Chip designer tests IPO waters
Published: 21 Nov 2001 15:40 GMT
The success of Magma Design Automation's initial public offering on Tuesday could indicate a growing hunger for high-tech public offerings. The only problem is there are hardly any companies waiting in the wings, and the market may be weary right now.
Magma, which develops software that helps speed the design of chips, priced on Monday at $13 a share, well above analysts' expected range of $9 to $11 a share, and it blew past expectations again on Tuesday: shares of Magma gained 46 percent, closing at $18.99.
The Cupertino, California-based company also increased its number of shares Monday -- from four million to 4.85 million. The IPO's lead underwriter is Credit Suisse First Boston.
"This is the best first-day performance we've seen since Global Power in May this year," said Richard Peterson, an analyst with Thompson Financial Securities. Global Power Equipment shot up just over 50 percent in its first day of trading.
That isn't saying much, considering the triple-digit gains of initial public offerings in past years and how few technology companies have made it to market this year. This year, 22 out of 84 IPOs, or about a quarter, have been technology companies. Last year, 240 out of 374 IPOs, or about two-thirds, were high-tech businesses, Peterson said.
Nevertheless, Magma surprised analysts with its strong performance, sparking speculation that the IPO market for technology companies could finally be recovering.
"We were positive on the stock but were caught off guard by the price revision Monday," said David Menlow, president of IPOfinancial.com.
Magma's upbeat outcome can be attributed to the recent pickup in successful public offerings in the past week and a solid business model in one of this year's hotter sectors: semiconductor design.
See techTrader for the latest financial news in the high-tech sector.
Have your say instantly, and see what others have said. Click on the TalkBack button and go to the techTrader forum
Let the editors know what you think in the Mailroom. And read other letters.
Did you find this article useful?
36 out of 85 people found this useful
Digg
Slashdot
Del.ici.ous
Stumble
Reddit
