by David Shabelman
[Posted on November 13, 2007 - 5:08 PM]
E-mail
del.icio.us
Technorati
DiggFingerprint scanning device maker Cross Match Technologies Inc. on Tuesday postponed its initial public offering for a second time, becoming the fourth company in recent days to drop plans to test the volatile stock market.
Indeed, experts expect investors to carefully monitor IPOs through the end of the year as turmoil in the credit and housing markets continues to ripple out into other sectors.
Palm Beach Gardens, Fla.-based Cross Match makes fingerprint, palm and full-hand scanning devices and facial recognition technology for security systems. The company first postponed its offering in August, also citing market conditions. Cross Match, which originally retained Credit Suisse Securities LLC as the lead manager on the IPO, has since opted to conduct a "Dutch auction" using W.R. Hambrecht + Co.'s OpenIPO auction system.
"Once you go through a postponement, investors are a little more suspect," said Ben Holmes, publisher of IPO research firm MorningNotes LLC. "And going from Tier 1 underwriter to Tier 3 makes them a little less interesting, and right now we need things that are a little more interesting."
Weakness in the Nasdaq, which fell nearly 9% from Nov. 6 to Nov. 12, has deterred tech companies from going public. Holmes also said some investors are complaining that offerings are being priced too high. "We're starting to hear from our clients who are telling us people are becoming frustrated that the valuations are a little aggressive," he said. "Some of these pricings three or four weeks ago would have been fine. But with the environment we're in they need to be priced with a little more sensitivity."
Across industry, 155 companies have gone public this year through Sept. 30, raising a combined $38 billion, compared with 198 for all of 2006, raising $43 billion, according to Renaissance Capital LLC's IPOhome.com. The average IPO size this year is $243 million, versus $217 million last year.
Cross Match's move comes a day after cleantech firm NanoDynamics Inc. of Buffalo, N.Y., withdrew its proposed IPO after postponing it in August. On Nov. 9, insurance and financial services firm Symetra Financial Corp. postponed its offering and life sciences firm NimbleGen Systems Inc. of Madison, Wis., withdrew its issue.
On the runway to go public this week is 3Par Inc. of Fremont, Calif., a maker of storage and virtualization software. But that IPO is expected to be strong after another storage company, EquaLogic Inc. of Nashua, N.H., was acquired on Nov. 6 by Dell Inc. of Round Rock, Texas, for $1.4 billion. Another storage player, Compellent Technologies Inc. of Eden Prairie, Minn., went public last month and gained 77% in its first day of trading.
"That's a deal that I don't think anyone will care what the market is doing," said Tom Taulli, founder of DealProfiles.com, an online service that tracks the IPO and M&A markets, noting the strong performance for storage companies.
Investor appetite for Internet companies, and the broader resilience of tech companies to the credit crisis, also will be tested over the next two weeks. Internet Brands Inc., an El Segundo, Calif., company that operates a network of automotive, travel and home improvement Web sites, is expected to price this week. Austin, Texas-based CreditCards.com, an online information resource for consumers to search, compare and apply for credit cards, is slated to go out next week.
"We've seen a lot of infrastructure, software and storage companies, but we haven't seen too many of the pure-play Internet companies," Taulli said.
NimbleGen was acquired.