CurrentOfferings.com Story:

IPO Doldrums to Outlast End of Summer

Nicole Maestri, Reuter�s News, Sept. 10, 2004

NEW YORK, Sept 10 (Reuters) - Summer may have reached its unofficial end, but it appears the initial public equity market won't awaken from its recent doldrums anytime soon.

While the number of IPOs this year continues to outpace 2003, largely due to a flurry of deals at the beginning of the year, the U.S. market for new offerings has largely been stuck in a rut since the end of the second quarter.

Industry watchers were hopeful the much-anticipated offering of Google (GOOG) shares in August would jump-start the market. Instead, the drawn-out Google saga proved to be little more than a distraction to other potential market entrants already wary of the rocky equity markets, rising oil prices and an increasing investor aversion to risk.

Now, analysts are skeptical market conditions have improved enough to bolster the prospects of upcoming IPOs heading into the fourth quarter.

"There are a lot of companies in the pipeline right now that will probably have to stay on the sidelines," said Tom Taulli, co-founder of Current Offerings, which tracks IPOs.

The latest company to reach that conclusion was Fidelity National Financial Inc. (proposed: FNF), which on Thursday delayed the IPO of its information services unit, citing, in part, the "relatively weak and unpredictable current equity market conditions."

FNF said it did not expect to hold the IPO before the first quarter of next year, if it held it at all.

Currently, more than 150 companies are waiting in the wings to hold IPOs, seeking to raise $33.6 billion, according to research firm Dealogic.

Analysts, however, said with November's looming U.S. presidential election and worries persisting over corporate profits, oil prices and the state of the economy, that goal could prove optimistic.

Indeed, so far 31 IPOs have been withdrawn or postponed during the third quarter, compared with a total of 13 through the first two quarters of the year, according to Dealogic.

Additionally, more than half of the third quarter's offerings have priced below initial expectations compared with 25 percent in the first quarter, according to the data provider.

"In order to get out these days ... you still have to be a substantial company, you have to have a full management team, you have to have revenues," said Jocelyn Arel, a partner with Testa, Hurwitz & Thibeault LLP. "We're not seeing concept companies from the '90s get out there."

Arel said companies filing to go public and their investors who are looking for a return on their investment are not ruling out other options besides going public.

"They're filing their initial public offerings, but they're also keeping their M&A; alternatives open," Arel said.

One company that has filed for an IPO but could be a prime acquisition candidate is JAMDAT Mobile, which develops video games for cell phones, Taulli said.

It has filed for an IPO of 5.3 million common shares for an estimated price of between $13 and $15 per share.

With wireless carriers embracing games as a potent source of revenue, both from game downloads and from data fees for games played by multiple people over the network, JAMDAT could be snatched up before it has to test the IPO waters, Taulli said.

While the near-term prospects for IPOs may be dim, IPO watchers said it could lead to a strong 2005.

"I think it'll be a great year next year," Taulli said. "A lot of these uncertainties will be out of the way, and it'll set the stage for a much stronger, healthier IPO market."