IPO SECrets Newsletter 3.28.01

[EDGAR Online News]

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

***INSIDE THIS ISSUE
IPO QUESTION OF THE WEEK: What Is a “Reload Provision”?
IPO COLUMN OF THE WEEK: IPO Market Returning to Normal?
IPO COMPANY PROFILE: Agere Systems (AGR): a Bargain at $6?
IPO MIDWEEK UPDATE: Go Ahead. No, After You. Please, You Go First.
VC COMPANY PROFILE: NuGenesis: Pharmaceutical, Scientific Data
Management 
COMPANIES MENTIONED IN THIS ISSUE
PEOPLE MENTIONED IN THIS ISSUE

----------ADVERTISEMENT---------------------
Free Annual Reports For Over 3,400 Companies
For EDGAR Online customers only. Download 
or get printed copies of Annual Reports FREE. 
Go to http://edgar-online.ar.wilink.com to order today.
--------------------------------------------

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

QUESTION: What is a “reload provision”?

ANSWER: A reload provision is a feature in an option plan (or option
agreement) that allows companies to issue new option grants to
option-holding employees in exchange for retiring their former grants.
The new exercise price is usually pegged to the current market price.

“The number of reload shares granted is equal to the number of shares
delivered to exercise the option plus, in some cases, any shares
withheld for tax withholding obligations,” says Bruce Brumberg,
editor-in-chief of MyStockOptions.com. “The option generally expires on
the same date that the original option would have.”

----------------------------------------
***IPO COLUMN OF THE WEEK***
----------------------------------------
IPO Market Returning to Normal?

IPOs have stopped going down.

After months of battering, new equity offerings have shown faint signs
of life in March. Six of the seven IPOs that began trading this month
finished their first day in the black. Rather than soaring tenfold, as
hot issues were doing a year earlier, they finished ahead modestly –
mostly in line with the traditional norm of leaving 10% or so on the
table for aftermarket investors.

“Only the cream of the crop are getting through the IPO window, and they
are performing more as they did historically, delivering reasonable
returns,” says Clint Morrison, head of equity research for Miller
Johnson Steichen Kinnard, an investment bank in Minneapolis.

The most successful launch was AFC Enterprises (AFCE), the No. 2
operator of fast-food chicken restaurants, such as Church’s and
Popeye’s. Priced at $17, it finished its first trading day, March 2, at
$20.38 – a gain of 19.9%. At press time the shares were trading around
$18.75, up 10.3% from the IPO price.
http://www.edgar-online.com/ipoexpress/company.asp?company=5222

The most highly touted deal of March, Loudcloud Inc. (LDCL), finished
its first day of trading, March 9, at $6.16 – some 16 cents, or 0.4%,
ahead of the IPO price. It subsequently slipped to $5.50, 8.3% below the
initial price. Loudcloud’s chairman is Marc Andreessen, formerly of
Netscape.
http://www.edgar-online.com/ipoexpress/company.asp?company=5036

Stelmar Shipping (SJH) found favor in the aftermarket, and has preserved
it since its March 8 debut. Priced at $12, the shares finished their
first day at $12.80 and were trading at press time at $13.20, a gain of
precisely 10.0%.
http://www.edgar-online.com/ipoexpress/company.asp?company=5280

The month’s sole loser was SureBeam Corp. (SURE), a maker of electronic
pasteurization equipment for the food industry. Launched March 16 at
$10, the shares closed their first day down 14.1% at $8.59. They have
since recovered, but only to $9.25.
http://www.edgar-online.com/ipoexpress/company.asp?company=4912

In its registration statement with the SEC, SureBeam reported a pro
forma loss of $330,000 for the six months ended June 30, 2000, on
revenue of $9.3 million. Losses, says Morrison, are not something IPO
investors will tolerate these days.

“What we’re hearing from our customers is, they’re not interested;
everything else is on sale, so they’ll buy the stuff they already own,”
he says. “To get them interested, it’s got to be very compelling, which
means there’s got to be immediate visibility in earnings and growth. It
doesn’t necessarily have to be a low-risk deal, but there’s got to be a
level of comfort with the story.”

