By John E. Fitzgibbon, Jr.
The news from the world’s financial capitals this week was bad. Nevertheless, the forward IPO calendar coming from Wall Street was good—no, make it great. Here’s the backdrop:
On Tuesday, the Dow Jones Industrial Average lost 416 points to close at 12,216.24. That was a drop of 3.29 percent from Monday’s close of 12,632.26.
That was a pretty big cloud that rolled over Wall Street. But here’s the silver lining. Neither the point loss nor the percentage decline were anywhere near records.
There have been five times the Dow Jones Industrial Average has given up more than 500 points in a single day, according to available records. They are:
On September 17, 2001, the DJIA fell 684.81 points, off 7.13 percent from its previous close of 9,605.51.
On April 14, 2000, the DJIA fell 617.78 points, off 5.66 percent from its previous close of 10,305.77.
On October 27, 1997, the DJIA fell 554.26 points, off 7.18 percent from its previous close of 7,715.41.
On August 31, 1998, the DJIA fell 512.61 points, off 6.37 percent from its previous close of 8,051.68.
On October 19, 1987, the DJIA fell 508.32 points, off 22.6 percent from its previous close of 2,246.73.
Tuesday’s 3.29 percent decline didn’t even rank in the top 20. The sharpest single-day loss was
December 12, 1914. The Dow lost 24.4 percent to close at 54 that day, down from its previous close of 71.42.
No. 20 on the sharpest percentage decline list is January 8, 1988. The Dow lost 6.85 percent to close at 1,911.31, down from its previous close of 2,051.89.
Some experts think the underlying stock market may be bumpy over the near future. But there’s reason to take heart.
Tuesday’s stock market decline jumped to the front page from the business section of most newspapers. Normally, that’s a reverse indication of better times ahead.
Warming Up
The outlook for the IPO market is starting to look good.
First, it is coming out of a “seasonal slowdown period” that runs from mid-February into early March. From February 15 through March 1, only one IPO was priced. That’s the bad news.
The good news? There are five deals on the calendar for the week of March 5. It includes two carryovers from last week. Bankers are expecting to raise slightly over $1 billion.
Next, 2007’s aftermarket performance has been outstanding. Consider this: As of March 1, bankers had priced 28 IPOs (excluding 11 unit offerings).
On Thursday, 19 of those 28 IPOs closed above their initial offering prices. They had an average gain of 13.7 percent.
This was a very favorable comparison with the Nasdaq Composite Index. It closed Thursday at 2,404.21, down 0.46 percent for the year.
But the IPO news gets better.
Since October 18, bankers have priced 100 IPOs and, on Thursday, 73 of them closed above their initial offering prices. They had an average gain of 25.2 percent, compared with a 2.87 percent gain by the Nasdaq Composite Index.
This week, the 2007 IPO calendar starts to come back to life after its mid-February slowdown. Bankers are planning to price three IPOs, plus a “blank check.” That’s more than what has been priced over the previous two weeks.
Each of this week’s three new faces are high-profile deals. All are reportedly in demand from investors. Each has attracted some buzz as a “hot issue.”
If all three do as well as the experts think and the stock market holds up, then we’ll be in for a good ride on the IPO train.
Inside This Week’s IPO Calendar
This week’s IPO calendar lists five deals, including two carryovers from last week.
The new faces
A Chinese news media company (Xinhua Finance Media)
A network security provider (Sourcefire)
A wireless equipment provider (Clearwire)
The carryovers
The blank check: (Symmetry Holdings)
A pharmaceutical (OncoGenex Technologies)
All five deals are expected to raise $1.1 billion.
Company Profiles
—Clearwire, based in Kirkland, Washington, builds and operates next-generation wireless broadband networks that offer fast, portable, and affordable Internet service to over 206,000 subscribers. Clearwire’s service is available in Alaska, Hawaii, California, Idaho, and eight other states, as well as in Belgium, Denmark, and Ireland.
Clearwire plans to price 20 million shares at $23 to $25 each to raise $480 million. The IPO is to start trading on Thursday.
For the year ending December 31, 2006, Clearwire reported a net loss of $284 million on total revenues of $100.2 million, compared with a net loss of $140 million on total revenues of $33.5 million for the same period a year ago.
Clearwire
As of December 31, 2006, Clearwire reported an accumulated deficit of $458.6 million.
Clearwire
Formed in 2003 by cell phone pioneer Craig O. McCaw, Clearwire has about 930 employees.
Clearwire
Underwriters: Merrill Lynch, Morgan Stanley, and JPMorgan are the joint-lead managers. Acting as co-managers are Wachovia Securities, Bear Stearns, Citigroup, Jefferies,Raymond James, ThinkEquity Partners, and Stifel Nicolaus.
lead managers. Acting as co-managers are Wachovia Securities, Bear Stearns, Citigroup, Jefferies,Raymond James, ThinkEquity Partners, and Stifel Nicolaus.
