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Broadcom's Hot IPO May Have Blazed Trail for Others

April 20, 1998|HOLLY ROSENKRANTZ | REUTERS

NEW YORK — Following chip maker Broadcom Corp.'s red-hot debut Friday as a public company, with its stock trading at three times its IPO price, Wall Street analysts see strong showings among this week's initial public offerings.

Manhattan Associates, an Atlanta-based technology company scheduled to go public this week, is expected to perform well, riding on the wave of investor enthusiasm for Internet-related stocks.

Its three-million-share offering has a filing price range of $10 to $12 and analysts who estimate opening prices predict it will go public at 3 to 4 points higher than that.

Although the company, a software and hardware maker for distribution centers, is not part of the Internet sector, analysts said it will likely benefit as more commerce moves into cyberspace.

"Most distribution centers were not designed to handle electronic commerce transactions, and now there is a bigger push to update," said Mark Basham, an investment officer at Standard and Poor's.

In the near future, he said, the year 2000 problem--in which computer systems are expected to crash because they cannot handle years expressed as two-digits--may also create a greater demand for Manhattan Associates' products, as companies update their software for managing inventory.

Also, analysts said, the recent rise in the stock price of the company's main competitor, Catalyst International, suggests interest in its IPO.

Since Manhattan Associates filed for its IPO, Milwaukee-based Catalyst's stock has risen to $10 from $4, according to Ken Fleming, an analyst with Renaissance Capital Corp.

But ultimately, analysts said, potential investors may be drawn to Manhattan Associates simply because it is technology-related.

Technology-related IPOs tend to garner strong fanfare among investors chasing the next Netscape, analysts said. After Irvine-based Broadcom on Friday traded at a high of $70 compared with its $24 IPO price, analysts expect continued excitement over tech IPOs.

"Obviously, there's an unsatiated demand for anything tech-related," said Ryan Jacob, director of research at IPO Value Monitor.

Other hot IPOs on deck for this week are Charles River Associates and Correctional Properties, analysts said.

Charles River, offering 2.19 million shares at a filing price range of $15 to $17, is a Boston-based consulting company with big-name clients like Exxon Corp. and Procter & Gamble.

Eileen Ohnell, an analyst with Renaissance Capital, said the company has a staff of economists and "top thinkers" to advise its corporate clients on litigation, mergers, and anti-trust questions. Those are all issues, she said, that are certainly in hot demand in the current M & A-frenzied marketplace.

Correctional Properties, a Palm Beach Gardens, Fla.-based real estate investment trust that owns prisons, is expected to perform well in the public markets based on strong interest in REITs and the strong financial performance by prison owners, analysts said.

"Unfortunately in this country, this is a growing business," Basham said. "Prisons are seen now as a cash drain for the government, and they are being transferred to the private sector."

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