing and Sporting Goods Inc. was the top gainer, rising by 58.3%. Eon Labs Inc., a generic drug maker, ranked second with a 58.1% increase, and JetBlue Corp., the East Coast discount airline, ranked third with a 57.2% rise in its price.
Of the 10 industry sectors, only two showed an increase. The mysterious “Other Products” sector rose by a healthy 12%. The Medical/Health sector showed increased a modest 1.6%.