CDR: IPO SECrets Newsletter 10.18.00

[EDGAR Online News]

EDGAR Online's IPO SECrets Newsletter
Editor: Timothy Middleton, EDGAR Online Analyst
mailto:editor at edgar-online.com

***INSIDE THIS ISSUE
NEW & NOTEWORTHY
IPO QUESTION OF THE WEEK: What is a warrant?
IPO COLUMN OF THE WEEK: Leaving Money on the Table
IPO COMPANY PROFILE: Watson Wyatt & Co. Holdings (WW)
IPO MIDWEEK UPDATE
COMPANIES MENTIONED IN THIS ISSUE
PEOPLE MENTIONED IN THIS ISSUE

/---------------------ADVERTISEMENT-------------------------------\
DON'T MISS OUT ON YOUR CHANCE TO WIN AN IBM THINKPAD 600X
Register now for any of ITworld.com's weekly IT email
newsletters, and enter our sweepstakes for your chance to
win a powerful new IBM ThinkPad 600x. CLICK HERE!
http://www.itworld.com/sweeps/sweepsim.html?impsite=9235
\-----------------------------------------------------------------/

----------------------------------------
***NEW AND NOTEWORTHY***
----------------------------------------

EDGAR Online Launches "Fair Disclosure Express" Site

In response to the SEC's Oct. 23rd adoption of the new Fair
Disclosure regulation, we have launched "FD Express"
(www.FD-express.com), to keep you abreast of the sweeping changes
and the influx of new filings expected as a result of the new
FD rule. In addition to real-time filings of Forms 8-K and 425,
the new Web site provides an analysis of the new Fair Disclosure
rule by the law firm Morrison & Foerster LLP, a selection of
comment letters submitted to the SEC on the rule and glossary of
FD-related terms. "Savvy market players and investors will be
looking at the surge of new disclosure filings made as a result
of the new Fair Disclosure rule. EDGAR Online is making all these
filings available in one place --- FD Express," said Jay Sears,
senior vice president for EDGAR Online, Inc. The volume of 8-K
filings, disclosures of unscheduled material events, is expected   
to double over the next 12 months due to the new Fair Disclosure
rule. "Form 8-Ks are the anti-press release, now more than ever."
said Sears.

"Question of the Week" Archive Now Searchable

In light of numerous subscriber requests to search back issues of
SECrets, our "Questions of the Week" are now searchable
alphabetically and chronologically. Later this year, the full
newsletter archive will be searchable.  Click on the "SECrets
Newsletter" button under "News" on the EDGAR Online home page
http://www.edgar-online.com/secrets.  The default view is alphabetical
search. To find questions beginning with numbers - i.e. "13-D", click
on the pound sign "#".

-- HB

----------------------------------------
***IPO QUESTION OF THE WEEK***
----------------------------------------

QUESTION: What is a warrant?

ANSWER:  A warrant is a right to purchase stock in the future at
a pre-set (premium) price. Warrants are often issued with preferred
stock, or a bond, and function as a deal "sweetener"- i.e. the
underwriters of an IPO that priced at $12, could receive warrants
to purchase additional shares at $15 any time over the next five
years.

Unlike call options which are typically "in play" for less than a
year, warrants tend to be longer term in scope - one to five years
and sometimes into perpetuity. Warrants are typically offered at a
premium to the offering price and may account for 10% of the
offering. Warrants are sometimes transferable and often trade on
the major exchanges.

----------------------------------------
***IPO COLUMN OF THE WEEK***
----------------------------------------

Leaving Money on the Table

With the IPO market cooling off, less money is being left on the
table.

This expression refers to the gap between the price underwriters
assign to a stock, and the price the market accords it when it's
released for trading. Traditionally, Wall Street prices an IPO at
10% to 15% below the price the shares are expected to fetch in the
public market. Issuers get a little less, but they harvest goodwill
because the deal is reckoned a success. Underwriters reap a bonanza:
Quick profits for favored customers, a reputation as a money maker,
and better prospects for future deals.

This summer, the amount left on the table was staggering -- in some
instances netting the underwriters' customers more than the issuers
got themselves. In July, for example, Corvis Corp. (CORV) was priced
at $36 but began trading at $74. The pricing set the company's value
at $1.14 billion. The market said it was worth $2.34 billion -- a
difference of more than 100%.

"Those deals were done in an environment of almost a casino
mentality," says Eric Miller, a portfolio manager with
Heartland Advisors, a money management firm in Milwaukee, Wis.
"The whole tech market was vastly overvalued, and IPOs just sort
of fed that mentality."

That mentality's appetite was voracious: The Corvis deal is by no
means the most extreme example of riches piling up on a groaning
board. In August, McDATA Corp. (MCDT) was priced at $28 but began
trading at $72 - an instant bonus to IPO investors of 157%. Last
month, CoSine Communications (COSN) went out at $23 and on the
first trade soared to $70, an instant gain of more than 200%.

