ArrowPoint Communications, ValueClick and Websense Enterprise are among the companies expected to have the best shot at capturing large first-day gains, industry analysts said. Yet they won't be the only firms looking for favor, as 18 IPOs are scheduled to hit Wall Street.
If next week's IPO market is anything like this week's, however, investors are expected to be finicky about where they put their money.
The market welcomed Caldera Systems and Blaze Software this week, as shares more than doubled for both firms on their first day of trading. A seller of the open-source Linux operating system, Caldera didn't jump as high as its fellow Linux brethren on its first day, but the company still has a market capitalization close to $1 billion.
In comparison, shares of low-cost computer maker Emachines today fell on their first day of trading, dropping under their IPO price of $9 per share.
Next week's offerings may follow in the footsteps of some early technology leaders. ValueClick, an Internet advertising network that landed an $85 million investment from DoubleClick earlier this year, is expected to ride a wave similar to that of the Internet advertising firm.
"DoubleClick priced its IPO in February 1998 at $17 and gained 76 percent on its first day. Now the stock's up 2,394 percent," said Richard Peterson, IPO analyst with Thomson Financial/Securities Data.
Peterson said that DoubleClick's early success could be a good indication that ValueClick, a company in the same market, may do well as a publicly traded firm. Goldman Sachs, the lead underwriter for DoubleClick's IPO, will also shepherd ValueClick's offering, he added.
Last year, ValueClick generated pro forma revenues of $21 million and posted a loss of $2.3 million. The company targets small to midsize businesses with its advertising services, which use a cost-per-click model.
Jeff Hirschkorn, a senior analyst with IPO.com, said he expects ValueClick to raise its price range as high as $15 to $17 per share, as he believes demand will be strong. The company had already increased its range from between $9 and $11 to between $11 and $13.
ValueClick hopes to sell 4 million shares to raise up to $52 million, based on the high end of its pricing range. The company is scheduled to price Thursday and begin trading Friday under the ticker "VCLK."
Demand to ease congestion over the sprawling networks that form the Internet could help fuel demand for ArrowPoint's IPO. Another Goldman Sachs deal, ArrowPoint provides Web switching technology that allows companies to prioritize routing for site search requests, making transactions faster.
"We absolutely love the concept, and it's one that the hot IPO market is in search of," said David Menlow, president of IPO Financial Network. "I would expect a price revision on the upside for this company."
Yet Hirschkorn said that many companies in the hot networking market could pose a threat to the company, namely leader Cisco Systems and rival Foundry Networks--both of which also offer technology to help ease network congestion.
The company posted revenues of $12.4 million for the year ended Dec. 31, up from $201,000 the previous year. Its loss widened to $12.6 million last year from $9.4 million a year earlier.
ArrowPoint plans to sell 5 million shares to raise $85 million, based on the high end of its $15 to $17 range. The company expects to price its shares Thursday and begin trading Friday under the ticker "ARPT."
Websense, which provides Web filtering and traffic management software, raised its price range yesterday to between $14 and $16 a share from between $12 and $14.
The company plans to sell 4 million shares to raise $64 million, based on the high end of its range. Chase H&Q is the lead underwriter.
"Websense has a lot of blue chip clients," Thomson Financial's Peterson said. "I wouldn't be surprised to see this (company) price its IPO at $20 or more."
American Express, BellSouth and Coca-Cola are among Websense's customers.
The company generated $8.6 million in revenues last year for the period ending Dec. 31, up from $6.9 million a year earlier. Its loss rose to $9 million for the year from $5.6 million the previous year.
Websense will trade on the Nasdaq Stock Market under the ticker "WBSN."
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