The days of the gilded IPO are long gone, no question. But even after the fall, a number of Valley companies are bravely going public. Among technology companies, those based in the Valley that have gone public in the last six months have treaded through some rough waters. Chatsworth-based Optical Communications Products Inc., a fiber-optics firm, has been one of the lucky ones. The company went public Nov. 3, selling 10.5 million shares at $11 each. The company’s stock jumped to $17.88 a share on the first day, but as of late November, it had fallen back to around $12, still slightly above its initial offering price. “They did fairly well their first day out,” said Dan McCarthy, market analyst with IPO.com. “For recent times, they did very good.” McCarthy said that Optical was initially successful because it is part of the fiber-optics sector, which has had several successful IPOs over the past month. Optical is still in its “quiet period,” as required by the SEC. The company makes fiber-optic subsystems and modules for customers that include heavyweights such as 3Com Corp., Alcatel, CIENA Corp., Cisco Systems, Lucent Technologies, and Nortel Networks. Optical reported net income of $7 million in 1999, a 92 percent increase over the previous year. Revenues were $36 million. Across town from Optical, fiber-optics firm Luminent, a spinoff of MRV Communications, has been seeing its stock sink. The company went public at $12 a share on Nov. 11, but as of late November it had dropped to around $8. Analysts had expected Luminent’s stock to perform better out of the chute. “It kind of took me by surprise that they didn’t do better the first day, since they are an optical company,” McCarthy said. Hard times The fiber-optics industry in general has been having a rough time lately, after several months of success, he said. Optical was the last successful launch in the sector. And industry leader JDS Uniphase has seen its stock buffeted. “The party seems to be over,” McCarthy said. Telecommunications companies are also having a tough go. Moorpark-based Accelerated Networks launched in June at $15 a share. The stock had tripled in value by its second day on the market, and by late July, it had hit a peak of $67.50 a share. But as of late November, it had plummeted to around $7. Accelerated, which makes telecommunications equipment enabling companies to get Internet and voice service over a single phone line, is suffering like much of the telecom industry. Analysts expect spending on voice-over-broadband products to cool in the coming year. For the third quarter ended Sept. 30, the company reported a net loss of $6.7 million (14 cents a share) compared to a net loss of $5 million (13 cents a share) in the like period a year ago. Revenues were $11.9 million vs. $2.9 million. Accelerated CEO Suresh Nihalani told Reuters that the company hasn’t felt a slowdown in its business because it makes such specialized equipment. The company isn’t expected to be operating in the black until 2002. Victor Hwang, chief operating officer of the Los Angeles Regional Technology Association, said Valley companies are running into the same problems as their counterparts nationwide. “These are still tough times for (tech companies to obtain) capital,” said Hwang. “There’s still a lot of trepidation out there.” The technology companies going public now are in the wireless and optical industries, Hwang said. “What you’re not seeing are any Internet companies going public anymore,” Hwang said. “They’re all pure technology players.” The IPO market in general has changed. Fewer companies are going public and those that are differ from those going public prior to this spring’s “tech wreck” market selloff. Analysts don’t expect more than several companies a week to go public through the rest of the year. “There’s not a whole lot,” McCarthy said. “The bad conditions in the market overall have really frightened underwriters.” That means, any speculative business or business not making money, is out. Right now, foreign companies such as Austria Telecom are hot on the IPO market. Pharmaceutical and biotechnology firms are also popular, as are power, oil and gas companies that stand to benefit from a rise in energy prices, McCarthy said.
