Transcript Excerpt: CNBC IPO Market Story

May 17, 2001

TED DAVID, co-anchor: With the stock market apparently kicking back into high gear, can the IPO market break out of its dry spell? There was one launch today, two more debuts expected tomorrow and a resurgent pipeline. Can all these whet investors' appetites for more? Mike Huckman, speaking of whetting appetites, joins us live from Manhattan with tonight's Big Story. Where are you?

MIKE HUCKMAN reporting:

I'm in Midtown, Ted. "And unlike Krispy Kreme, which passed out 40,000 doughnuts outside the NYSE this morning, I think it's a pretty safe bet that Smith & Wollensky, across the street, which is a small national restaurant chain, will not be handing out its trademark $ 33 steaks when it debuts on the Nasdaq next week, although they did give us this raw one. Even with the IPO that came to market today, though, a lot of analysts are already asking, 'Where's the beef?'


HUCKMAN: The shares of the New Jersey switchmaker were priced at 15 bucks, and they quickly popped above 20. George Nichols at Morningstar thinks they were expensive to begin with.

GEORGE NICHOLS (Morningstar): Frankly, I'm quite surprised that Tellium had such a run-up. After all, we're talking about a company that lost $ 50 million last quarter and has only three customers.

HUCKMAN: So only time will tell if Tellium can hold on to the gains.

DAN PRIMACH (IPO Reporter): Bankers are going to watch this closely to decide whether or not they can push the companies they've got in the pipeline out in the future. If Tellium tanks, then I think all bets are off.

HUCKMAN: Even if the stock does do well, analysts and market watchers do not expect the IPO floodgates to open.

PRIMACH: I think the bankers are going to be kind of cautious on this. They're not going to go and completely undo their faucets and let everything go out 'cause that's a huge risk.

NICHOLS: I don't think we're going to return to the heyday of the market from a couple of years ago. I think the market's going to be very selective about which offerings it's going to buy.

HUCKMAN: Among the choices: energy companies, like the Global Power Equipment group, which are lining up to go public.

NICHOLS: Simply put, the energy sector is the hottest area in IPOs.

PRIMACH: There's a bunch of energy companies which have filed in the past couple weeks, all of whom are losing money, but all of whom the bankers are pretty confident that they're going to make decent hits on the IPO market.

HUCKMAN: That's why some analysts advise investors to stick with big brand names, like Kraft, Prudential, Instinet and Nasdaq, all of which are about to have IPOs.