Trio of IPOs soar in debuts

By Yung Kim

NEW YORK, Oct 13 (Reuters) - Government contractor Science Applications International Corp. (SAIC) (SAI.N: Quote, Profile, Research) led a trio of strong stock market debuts on Friday in the latest sign of growing investor appetite for technology related IPOs.

Bolstered by near record highs for the Dow and a rising Nasdaq, the initial public offering's strong reception could be a bullish sign for a backlog of other pent-up deals issuers are hoping to get done in the fourth quarter.

"The IPO market is on fire right now after not being very exciting for the last couple years," said Ben Holmes, publisher of Morningnotes.com, an independent research firm based in Boulder, Colorado.

Shares of government contractor SAIC rose as much as 21 percent Friday, a day after pricing at $15, the top of a forecast range and raising about $1.1 billion.

The float was the second largest of the year, behind only MasterCard Inc., (MA.N: Quote, Profile, Research) which raised almost $2.6 billion in May, according to data tracker Dealogic.

Two smaller deals had even more dramatic gains. Shares of Acme Packet Inc. (APKT.O: Quote, Profile, Research), which makes computer networking equipment, rose as much as 70 percent to $16.90, a day after pricing at $9.50 per share.

Online health insurance company eHealth Inc. (EHTH.O: Quote, Profile, Research) opened up almost 79 percent at $25 from its $14 offering price, the second biggest increase from offering price to opening of the year, according to Dealogic

A fourth initial public offering from industrial transportation company Ultrapetrol (Bahamas) Ltd. (ULTR.O: Quote, Profile, Research), did not fare as well. The company priced 12.5 million shares below forecast and fell 4 percent in its debut.

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Acme creates products to deliver secure communications across Internet network borders and is part of the hot market for the transfer of video over the Internet.

At a $14.74 price, Acme shares traded at 38 times estimated 2006 earnings.

The multiple is pricey compared with larger rival Cisco Systems Inc. (CSCO.O: Quote, Profile, Research), the biggest U.S. network equipment maker, which trades at more than 27 times annual earnings.

EHealth sells health insurance online and generates revenue primarily from commissions after individuals, families and small businesses buy policies through its Web site.

At a share price of $23.07, eHealth trades at 90 times estimated 2006 earnings.

The multiple is lofty, but the company recently swung to a profit, has continuing commission income and is the leader in their category, providing strong growth prospects, said Francis Gaskins, an independent IPO analyst and president of IPO Desktop.

Shares of health insurer Aetna Inc. (AET.N: Quote, Profile, Research), although not directly comparable, trades at about 15 times annual earnings

"There have been a lot of companies that tried to do what eHealth is doing, but they have not been successful," Gaskins said. "Somehow eHealth has found the formula."

Growth prospects for SAIC do not compare to those of Acme and eHealth, but SAIC's offering price presented value, Gaskins said.

At a $17.84 trading price, shares of the San Diego-based company traded at 18 times the company's earnings annualized from July 31, which compares favorably to government contractor Lockheed Martin Corp., (LMT.N: Quote, Profile, Research) which trades at almost 18 times annual earnings.

SAIC's offering price was influenced by stockholders, many of whom work for what is the largest employee-owned company in the world. SAIC plans to use net proceeds from the IPO to pay a special dividend for stockholders of record prior to the offering, Gaskins said.

"It was priced to go up," Gaskins said. "They left some money on the table, but now they have happy employees."