Selected Principal Shareholders: EagleRiver Holdings, Intel, Motorola, BellCanada, andOB Wireless LLC.
52-Week Percentage Change:
Dow Jones U.S.Mobile Telecommunications Index: up 2.43 percent
MobileNasdaq Composite Index: up 4.02 percent
—Sourcefire, based in Columbia, Maryland, provides network security technology designed to detect and block hackers. It is best known for Snort, one of the industry’s leading open source intrusion detection products.
Sourcefire plans to price 5.77 million shares at $12 to $14 each to raise $75 million. The company will offer 5.32 million shares and selling shareholders will offer 450 billion shares.The IPO is to start trading on Friday.
For the year ending December 31, 2006, Sourcefire reported a net loss of $932,000 on total revenues of $44.9 million, compared with a net loss of $5.5 million on total revenues of $32.9 million for the same period a year ago.
Sourcefire
As of December 31, 2006, Sourcefire reported an accumulated deficit of $38.9 million.
Sourcefire
Formed in 2001, Sourcefire has about 182 employees.
Sourcefire
Underwriters: Morgan Stanley and Lehman Brothers are the joint-lead managers. Acting as co-managers are UBS Investment Bank and Jefferies.
lead managers. Acting as co-managers are UBS Investment Bank and Jefferies.
Selected Principal Shareholders: Core Capital Partners and entities affiliated with Sequoia Capital.
52-Week Percentage Change:
Dow Jones U.S. Software Index: up 8.08 percent
U.S.Nasdaq Composite Index: up 4.02 percent
—Xinhua Finance Media, based in Shanghai, is a media company that provides financial news and data in China. The company has ties to Xinhua News Agency, the state-controlled news agency of China.
Xinhua Finance Media plans to price 23.1 million shares at $12 to $14 each to raise $300 million. The company will offer 17.3 million shares and selling shareholders will offer 5.8 million shares.The IPO is to start trading on Friday.
For the year ending December 31, 2006, Xinhua Finance Media reported net income of $5.7 million on total net revenues of $59 million, compared with pro forma net income of $466 billion on total net revenues of $5.7 million for the same period a year ago.
Xinhua Finance Media
Formed in 2005, Xinhua Finance Media has about 623 employees.
Xinhua Finance Media
Underwriters: JPMorgan and UBS Investment Bank are the joint-lead managers. Acting as co-managers are CIBC World Markets, WR Hambrecht + Co., and ABN AMRO Rothschild.
lead managers. Acting as co-managers are CIBC World Markets, WR Hambrecht +
Co., and ABN AMRO Rothschild.
Selected Principal Shareholders: Xinhua Finance Limited, Patriarch Partners Media Holdings, Sino Investment Holdings Limited, Dragon Era Group Limited, and Honour Rise Services Limited.
52-Week Percentage Change:
Dow Jones U.S. Publishing Index: up 4.57 percent
U.S.Nasdaq Composite Index: up 4.02 percent
The Carryovers
—OncoGenex Technologies is a Vancouver, Canada-based biopharmaceutical company developing new cancer therapies to address treatment resistance in cancer patients. The company has three products in development designed to selectively inhibit the production of proteins associated with treatment resistance.
OncoGenex Technologies now plans to price 5 million shares at $7.50 to $8.50 each to raise $40 million. The deal was reduced from 4.5 million shares at $10 to $12 each to raise $49.5 million. The IPO is to start trading during the week of March 5.
Formed in 2000, OncoGenex Technologies has never generated any revenues. As of September 30, it reported an accumulated deficit of $26.7 million.
OncoGenex Technologies
OncoGenex Technologies has about 25 employees.
Underwriters: RBC Capital Markets is lead manager. Acting as co-managers are Needham, Lazard Capital Markets, Canaccord Adams, and Susquehanna Financial Group.
lead manager. Acting as co-managers are
Needham, Lazard Capital Markets, Canaccord Adams, and Susquehanna Financial Group.
Selected Principal Shareholders: Ventures West 7 Limited Partnership, H.I.G. Horizon, Working Opportunity Fund (EVCC), BDC Capital, and Milestone Medica.
52-Week Percentage Change:
Dow Jones U.S. Pharmaceutical Index: up 6.04 percent
U.S.Nasdaq Composite Index: up 4.02 percent
—Symmetry Holdings, of Briarcliff Manor, New York, is a “blank check” company recently formed for the purpose of acquiring through a merger, capital stock exchange, stock purchase, asset acquisition, or other similar business combination, businesses in North America that are in or are suppliers to the basic industries sector, including energy and energy-related infrastructure.
The company plans to price 18.8 million units consisting of one share of common stock and one warrant at $6 each. The units are expected to trade on Tuesday.
The underwriters are CIBC World Markets, Sunrise Securities, FTN Midwest Securities, and GunnAllen Financial.