Optical IPO Market Sizzles

The last couple of weeks in July are shaping up to be unusually busy in the IPO market, with optical networking companies leading the charge.

This week in particular, the calendar is loaded with first-timers such as Avici Systems Inc. (proposed Nasdaq symbol: AVCI), Corvis Corp. (proposed Nasdaq symbol: CORV), and Tycom Ltd. (proposed NYSE symbol: TCM), which is an undersea cable spinoff of Tyco International Ltd. (NYSE: TYC).

"This looks more like a mid-May calendar than a summer calendar," says Jeff Hirschkorn, senior market analyst at IPO.com. "There are a lot of quality companies coming out, and the market will continue to be selective."

With 28 IPOs scheduled for this week, things reached fever pitch -- particularly in the fiber optics and optical networking market, which Hirschkorn notes is today's hot ticket on Wall Street. On Tuesday, bankers announced an increase in the price range of Avici shares from $20-$28 to $28-$30. Underwriters also increased the number of shares being offered from 6 million to 7 million (see Avici IPO Heats Up). Then Corvis bankers announced its share price range would be increased from $13-$15 to $28-$30 (see Corvis IPO Terms Increased).

This activity follows on the heels of another top pick, Tycom, which on Monday increased the number of shares it plans to offer from 43.5 million to 54.4 million. Its share price range remained the same, $26-$30, giving it the potential to raise $1.5 billion. These last-minute price increases represent a vote of confidence from investors, says Hirschkorn.

So what's keeping the calendar full and the investment bankers off the beach this summer? There are a couple of things going on here. The last few weeks of July usually tend to be slightly busier than the rest of the summer months, because investment bankers and other Wall Street professionals participating in the IPO "road shows" tend to go on vacation in August.

"There is always a mad rush before August," says Jeff Barker, director of product marketing for Packeteer Inc. (Nasdaq: PKTR), which went public in July 1999. "Everybody goes on vacation, and you can't do a road show to drum up business if no one is around."

Even with the typical last-minute rush to seal deals before August, this year seems especially active, with a focused list of higher quality companies coming out, notes Hirschkorn. One reason is that a lot of IPOs were postponed in the spring, following the Nasdaq's plunge in March and April.

As a result, strong companies postponed their offerings and weaker companies fell through the cracks. But some experts aren't necessarily optimistic about the market. "It appears as though there is too much happening too fast," says Steven Tuen, director of research at IPO Value Monitor. "The Nasdaq is still trying to regain footing, and overloading the market could hurt new issues."

Regardless of the outcome, the next couple of weeks promise to be exciting for those following the trends of new public companies. Tycom is scheduled to go out on Thursday, with Avici and Corvis both set for Friday.

by Marguerite Reardon, senior editor, Light Reading, http://www.lightreading.com
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