--------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
--------------------------------------------

----------------------------------------
***COMPANY PROFILE***
----------------------------------------
Agere Systems (AGR) $6 Price Called Bargain

The scaled-down IPO of Lucent Technologies (LU) spin-off Agere Systems
was priced Tuesday at a rock-bottom $6 a share, leading at least one
major Wall Street firm to recommend buying the shares aggressively.

Agere, which begins trading today on the New York Stock Exchange with
the ticker AGR, is a world-leading maker of communications
semiconductors, but investment bankers struggled for months to close the
deal. It will fetch only $3.6 billion, far less than the $6.5 billion
Lucent originally sought.

Sanford C. Bernstein analysts Paul Sagawa and Matthew Nagle speculated
in a research report Friday that Lucent would “likely pull” the
offering, but wrote that if it didn’t, “We would be aggressive buyers.”

Debt-burdened Lucent is transferring $2.5 billion of debt to Agere in
the deal, and could retire more if a 90 million share Green Shoe is
exercised by the underwriters, which are led by Morgan Stanley Dean
Witter. 

Only hours before the pricing, IPO followers were skeptical the deal
would be done. “There’s a lot of doubt that that one will make to the
Street,” Clint Morrison, head of equity research for Miller Johnson
Steichen Kinnard in Minneapolis, said early Tuesday afternoon.

Agere’s IPO was filed in December, but nearly every passing week has
seen the market for technology stocks decline and, with it, interest in
this deal ebb. In February Agere set a price range of $15 to $20 for
370.3 million shares. Later that month it slashed the range to $12 to
$14 and boosted the number of shares to 500 million. Last week it
dropped the price to the current range, and increased the number of
shares to 600 million.
http://www.edgar-online.com/ipoexpress/company.asp?company=5197

The Bernstein analysts say a $12 price for the offering would still be a
discount to rivals such as JDS Uniphase (JDSU) and Infineon Technologies
(IFX). “We believe the reduced price range is the product of poor market
conditions, negative LU sentiment and the sense of desperation to get
the deal done,” they wrote in a March 23 research call.

If the deal got the green light, however, the Bernstein analysts urged
clients to snap it up. “In the ($6 to $7) price range, Agere would trade
at 2.1 times calendar year 2000 sales of $5.1 billion – a 36% and 75%
discount to comparables IFX and JDSU, respectively,” the wrote. “Already
a strong business with leading products and attractive margins, we
believe Agere will experience strong synergies as an independent
company. LU’s competitors will be more inclined to purchase components
from an independent Agere.”

Allentown, PA-based Agere manufacturers communications semiconductors,
including optoelectronic components and integrated circuits. It calls
them “the basic building blocks of electronic and photonic products and
systems for terrestrial and submarine, or undersea, communications
networks and for communications equipment.”

The 16,500-employee company had revenue in the fiscal year ended Sept.
30 of $4.71 billion, and a loss of $76 million.

In addition to Morgan Stanley, the underwriting syndicate includes Bear
Stearns, JP Morgan Securities, Salomon Smith Barney, Deutsche Banc Alex
Brown, ABN AMRO Rothschild, SG Cowen Securities and Blaylock & Partners.

Agere will have 1.64 billion shares outstanding.

---------------------------------------
*** IPO MIDWEEK UPDATE FROM IPO EXPRESS***
----------------------------------------

IPOs on Deck 

Smith & Wollensky Restaurant Group Inc. (SWRG)
http://www.edgar-online.com/ipoexpress/company.asp?company=5349

EDGAR INSIGHT: Smith & Wollensky Restaurant Group Inc. of New York, NY,
filed March 23 for an IPO. CE Unterberg Towbin is the lead underwriter.
The proposed offering is expected to raise $57.5 million. The company
will have 8.6 million post-offering shares outstanding. The company is a
developer and operator of high-end, high-volume steak restaurants in the
United States. The 1,812-employee company had 2000 revenue of $81.5
million and a loss of $6.4 million. 

