IPO Hardball!

This last week, buyers were back. On Tuesday, the Nasdaq had its biggest one-day point gain, 254 points. For the week, there was positive gain. Even the Queen of the Net, Mary Meeker, has proclaimed that the worst is over. Let’s hope so.

Shortened due to Good Friday, last week most investors could have gotten all the IPO stock they wanted at the IPO price. Here are last week’s IPOs, ranked by % change from the IPO price.

Embarcadero Tech, +60% to $16 from IPO price The San Francisco-based Embarcadero Technologies (EMBT) got the best reception. They lowered their initial price to $10 to raise $42 million. In the immediate aftermarket EMBT traded at $10 3/8, then moved up to close at $16.

Embarcadero Technologies helps companies with their enterprise and e-commerce databases. Its primary product, DBArtisan, works across multiple operating and hardware systems. Customers includ GTE, AT&T Wireless Services, Bank of America, and Universal Studios.

The lead underwriter was Donaldson, Lufkin & Jenrette.

360networks, +36% to $19 from IPO price On Thursday, 360networks (TSIX), a fiber-optic network builder, priced their IPO at $14, which was under the proposed $16 to $18 range. This was a shrewd move as 360networks rose 36% to 19 by the end of trading. In the New Net reality, such a rate of return is consider very good.

360networks is quite the fiber-optic builder. They project that by the end of 2001, their overall network will be approximately 56,300 route miles, mainly in North America and Europe. They are also building two fully protected undersea cables. One is a 7,600 route mile cable between America and Europe, and the other, a 14,000 route mile cable between South America and North America. Seems like there is lots of this cable already – but investors nonetheless are interested.

The co-Lead Managers were Goldman, Sachs and Donaldson, and Lufkin & Jenrette.

QS Communcations, +16% to $28 1/8 from the offering price QS Communications (QSCG) gave it a try on Wednesday. QS Communications rose 26 percent to 30 1/8 from its opening of $24.64. It was down to 28 ½ on Thursday.

QS Communications is a German provider of high-speed DSL Internet access for small and midsized businesses in Germany. QSC is constructing a network linking 40 German major cities. They project that by next year, they will serve over 20 million customers with full broadband service nation-wide.

The lead underwriter was Morgan Stanley Dean Witter.

Packard Biosciences, +1/8 to $9 1/8
Packard Biosciences (PBSC) priced at $9 Wednesday evening for Thursday trading.
The original filing price range was 16 to 18, so PBSC effectively cut in half its hoped-for IPO price.

Based in Meriden, CT, Packard Biosciences has a split personality, with 60% of its business life sciences research instrumentation and 40% in nuclear industry instrumentation.

Merrill Lynch was the lead underwriter

Rockford Corp, no change at $11
Rockford Corp (ROFO) priced Wednesday evening at $11, the bottom of its price range, for trading on Thursday and closed unchanged at $11.

Based in Tempe, Arizona Rockford designs, manufactures and distributes high-performance aftermarket car audio systems. ROFO is profitable, although on a quarter-to-quarter based sales and profits are declining.

Dain Rauscher was the lead underwriter.

PEC Solutions, -4% from IPO price to $9
PEC Solutions (PECS) just was not buff enough. Facing little investor interest, it had dropped its opening price. It wasn’t enough. It opened at 9 ½ and staggered to 9 by the end of the trading.

The Fairfax, Va., PEC Solutions provides Internet and security technology services mainly to government, often building their applications from the ground up, as well as integrating with legacy systems. They provide encryption programs to protect sensitive information, including biometric authentication, a process that identifies people by their physical characteristics. Definitely cool stuff. But it was not what investors wanted.

Donaldson, Lufkin & Jenrette was the lead underwriter.

PRE-IPO PRICE-TO-EARNINGS RANKINGS…as of Sunday 4/16
Of the 19 companies ranked Sunday 4/16 by Gaskins IPO Desktop, five of the top six successfully completed IPOs last week. The six successful companies, discussed above, are identified with an asterisk (*) before their name (below).
The rest were rescheduled, postponed or withdrawn.

Pre-IPOs ranked by Price-to-Earnings (Loss) ratios
Posted Sunday 4/16 by Gaskins IPO Desktop Recent qtr’s
IPO Price
(Mrkt Cap
NAME/symbol
Mrkt
Rated
Rev
Profit
to Profit
/ qtr profit
Cap
(mm)
(loss)
(Loss) Ratio
(loss)*4)
‘*’ = successful IPO the week of 4/17
LowerPrice/Earnings ratio is better
Four profitable companies 
*Rockford (ROFO)
127
C+
32
1.8
18
Qualstar (QBAK)
150
C+
11.1
1.7
22
*Embarcadero (EMBT)
332
C+
6.6
2*
41
*Pec Solutions (PECS)
350
C+
14.6
1.7
51
One breakeven company
*Packard Bio (PBSC)
1069.2
C+
65
0
breakeven
14 unprofitable companies
Lower ratio of Market Cap to Loss Rate (Price/Loss ) is better
…for example -149 is lower & better than -6
*360networks (TSIX)
14292
C+
100
-24
-149
ParadigmGen (PDGM)
382
C
0.6
-2.6
-37
Software Tech (STCS)
1224
B-
17.3
-9.5
-32
BirchTelecom (BRCH)
1618
C
15
-15
-27
Virologic Inc (VLGC)
315
C
0.3
-4
-20
Digitalwork (DWRK)
394
C+
1.1
-5.1
-19
Netjewels.com (NTJ)
66
C
0.4
-0.9
-18
Yupi Internet (YUPI)
641
C
1
-9
-18
Coolsavings (CSAV)
507
C+
6.7
-7.3
-17
Inventa Tech (INVA)
275
C
5.6
-4.1
-17
Crown Media (CRWN)
1313
C+
12.5
-24*
-14
Genomic Slns (GNSL)
386
C+
12.1
-11.1
-9
OneSoft Corp (ONSF)
287
C
4.3
-9.9*
-7
Techies.com (TCHS)
355
C
3.4
-15.9
-6
*excl non-cash chrg
Two non-edgar filings
Camtek (CAMT)
196
n/r
non-Edgar filing
*Qs Comm (QSCG)
tba
n/r
non-Edgar filing
‘*’ = successful IPO the week of 4/17
IPO Price to profit (loss) ratio = Market Cap / most recent quarter’s profit (loss) * 4
Business Model Rating Criteria…
A = high growth market, potential leader; B = more competitive market;
C = ‘public venture capital’

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