IPOs have gone from hot to not Most firms that go public see prices fall

The investor thrill from initial public offerings is gone, fornow.

After last year's boom in IPOs, 1997 has been a cold dash ofreality for young companies going public. The prices they'refetching in IPOs are down, and their stock market performance aftergoing public also has flagged.

Last year, a record 52 Massachusetts companies sold publiclytraded stock for the first time, compared with 31 firms in 1995 and28 in 1994, according to the Globe 100.Software companies dominated the 1996 list, including a hodgepodgeof Internet-related firms, followed by life-science companies thatranged from biotechnology to medical equipment suppliers.One company that prospered handsomely was The Registry Inc. ofNewton, which places software engineers on temporary assignments.The company saw its IPO price more than double to 35 1/2 at the endof March. It has since climbed to more than 45 in mid-May."I think Wall Street has recognized that being a service providerenables investors to invest in the software market without beinglinked to the Internet or a particular software market segment," saidG. Drew Conway, president of the 11-year-old company, which in thepast five years has experienced revenue growth of more than 55percent annually.Massachusetts mirrored the national trend, as a record 210information science firms raised $19.3 billion last year, comparedwith 164 computer-related companies garnering $10 billion frominvestors in 1995, according to VentureFinance, a New Yorkpublication that tracks the venture capital and IPO markets.Similarly, 132 life-science firms raised $5.7 billion on WallSteeet last year, compared to $3 billion invested in 61 publiccompanies in 1995, according to VentureFinance.But the IPO boom has become a fading memory. Among the 52Massachusetts companies that went public last year, only 22 had stockprices above their initial offering price by March 31, 1997.By contrast, 26, or almost all, of the 31 companies that wentpublic in 1995 saw their stock prices rise by the following March.What changed?Start with the glut of high-tech companies rushing to cash in oninvestor frenzy created by the Internet, said William D. Marbach,managing editor of VentureFinanceInstead, a lot of investors got burned, as many companies eitherwent public prematurely or simply failed to live up to the promise ofcontinued growth. "Some people have great rushes of enthusiasm andthen cool off," Marbach said. "Markets go through a phase, wherethere is a burst of enthusiasm for something new and then realitysets in."What's more, companies that do launch IPOs are selling stock atlower initial prices than they did in 1995 or 1996, according toVentureFinance figures.For example, in the once-hot biopharmaceutical market, the onlyMassachusetts IPO in the first quarter of this year was Epix MedicalInc. of Cambridge.The company, formerly known as Metasyn, is a developer of contrastagents used with magnetic resonance imaging equipment. It sold 2million shares at $7 each on Jan. 30 -- far below the $9 to $11 thecompany expected.Among Massachusetts companies that went public in 1996, thebiggest stock price gainer, as of March 31, was Sipex Corp. ofBillerica, one of the few electronics manufacturers to go public lastyear. Its shares climbed 208 percent to 29 1/4. A maker of analogintegrated circuits used in cellular telephones and personalcomputers, Sipex shares hit a high of 38 