Reuters 
Market decline not seen dulling appetite for IPOs
Tuesday March 16, 3:37 pm ET
By Steve James

NEW YORK, March 16 (Reuters) - The appetite for initial public offerings
is still sharp, despite a recent drop in the stock markets and anemic
after-market performances by some IPOs, experts said on Tuesday.

Even with the blue-chip Dow down 2.7 percent and the Nasdaq almost
3 percent lower this year, there have been 24 IPO filings in the past two weeks,
 and 77 so far this year, according to Dealogic, a financial data provider.
Fifty-three IPOs have priced since the beginning of the year.

"With 11 last week, the filing traffic is quite heavy," said John Fitzgibbon,
an IPO analyst with Red Herring.com.

Lawrence Calahan of America's Growth Capital, a Boston-based investment
bank, said the dip in the Dow and Nasdaq did not appear to be crimping the
pipeline or delaying IPOs from coming to market.

"People may be hesitant," he said. "Some people may not start the road
show (presentations to investors), but they will still go ahead and file
prospectuses with the SEC (Securities and Exchange Commission
(News - Websites) )."

Francis Gaskins, an analyst with IPO Desktop, agreed that once the
process had been launched, market "corrections" are unlikely to prevent an IPO
from being completed.

"If they're on the runway, they better take off. The proof of the pudding will be
what happens to the 24 IPOs that have been filed in the last two weeks," he said.

"It's a long time, two years, since we saw filings withdrawn and there has
been an upward trend (in IPOs) since December and there have been very few postponements."

DOWNTREND DAMAGING

Some recent IPOs have been hurt by the downward trend of the stock market.
Stock in Chinese wireless service provider Linktone (NasdaqNM:LTON - News)
surged 30 percent over its IPO price of $14 on its debut on March 4, but on
Tuesday was trading at $11.07. TOM Online Inc. (NasdaqNM:TOMO - News),
a China-based online company, has seen its shares slip to $12.82, below
the March 9 IPO price of $15.55.

Timing is crucial, said Calahan. "A question is to what extent a company
may think the downturn (in the market) may be short-term.

"Some may wait for weeks, but it depends on how big the company is
and if they think the downturn will continue.

"It is difficult, even if it is a highly sought-after deal, to get premium valuation
(if the market is down). And from a management perspective, a two-week
road show is a full-time commitment," said Calahan.

"If a company goes ahead with the road show and then does not price
the IPO, it's all right to say it is because of the overall tone of the market.
But it can have an effect on investor confidence."

Gaskins said the IPO of Xcyte Therapies Inc. (Nasdaq:XCYT - News),
which priced on Tuesday morning and dropped as much as 9.5 percent
below the IPO price of $8, was an example of a company adjusting to
the investment climate.

The Seattle-based biotechnology company had delayed its IPO from
last week and finally priced it at $8 per share -- well below the previous
estimate of $13-$15.

"The problem is that once a company enters the road show phase,
they assume pricing will stay the same," said Gaskins. "But they
have time to adjust to current market conditions."

Underwriters might pressure a company to go ahead at a lower price, he said.
"But for the guys in the pipeline who are all prepared and have done their road
show, if they pull back they can be tagged as stale merchandise."