Then the Nasdaq began to melt again, as it did in the spring. The
total value of IPOs filed in the third quarter of 2000 shrank to
$18.3 billion from $32.8 billion in the second quarter, and was
about even with the third quarter of 1999.

This month, IPO investors have found considerably smaller bounties
being placed on their investments. When Synplicity Inc., a maker
of design software for integrated circuits, went public last week
at $8, it opened at $8.47, a premium of only 5.9%. Regus PLC (REGSV),
a British office-services firm, was priced Monday at $18.79 and
opened Tuesday at $20, up 6.4%. Endwave Corp. (ENWV), a maker of
components for broadband wireless communications, was priced Monday
at $14 and opened the next day at precisely that amount.

"People are beginning to recognize that in this type of market
you're not going to get the big pop, and you might actually have
to own these things for more than 10 or 15 minutes," says Miller.
"That's bringing a little more realism to this type of IPO."

Users of EDGAR-Online can track pricing and other trends at our
IPO Express, http://www.edgar-online.com/ipoexpressn/
by clicking on IPO Express on the left-hand menu bar.

/----------ADVERTISEMENT----------------------------------------\
Purchase Business/Credit Reports from Dun & Bradstreet on
over 11 million U.S. businesses. Click on the "Resources"
link when you look up SEC filings for any public company,
or search by company name and state at
http://www.edgar.telebase.com
\----------------------------------------------------------------/

----------------------------------------
***IPO COMPANY PROFILE***
----------------------------------------

Watson Wyatt & Co. Holdings (WW)

With unemployment at a 30-year low, human resources consulting firms
have emerged from the back office into the public eye.

Watson Wyatt & Co. Holdings (WW) went public last week at $12.50 a
share in a deal lead by Deutsche Banc Alex. Brown. This week,
Watson Wyatt shares surged 36% to $17 per share.
http://www.edgar-online.com/ipoexpressn/priced.asp

"We've seen e-consulting firms losing so much of their value, it's
quite a surprise to see this decades-old firm coming in and doing
well in its IPO," says Delicia Yard, editor of Consultants News,
an industry newsletter.

Boston-based Viant Corp. (VIAN), for example, is trading around
one-tenth of its 52-week high. Scient Corp. (SCNT), another Internet
consulting firm, is down 85% from its high.

"Watson Wyatt is the antithesis of these kinds of firms," Ms. Yard
says. "It doesn't have a sexy business model -- it's not helping
dot-com firms with their strategies."

Rather, the 54-year-old company, the nation's fifth -largest HR
consulting firm, advises Fortune 500 companies such as
General Electric and General Motors on recruitment, personnel
policies, salaries and benefits, pension regulations, global
expansion and related matters.

The Bethesda, MD-based firm's revenue in the fiscal year ended
June 30 was $624.6 million, and net income was $18.5 million.

The company and its affiliates have 5,800 employees in 85 offices
worldwide, according to its most recent annual report.
http://www.edgar-online.com/secrets.asp?d=A-892968-0000912057-00-042928

Watson Wyatt is a leader in an industry that is growing in overlap
as well as size. Its competitors include other HR giants like
William M. Mercer and Towers Perrin, accounting firms like
Pricewaterhouse Coopers, benefits consultants like Buck Consultants
and information technology firms like Andersen Consulting.

Historically employee-owned, like many consulting firms are,
Watson Wyatt sold 5.6 million shares -- half on its own behalf and
half by selling shareholders. About 83% of the company's outstanding
stock remains in the hands of insiders, most of them employees.

---------------------------------------
*** IPO MIDWEEK UPDATE FROM IPO EXPRESS***
----------------------------------------
Undone Deals: Friday the 13th Takes Its Toll

AMComp Inc. (-TBA-) of North Palm Beach, FL
http://www.edgar-online.com/ipoexpressn/company.asp?company=2961

EDGAR INSIGHT: AMComp Inc. filed Oct. 13 to withdraw its IPO.
Donaldson Lufkin & Jenrette Inc. was the lead underwriter.  The
proposed offering was expected to raise $50 million.  The company
is Florida's fourth largest provider of workers' compensation
insurance.  The 175-employee company reported revenue of $108.6
million in 1997, and net income of $5.4 million, in an S-1 originally
filed Nov. 12, 1998.

Commerx Inc. (CMRX) of Chicago, IL
http://www.edgar-online.com/ipoexpressn/company.asp?company=4162

EDGAR INSIGHT: Commerx Inc. filed Oct. 13 to withdraw its IPO.
Goldman Sachs & Co. was the lead underwriter.  The proposed offering
was expected to raise $100 million.  The company creates 
business-to-business electronic marketplaces for customers and
sellers in the industrial processing industry.  In the nine months
ended Sept. 30, the 100-employee company had revenue of $800,000,
and a loss of $8.1 million.

