Saturday, June 16, 2001

Kraft brought back good ol' days of IPOs




By Lisa Singhania
The Associated Press

        NEW YORK — The anticipation surrounding the initial public offering of Kraft Foods this week — the second biggest IPO ever at $8.7 billion — brought back memories of the euphoria once associated with new stocks.

        But don't expect to see a rush of similar debuts.

        As Kraft stock's subsequent lukewarm performance illustrated, the market's weak condition has made such launches hard. This year, there have been about 40 IPOs, compared with 216 at the same point in 2000, according to IPO.com. The type of IPOs coming to market also has changed.

        About 200 of the 216 IPOs priced from Jan. 1 to June 15, 2000, were offered on the Nasdaq Stock Market, according to IPO.com. More than half were Internet- or technology-related and not all survived. Remember Pets.com?

        This year, the offerings split nearly evenly between the Nasdaq and New York Stock Exchange. And energy-related deals, not technology or the Internet, are the biggest sector within IPOs.

        The characteristics of IPOs have changed to reflect the sluggish economy. Unlike many of the dot-coms and other businesses that debuted in 1999 and the first half of 2000, companies going public today are more likely to have track records and already be profitable.

        One example: the Kraft Foods' IPO, which raised $8.7 billion through 280 million shares Wednesday. Spun off by Philip Morris, Kraft already had an established business and one of the best-known brands in America.

        The stock has struggled, though. It closed at $30.60 Friday, below the $31-per-share level the stock was originally priced at, but analysts weren't alarmed.

        “It's down from $31 but the market's been down, too,” said John Forelli, portfolio manager for the John Hancock Value Funds.

       



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- Kraft brought back good ol' days of IPOs
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