Analysts Foresee Surge in High-Tech Stock Offerings

By Pollack, Andrew | THE JOURNAL RECORD, March 15, 1991 | Go to article overview

Analysts Foresee Surge in High-Tech Stock Offerings


Pollack, Andrew, THE JOURNAL RECORD


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By Andrew Pollack SAN FRANCISCO - Inspired by the strength of the stock market and of computer stocks in particular, many small technology companies are expected to offer stock to the public for the first time in the next few months.

``There's going to be a big burst of them here if the market holds up,'' said Daniel Case, head of investment banking for Hambrecht & Quist, an investment banking firm here.

In the past, the offering of stock in a high-flying company like Apple Computer or Microsoft was a celebrated event, with the stock often soaring in its first day of trading. But some investors and investment bankers say that this time, while there is a great demand for new offerings, there is not a great supply of exciting companies.

``I don't see a lot of guys who look like Sun Microsystems, or even Borland for that matter,'' said Roger B. McNamee, president of the T. Rowe Price Science and Technology Fund, referring to Borland International, a fast-growing software company, and Sun, the leader in engineering work stations.

An initial public offering represents a coming of age for a technology company and plays an important role in the entrepreneurial process in Silicon Valley.

It provides a return for venture capitalists, who finance start-up companies, and for a company's employees, who often work back-breaking hours and accept a low salary in exchange for stock that could make them rich.

There were hundreds of offerings of technology stocks in the early 1980s, but they have been much more infrequent since the stock market crash of 1987. Rather than a steady stream, such offerings now come in bursts when market conditions are right. It's like ``the financial equivalent of deer season,'' McNamee said.

Now is one of those times. Already some established companies like AST Research and Conner Peripherals have raised money through offerings of secondary stock or convertible debt. Numerous biotechnology companies have also taken advantage of the opportunity to raise money.

Now investment bankers expect private companies to start going public. There is demand for stock of new companies because stkcks of established companies, like Apple Computer and Microsoft, have surged since their lows in October.

At a growth stock conference held in San Francisco last week by the investment banking firm Robertsn Stephens & Co., portfolio managers packed the presentations of private companies that might go public, like Soft Warehouse, a fast-growing chain of computer superstores. …

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