Redone Deals

MCE Companies Inc. (MCEI) of Ann Arbor, MI
http://www.edgar-online.com/ipoexpressn/company.asp?company=4868

EDGAR INSIGHT: MCE Companies Inc. filed Oct. 13 to decrease its
price to $11-$13 per share from $13-$15 per share, and to decrease
its offering to 5.5 million shares from 8.7 million.  Deutsche Banc
Alex. Brown Inc. is the lead underwriter.  The proposed offering is
expected to raise $71.5 million.  MCE sells products used in wireless
broadband access, fiber optic networking, and radar and satellite
applications.  The company will have 26.6 million shares outstanding.
The 643-employee company had revenue of $64.6 million in 1999, and a
loss of $1.9 million.

IPOs on Deck

Peets Coffee & Tea Inc. (PEET) of Emeryville, CA
http://www.edgar-online.com/ipoexpressn/company.asp?company=5092

EDGAR INSIGHT: Peets Coffee & Tea Inc. filed Oct. 13 for an IPO.
WR Hambrecht & Co. is the lead underwriter.  The proposed offering
of 3.3 million shares is expected to raise $46.2 million.  The
company roasts and markets fresh whole bean coffee.  The company will
have 8 million post-offering shares outstanding.  The 1,502-employee
company had revenue of $67.8 million in 1999, with a loss of $0.1
million.

/---------------------ADVERTISEMENT--------------------------\
EDGAR Online Corporate creates customized corporate applications
that can be integrated seamlessly into your company's Intranet
or Extranet. We meet the needs of our clients who require the
business, financial, and competitive information derived from
SEC filings delivered throughout their organization, tailored
to their specifications.  Find out more at
http://www.edgar-online.com/corporate.asp
\--------------------------------------------------------------/

----------------------------------------
**COMPANIES MENTIONED IN THIS ISSUE***
----------------------------------------
AMComp Inc
Andersen Consulting
Buck Consultants
Commerx Inc
Consultants News
Corvis Corp
CoSine Communications
Deutsche Banc Alex. Brown
Donaldson Lufkin & Jenrette Inc
Endwave Corp
General Electric
General Motors
Goldman Sachs & Co
Heartland Advisors,
McDATA Corp
MCE Companies Inc
Peets Coffee & Tea Inc
Pricewaterhouse Coopers
Regus PLC
Synplicity Inc
Towers Perrin
Viant Corp
Watson Wyatt & Co. Holdings
William M. Mercer
WR Hambrecht & Co

----------------------------------------
**PEOPLE MENTIONED IN THIS ISSUE***
----------------------------------------
Miller, Eric
Yard, Delicia

----------------------------------------
ABOUT THE EDITOR
----------------------------------------
IPO SECrets is edited by EDGAR Online Analyst Timothy Middleton.
Timothy has covered business and financial topics for The Wall
Street Journal, The New York Times, Dow Jones News Service and
Crain's New York Business.  Twice nominated for the Pulitzer Prize
in investigative journalism, his weekly business reports can be
heard on WCBS Radio and Microsoft MoneyCentral Radio.

For press, syndication, and advertising inquiries, contact
Group Publisher Hank Berkowitz at
mailto:hberkowitz at edgar-online.com
----------------------------------------
Copyright 2000, EDGAR Online, Inc.
http://www.edgar-online.com
----------------------------------------
DISCLAIMER: EDGAR Online's IPO SECrets contains observations of its
editor Timothy Middleton, a consultant of EDGAR Online and is for
informational purposes only.  These statements and expressions are
the sole opinions of Mr. Middleton and EDGAR Online does not endorse
nor necessarily agree on such statements and expressions.  Factual
statements in this report are made as of the date stated and are
subject to change without notice. Nothing contained herein shall be
deemed to be recommendations to buy, hold or sell securities nor
shall it purport to be a complete analysis of the companies mentioned.
While the information contained in this Report and the opinions
contained herein are based on sources believed to be reliable,
neither Mr. Middleton nor EDGAR Online have  independently verified
the facts, assumptions and/or estimates that may be contained in
this Report. Accordingly, no representation or warranty, expressed
or implied, is made as to, and no reliance should be placed on, the
fairness, accuracy, completeness or correctness of the information
and opinions contained in this Report.
****************************************
UNSUBSCRIBE INSTRUCTIONS
****************************************
You are receiving this newsletter because you are a
registered user of EDGAR Online. To unsubscribe from
the SECrets Newsletter, go to
http://www.edgar-online.com/auth/updateinfo.asp
and deselect the free newsletter option.

If you need your user name or password, go to
http://www.edgar-online.com/username.asp
For help contact: mailto:support at edgar-online.com
****************************************

Email Distribution Services for EDGAR Online
provided by DoubleClick DARTmail.




*#* cypherpunks at toad.com