Undone Deals 

Conexant Spinco Inc. (-TBA-)
http://www.edgar-online.com/ipoexpress/company.asp?company=5147

EDGAR INSIGHT: Conexant Spinco Inc. of Newport Beach, CA, filed March 26
to withdraw its IPO. CS First Boston Corp. was the lead underwriter. The
proposed offering was expected to raise $100 million. The spinoff of
Conextant Systems Inc. (CNXT) develops semiconductor systems for
broadband communications. The 1,500-employee company had revenue of
$579.2 million for the fiscal year ended Sept. 30, and a loss of $232.8
million. 

Phase2Media Inc. (PTWO)
http://www.edgar-online.com/ipoexpress/company.asp?company=4681

EDGAR INSIGHT: Phase2Media Inc. of New York, NY, filed March 26 to
withdraw its IPO. Robertson Stephens Inc. was the lead underwriter. The
proposed offering was expected to raise $57.5 million. The company is a
leading Internet advertising sales and marketing organization that sells
advertising inventory to branded Web publishers. The two year-old
company had revenue of $9.3 million for the 12 months ended Mar. 31,
2000 and a net loss of $9.7 million. 

QK Healthcare Inc. (KRX)
http://www.edgar-online.com/ipoexpress/company.asp?company=3910

EDGAR INSIGHT: QK Healthcare Inc. of Ronkonkoma, NY, filed March 26 to
withdraw its IPO. Lehman Brothers Inc. was the lead underwriter. The
proposed offering was expected to raise $176 million. The company is a
national wholesale distributor of selected healthcare products to
retailers, wholesale distributors, and pharmacy benefit managers. 

----------------------------------------
**VENTURE CAPITAL COMPANY PROFILE**
 ----------------------------------------
by Udayan Gupta

NuGenesis: Pharmaceutical and scientific data management

Last year, pharmaceutical companies spent $26.4 billion dollars on R&D,
triple the amount spent a decade ago, says the industry trade group
Pharmaceutical Research and Manufacturers of America (PhRMA).  A firm
that can help drugmakers use their R&D dollars more efficiently should
expect to do well.

Five year-old NuGenesis Technologies Corporation (www.nugenesis.com) –-
formerly known as Mantra Software -- designs data management software
for science-based organizations. Applicable from research and discovery
through manufacturing, it is for use by anyone who views data generated
in a lab, or a large volume of data produced by disparate sources. “For
a pharma, that could be as much as 30% to 40% of their employee base,”
says Mike McGuinness, president and CEO. Based in Westborough, MA,
NuGenesis provides product installation, training for users and
administrators, and follow-on support. The software is deployable on a
small scale – five to 20 users – or on an enterprise-wide scale where
thousands of individuals contribute to a database. The software can be
used to share data sets, graphs and reports.

Though most of the firm’s customers are in pharmaceuticals and biotech,
NuGenesis is branching out into medical devices, chemicals and food. “We
target our software to science-based industries, but the software is
applicable to many markets,” says McGuinness. NuGenesis has revenues,
but no profits. Current clients include Abbott, Eli Lilly, Merk, Pfizer,
Genentech, Biogen, DuPont, and Philip Morris, among others. “We feel the
total market for our products is $5 billion worldwide, that includes all
science based industries,” says McGuinness.

In May 2000, the firm closed on a $25 million round of equity financing.
Investors include TA Associates, BancBoston Ventures, Brentwood Venture
Capital, Highland Capital, and St. Paul Venture Capital. NuGenesis is
not planning any additional funding rounds at this time. “We’re very
well funded, we have plenty of cash,” says McGuinness. 

In February, the 180-employee firm announced it would partner with
Oracle to allow users of NuGenesis software to share scientific data
online. Competition comes from software giants International Business
Machines Corporation (IBM), Microsoft Corporation (MSFT) and Siebel
Systems, Inc. (SEBL). 

