Calix, Maxlinear charge the IPO market
NEW YORK (AP) — Investors eager to put their money to work in the stock market sent shares of two technology companies and a bank soaring on their first day of trading Wednesday.
Chip maker MaxLinear Inc. and broadband equipment provider Calix Inc. are set to benefit as technology spending increases, and regional bank First Interstate BancSystem Inc. is profitable. All three were priced right, analysts said, and posted double-digit gains on their first day of trading, despite a down day for the overall market.
It was the IPO market's best day since the financial crisis began. Last fall, the market began to come back, but by December interest waned, leading many companies to cut prices or delay their initial public offerings. A volatile stock market kept many investors away, while others were turned off by companies with no profits and heavy debt.
"The underwriters are taking their best companies and putting them in the marketplace," said David Menlow, who tracks IPOs for IPOfinancial. "We're not dealing with overvalued companies or companies that have marginal fundamentals."
Calix, formerly known as Calix Networks Inc., helps businesses and homes connect to broadband Internet in North America, the Caribbean and Latin America. MaxLinear makes chips that enable broadband video for digital TVs, PCs, netbooks and phones. Both could have a big jump in revenue as the U.S. plans to spread high-speed Internet infrastructure throughout the country and as more consumers connect to the Internet, on a PC or on a phone.
Meanwhile, First Interstate, of Billings, Mont., has offices in Montana, Wyoming and South Dakota, all states with unemployment and foreclosure rates below than the national average.
First Interstate is the first U.S. bank to go public since July 2007, and could open the doors for other regional banks with few problem assets related to real estate.
MaxLinear's IPO raised $89.6 million, selling shares for $14 apiece, more than the $11 to $13 range the company and underwriters had expected. The stock soared $4.70, or 33.6 percent, to close at $18.70.
Calix raised $82 million, and its shares rallied $2.10, or 16.2 percent, to $15.10; First Interstate gained $1.20, or 8.3 percent, to $15.70, after raising $145 million.
Last week Financial Engines Inc., a fast-growing company founded by a Nobel laureate had the best first-day IPO performance since November.
Good returns are also expected from China Lodging Group Ltd., a Chinese hotel chain expected to start trading on Friday.
In 2007, there were nearly 300 IPOs, according to research and auditing firm PricewaterhouseCoopers. There were only 126 in all of 2008 and 2009. This year will likely be the strongest for IPOs since before the recession began, PricewaterhouseCoopers said in a recent report.
"The IPO window has opened again," said Francis Gaskins of IPOdesktop. The four recent successes may mean the deepest discounts on IPOs are finished for now as investors eye projected growth rather than a company's most recent results, he said.
But others urge caution. A burst of successful deals doesn't necessarily give an all-clear signal for companies that want to go public, Menlow said.
The IPO market may be recovering, but that doesn't mean it will again be able to fund hundreds of companies a year. A declining stock market could send companies and underwriters back into a holding zone. Too many deals at once could overwhelm investors and upend positive momentum, said Scott Sweet of IPOBoutique.
"We still have a lot of uncertainties in the marketplace," Menlow said. "This is a rebuilding process."