At the close of the busiest week for initial public stock offerings since November 1997, Lantronix Inc. entered the fray and promptly took a pounding from Wall Street.
The Irvine company, which makes tiny computers that allow businesses to monitor and control electronic devices over the Internet, saw its stock fall 20% in its market debut, the 10th worst first-day performance so far this year, according to Thomson Financial Securities Data in New Jersey.
To date, none of the nine companies with worse opening-day performances have bounced back, said Richard Peterson, a market strategist for Thomson Financial.
"All of them have declined further," Peterson said, "so it doesn't look too promising for this company."
Lantronix's stock closed at $8, down $2 a share, in Nasdaq trading.
Even before trading began, Lantronix had scaled back its offer. The company, one of 27 that went public this week, offered 6 million shares of stock at $10 a share. That netted Lantronix about $54 million, less than half of what it had anticipated a couple of months ago. Lantronix had planned to sell 9 million shares at $14 to $16.
The company declined to comment.
Some companies sparkled Friday during their market debuts.
For example, shares of Microtune Inc., whose major investors include international financier George Soros, soared more than 88% after the initial stock offer was priced higher than the company had anticipated. Microtune, which provides radio frequency tuners, closed at $30.13, up $14.13, on the Nasdaq market.
Companies with higher asking prices tended to fare better than those with scaled-back offerings, one analyst said.
"There are two factors that separate the winners from the losers in today's market," said John Fitzgibbon, IPO editor at WorldFinanceNet.com. "If they increase the deal's pricing terms, then there is a big demand from institutions. If they decrease, then forget it," he said.
It could have been an even more hectic week for IPOs. About 40 new issues were slated at the beginning of the week but some companies pushed their deals into next week and others postponed them indefinitely because of the wobbly stock market.
"The best time to go public is when you have a very strong Wall Street foundation and a good economic backdrop, [and] right now the Wall Street backdrop is pretty weak for an IPO," said Gail Bronson, an IPO watcher in Palo Alto. "The fact that you're seeing companies make their public offering debuts and stumble is just indicative of how weak the market is right now."
Further, summer is not generally the best time to take a company public, Bronson said. "Stock brokers are at the seashore," she said, "not in the office."
Lantronix, which last year earned $2.8 million on sales of nearly $33 million, plans to use the proceeds from the IPO for working capital and general corporate purposes, including research and development and acquisitions.
Reuters was used in compiling this report.