IPO REVIVAL TWO-PRONGED: TECH, OTHERS; CYBERSTOCKS HELP PUT DEAL PACE AHEAD OF ’98, WHEN MANY HELD OFF

This year is shaping up as a feast of initial public offerings for what is clearly a starving investor public.

Consider this: At Pacific Internet Inc., an online service provider, 3 million shares were underwritten at $17 on Feb. 4, but the first public trading opened at $88.

Such fury is fueled by investors who had anticipated a plethora of companies going public last year, only to see the offerings put on hold when the market got volatile. With technology companies and some basic manufacturers leading the way, 39 IPOs had raised $4.53 million as of Feb. 5. — compared with 31 deals that raised $2.25 billion through the same period in 1998, according to researcher CommScan LLC in New York.

Moreover, 13 of the 1999 deals were priced above the anticipated range and only two were below. A year ago, only five stocks were priced above the range, and nine were below.

35% gain for quarter seen

Nobody yet is predicting a return to the dizzying heights of 1996, when a record $49.5 billion in IPOs was raised. But most observers, barring a bearish market turn like last year, expect a substantial advance over 1998, when a little over $35 billion was raised on the IPO market.

IPO activity through the first quarter will likely be 35% ahead of the same period in 1998, once again led by Internet offerings, says consultant David Menlow, president of IPO Financial Network in Springfield, N.J.

“It seems like the market has bifurcated itself, with the Internet and then everything else,” he says. “Manufacturers are something of an orphan right now. Those deals don’t generate much excitement, though they can still get done.”

Indeed, there was only a modest reaction surrounding Delphi Automotive Systems Corp.’s offering this month, which raised more than $1.7 billion at $18.625 a share. At the end of the first day, the shares had risen $1.625. Del Monte Foods Co., which also went public this month, was priced at $15.625 and traded up 62.5 cents the first day. Earlier in the week, in contrast, Perot Systems Corp., a computer-services concern, came public at $16 a share and, in frenzied trading, nearly quadrupled to $61 within two days.

Overall, IPOs have been trading stronger in the aftermarket of late. Peony Kao, an analyst at Renaissance Capital Corp. in Greenwich, Conn., notes that of eight IPOs priced in January 1998, the public stock traded up an average 17% by the end of that month. Of nine deals priced in January 1999, stocks were up 111% by the last day of the month.

“Six of the nine stocks priced this January were technology deals,” Ms. Kao says. “It’s still technology that is in favor right now.”

In early February the Internet rush continued — with IPO registrations for such companies as ForeignTV.Com, a broadcaster of foreign news and entertainment over the Internet; Internet Financial Services Inc., a provider of online brokerage services; and PLX Technology Inc., a supplier of semi-conductor devices and related software. Most are expected to come public in early spring.

goldman moment

Plenty of non-technology offerings also loom ahead, of course. Wall Street continues to hold its breath awaiting the initial stock offering of blue-chip brokerage Goldman Sachs & Co., for instance. A recent management shake-up might have sidetracked, in the eyes of some, the IPO — originally slated for last September and then postponed — but most observers expect the deal to get done by the end of the second quarter.

“I think the people at Goldman are playing it close to their vests right now as to the timing of their IPO, but it’s coming eventually,” says Dick Smith, senior managing director of equity capital markets at Nationsbanc Montgomery Securities Inc. in San Francisco. “Yes, there has been an internecine war of sorts inside the firm recently, but they have too many talented people and too great a franchise to let that interfere with an IPO.”

Much-awaited IPOs involving Gabelli Asset Management Inc. and Internet service provider Prodigy Communications Corp. came to market this month — priced at $17.50 and $15, respectively.

In coming days, the pipeline is bursting with companies like Onyx Software Corp., Priceline.com Inc., an airline and hotel broker, and Vignette Corp., a developer of relationship software. The latter is planning to raise a mere $45 million, yet has attracted powerful Morgan Stanley Dean Witter & Co. as its lead underwriter.