News Column

Biz Break: IPO activity unfazed by market volatility

July 10, 2014

By Jeremy C. Owens, San Jose Mercury News

July 10--Today: Wall Street's up-and-down second quarter didn't freeze the markets for initial public offerings, a report from PwC shows. Also: Intel, Hewlett-Packard gain after PC report.

The Lead: Late surge made second quarter a good one for IPOs

GoPro helped make the second quarter the busiest period for initial public offerings in more than six years despite IPO delays for Box and other Silicon Valley companies in the face of market volatility, PwC reported Thursday.

The research and consulting firm counted 89 companies that sold their first batch of shares in the second quarter for a total of $21.5 billion, the best quarter for IPOs since the final three months of 2007. A blitz at the end helped make up for delays suffered as tech stocks were mangled by investors at the beginning of the quarter; 25 companies rushed to Wall Street in the final three weeks of the period, PwC reported.

"Domestic capital markets activity remained very healthy during the second quarter, with deal flow rebounding following a brief pullback in the spring," PwC'sHenri Leveque said in Thursday's news release.

Silicon Valley companies followed that trend while bringing in a total of slightly more than $1.1 billion, according to Mercury News calculations. Four debuts in April received lukewarm receptions that helped freeze the market, with Menlo Park biotech Corium and San Ramon software company Five9 pricing below their expected range, Adamas Pharmaceuticals pricing at the bottom of its range, and Sysorex falling after charging $6 a share.

The quarter turned around in May, however, with a sparkling debut from San Francisco cloud software company ZenDesk, and went on to produce successful June debuts from Santa Clara'sArista Networks, Fremont biotech Ardelyx and Mountain View's MobileIron before the largest Silicon Valley IPO of the year so far, GoPro's$427.2 million offering in the final week of the quarter. MobileIron and Arista were two of the companies that reportedly delayed their offerings after plans to sell shares earlier in the quarter.

All of Silicon Valley's market entrants in the quarter were biotech/health care or technology companies, and those sectors dominated overall, accounting for 46 of the 89 debuts in the quarter, and GoPro helped push tech to the top in proceeds. GoPro's success on the open market -- the $24 IPO price has more than doubled at times on Wall Street, and shares closed Thursday at $41.94 -- helped returns as well: IPO stocks gained 9.2 percent on their first day of trading and 20.3 percent through the end of the quarter, PwC reported.

The rest of the year is expected to be strong as well, with a pipeline that includes the delayed offering of Los Altos cloud-storage company Box as well as Chinese e-commerce company Alibaba, which could break Facebook's record for biggest tech IPO of all time and boost the fortunes of investor Yahoo.

"If the current strength of the equity markets continues and the global economic recovery stays on pace, the total number of 2014 IPOs and proceeds raised may surpass 2013 levels," Leveque said.

In the first half of 2014, 160 IPOs on the U.S. exchanges brought in $32.4 billion; in all of 2013, PwC tracked 237 IPOs that raised $56.8 billion.

SV150 market report: PC report boosts Silicon Valley companies

Wall Street suffered losses Thursday, but Silicon Valley tech stocks' decline was smaller as companies invested in personal computers received a boost from strong second-quarter shipments.

After research firms revealed that PC shipments in the second quarter improved, chipmakers and top U.S. PC manufacturer Hewlett-Packard enjoyed gains Thursday. Intel, the largest chipmaker in the world, presaged the gains by increasing its projections earlier in the quarter, and gained 1.2 percent to $31.26 Thursday after Gartner and IDC backed up the gains. Rival Advanced Micro Devices added 1.4 percent while also releasing a study that shows laptops are still dominant among college students despite the rise of tablets. HP moved 0.6 percent higher to $33.85, and Microsoft added 2 cents to close at $41.69 after new CEO Sataya Nadella laid out his plans for the company in a long memo.

Netflix racked up 31 Emmy nominations as the television awards announced honorees Thursday morning, but the Los Gatos video-on-demand company dropped 1 percent to $438.55. Google dropped 0.6 percent to $580.04 while announcing a $100 million venture fund for European investments and facing a Google Docs challenge from Amazon; Amazon declined 0.6 percent to $327.92 amid an FTC inquiry into in-app purchases. Tesla Motors fell 1.6 percent to $219.46 as CEO Elon Musk promised to donate $1 million to a museum for the company's namesake while celebrating a Supercharger milestone.

Zynga enjoyed the biggest percentage gain in the SV150 on Thursday, adding 3.7 percent to $3.12 after reshaping its board, and Facebook dropped 0.2 percent to $64.87 as a senator called for an inquiry into the Menlo Park company's study on its users. Barracuda Networks was the first SV150 to release quarterly earnings, reporting net income of $200,000 on sales of $66.2 million a day after using some of its IPO cash to become the title sponsor of the Reno-Tahoe Open; shares gained in late trading after closing with a 2 percent gain at $34.

Up: Zynga, AMD, Pandora, Intel, Electronic Arts, Symantec, VMware, HP

Down: GoPro, LinkedIn, Applied Materials, Workday, Tesla, SolarCity, eBay, Netflix

The SV150 index of Silicon Valley's largest tech companies: Down 3.12, or 0.21 percent, to 1,516.23

The tech-heavy Nasdaq composite index: Down 22.83, or 0.52 percent, to 4,396.2

The blue chip Dow Jones industrial average: Down 70.54, or 0.42 percent, to 16,915.07

And the widely watched Standard & Poor's 500 index: Down 8.15, or 0.41 percent, to 1,964.68

Sign up for the 60-Second Business Break newsletter at www.siliconvalley.com. Contact Jeremy C. Owens at 408-920-5876; follow him at Twitter.com/jowens510.

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(c)2014 the San Jose Mercury News (San Jose, Calif.)

Visit the San Jose Mercury News (San Jose, Calif.) at www.mercurynews.com

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Source: San Jose Mercury News (CA)


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