*** Siebel Systems (SEBL) revenue grew 120% to nearly $1.8 billion in
2000, according to its 10-K405 filed Monday. Earnings per share doubled
to $0.24 from $0.12 in 1999. 
http://www.edgar-online.com/secrets.asp?d=1006835-0001006835-01-500005

*** Perkin Elmer’s (PKI) 10-K405 filed on Monday mentioned NuGenesis in
its new products summary on chromatography data management software:
“The seamless flow of TotalChrom data into the NuGenesis(R) SDMS
database provides laboratories with an integrated method of data capture
and management,” the Perkin Elmer filing said.
http://www.edgar-online.com/auth/verity/display.asp?query=NuGenesis&filename=0000950135%2D01%2D000920&cik=31791

In addition to its Westborough, MA headquarters, NuGenesis has offices
in The Netherlands, the United Kingdom, France, Germany and Italy. 

Venture Capital Investors:
TA Associates
BancBoston Ventures
Brentwood Venture Capital
Highland Capital
St. Paul Venture Capital

Executive Team:
Michael E. McGuinness, president and CEO
Ajit Nagral, Founder, EVP
Daryl Grabus, CFO


“Done Deals,” Udayan’s new book about the history of the venture capital
industry, is now on sale:
http://www.amazon.com/exec/obidos/ASIN/0875849385/edgaronline


--------ADVERTISEMENT-----------------------
EDGAR Online Compensation Express summarizes 
critical compensation data from SEC filings to 
create a complete profile of executive pay, 
including salary, stock options, bonus, and 
other income, all in one place. Check it out 
now at http://www.edgar-online.com/compexpress/
--------------------------------------------

----------------------------------------
**COMPANIES MENTIONED IN THIS ISSUE***
----------------------------------------
 
Abbott
ABN AMRO Rothschild
AFC Enterprises
Agere Systems
BancBoston Ventures
Bear Stearns
Biogen
Blaylock & Partners
Brentwood Venture Capital
CE Unterberg Towbin
Church’s
Conexant Spinco, Inc
Conextant Systems, Inc
CS First Boston Corp
Deutsche Banc Alex Brown
DuPont
Eli Lilly
Genentech
Highland Capital
Infineon Technologies
International Business Machines Corporation (IBM)
JDS Uniphase
JP Morgan Securities
Lehman Brothers Inc
Loudcloud Inc
Merk
Microsoft Corporation
Miller Johnson Steichen Kinnard
Morgan Stanley Dean Witter
NuGenesis Technologies Corporation (formerly Mantra Software)
Perkin Elmer
Pfizer
Pharmaceutical Research and Manufacturers of America (PhRMA)
Phase2Media Inc
Philip Morris
Popeye’s Restaurants
QK Healthcare Inc
Robertson Stephens Inc
Salomon Smith Barney
Sanford C. Bernstein
SG Cowen Securities
Siebel Systems, Inc
Smith & Wollensky Restaurant Group Inc
St. Paul Venture Capital
Stelmar Shipping
SureBeam Corp
TA Associates
 
 
----------------------------------------
**PEOPLE MENTIONED IN THIS ISSUE***
----------------------------------------
Andreessen, Marc
Grabus, Daryl
McGuinness, Michael E.
Morrison, Clint
Nagle, Matthew
Nagral, Ajit
Sagawa, Paul

----------------------------------------
ABOUT THE EDITOR
---------------------------------------
IPO SECrets, published every Wednesday, 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
hberkowitz at edgar-online.com
----------------------------------------
Copyright 2001, EDGAR Online, Inc.
http://www.edgar-online.com
ISSN# 1533-9068
----------------------------------------
DISCLAIMER: The EDGAR Online report
contains observations of its editor
Timothy Middleton, a consultant of EDGAR
Online, as well as observations of Udayan Gupta, Bruce
Brumberg and other contributors. All observations are for informational
purposes only.  These statements and expressions
are the sole opinions of Mr. Middleton and other contributors 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.

EDGAR® is a federally registered trademark of the U.S. Securities and
Exchange Commission (SEC). EDGAR Online is not affiliated with or
approved by the U.S. Securities and Exchange Commission. EDGAR Online is
a product of EDGAR Online, Inc.


****************************************
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.
-------------- next part --------------
A non-text attachment was scrubbed...
Name: not available
Type: text/html
Size: 20046 bytes
Desc: not available
URL: <https://lists.cpunks.org/pipermail/cypherpunks-legacy/attachments/20010328/62e6b4f0/attachment.txt>