in early January.At the opposite end is Watertown-based OneWave Inc., an Internetcompany that got caught in a restructuring and product transition.The company's shares plunged 87.5 percent, from an IPO price of $16last July to 2 at the end of March."The IPO market that peaked last spring dipped in the summer andrecovered last fall, only to slide again in the winter. It's nowherenear where it was at this time last year," Marbach said.SIDEBAR:TOP-PERFORMING 1996 INITIAL PUBLIC OFFERINGSRanked by market price change since offering.% Change 3/31/97 Dollarsince Stock Offer amountRank/Company offer price price Offer date ($ millions)1. Sipex Corp. 207.9 29 1/4 9 1/2 4/2/96 23.82. Registry Inc. 108.8 35 1/2 17 6/5/96 37.43. Cubist Pharmaceuticals Inc. 75.0 10 1/2 6 10/25/96 15.04. Atlantic Bank & Trust Co. 74.1 11 3/4 6 3/4 4/16/96 10.15. Diacrin Inc. 68.8 13 1/2 8 2/12/96 20.06. Pegasystems Inc. 67.7 20 1/8 12 7/18/96 40.87. Iron Mountain Inc. 54.7 24 3/4 16 1/31/96 76.88. Sapient Corp. 52.4 32 21 4/3/96 31.09. PCD Inc. 45.5 16 11 3/27/96 23.210. Vivid Technologies Inc. 33.3 16 12 12/11/96 19.211. Transkaryotic Therapies Inc. 30.0 19 1/2 15 10/16/96 37.512. ArQule Inc. 29.2 15 1/2 12 10/16/96 30.013. Cambridge Heart Inc. 26.4 11 3/8 9 8/2/96 18.014. SeaChange International Inc. 18.3 17 3/4 15 11/4/96 30.015. Cytyc Corp. 17.2 18 3/4 16 3/8/96 48.016. Forrester Research Inc. 14.1 18 1/4 16 11/26/96 32.017. Millennium Pharmaceuticals Inc. 13.5 13 5/8 12 5/6/96 54.018. Boston Biomedica Inc. 11.8 9 1/2 8 1/2 10/31/96 13.619. Specialty Catalog Corp. 7.7 7 6 1/2 10/17/96 9.820. Xionics DocumentTechnologies Inc. 5.2 12 5/8 12 9/26/96 36.021. SelfCare Inc. 2.9 8 3/4 8 1/2 8/5/96 11.122. Asahi/America Inc. 1.7 7 5/8 7 1/2 5/15/96 8.723. Harborside Healthcare Corp. 0.0 11 3/4 11 3/4 6/11/96 36.424. Aware Inc. --2.5 9 3/4 10 8/9/96 34.025. GeoTel Communications Corp. --8.3 11 12 11/20/96 26.426. Viisage Technology Inc. --10.7 9 3/8 10 1/2 11/8/96 26.327. Thermo Optek Corp. --11.1 12 13 1/2 6/7/96 40.528. Innovasive Devices Inc. --12.0 11 12 1/2 6/6/96 23.829. Lycos Inc. --12.1 14 1/16 16 4/1/96 48.030. Raptor Systems Inc. --12.5 13 1/8 15 2/6/96 45.031. Object Design Inc. --19.6 5 5/8 7 7/23/96 21.032. Suburban Ostomy Supply Inc. --20.8 9 1/2 12 10/9/96 46.833. ChiRex Inc. --21.2 10 1/4 13 3/5/96 69.434. Gensym Corp. --23.8 7 5/8 10 2/16/96 20.035. Bitstream Inc. --27.1 4 3/8 6 10/30/96 12.636. Nitinol MedicalTechnologies Inc. --27.3 8 11 9/27/96 33.037. BioTransplant Inc. --27.6 6 7/8 9 1/2 5/8/96 26.638. Virus Research Institute Inc. --31.3 8 1/4 12 6/5/96 27.639. Lightbridge Inc. --31.3 6 7/8 10 9/27/96 38.040. Transition Systems Inc. --34.7 11 3/4 18 4/18/96 108.041. Hybridon Inc. --35.0 6 1/2 10 1/24/96 25.042. Thermo Fibergen Inc. --36.3 8 1/8 12 3/4 9/13/96 52.343. QC Optics Inc. --37.5 3 3/4 6 10/24/96 5.744. Open Market Inc. --45.1 9 7/8 18 5/22/96 57.645. Segue Software Inc. --45.8 9 3/4 18 3/28/96 49.546. WebSecure Inc. --53.1 3 3/4 8 12/4/96 8.047. Individual Inc. --62.5 5 1/4 14 3/15/96 35.048. Physiometrix Inc. --68.2 3 1/2 11 4/30/96 22.049. Boston CommunicationsGroup Inc. --68.8 4 3/8 14 6/18/96 53.650. Workgroup Technology Corp. --71.7 4 1/4 15 3/21/96 50.551. Restrac Inc. --73.9 2 7/8 11 7/22/96 27.552. OneWave Inc. --87.5 2 16 7/2/96 60.0Must be traded on a major exchange as of 3/31/97 with a price of atleast 2.Adjusted for all splits prior to 3/31/97.SOURCE: Nordby International Inc. (nordby.com)Globe staff chart