PALO ALTO — Hewlett-Packard Co.'s Agilent Technologies Inc. strode out of its parent's shadow Thursday, with its shares surging 47% a day after its $2.16-billion initial stock sale.
The Palo Alto-based maker of measurement equipment and medical devices rose $14 to close at $44 on the New York Stock Exchange, giving the company a market value of about $19.89 billion. About 44.7 million shares changed hands, making it the second-most active stock on U.S. markets.
The company sold 72 million shares at $30 each Wednesday in the largest initial stock sale by a Silicon Valley company and the ninth-largest by a U.S. company this decade. The sale represented a stake of about 15% and is $1 billion larger than originally expected.
"This is a feeding frenzy, which is more suited for Internet-only stocks," said David Menlow, president of IPO Financial Network in Millburn, N.J.
The rise in Agilent's stock to about double the initial filing price "creates a problem for the marketplace" of overvalued shares, he said.
"We saw that with UPS, Martha Stewart; these are not the traditional big-pop stocks," he said.
Agilent makes test and measurement equipment, semiconductor components and health-care devices. The sale, to be followed by a complete divestiture by mid-2000, will let Hewlett-Packard's new chief executive, Carly Fiorina, focus on the company's main computer and printer businesses, where sales growth lags that of rivals, including Sun Microsystems Inc.
Agilent plans to pay the proceeds of the initial sale to Hewlett-Packard in the form of a dividend.
Hewlett-Packard shares surged $13.31 to close at $94.31 on the New York Stock Exchange, lifting other technology stocks and propelling the Dow Jones industrial average to its first close above 11,000 in more than two months, as investors reacted positively to its earnings report Wednesday.
Agilent shares sold for $2 above the range of $26 to $28 set by Morgan Stanley Dean Witter & Co., which handled the sale. Last month, the company had planned to sell 57 million shares at $22.
The increase in the price of the shares "is worrisome" as the proceeds from the sale are being paid as a dividend, Menlow said. "This is about HP; this isn't about Agilent shareholders."
Goldman, Sachs & Co. also was part of the underwriting group handling the sale.