Convio jumps but Alpha and Omega lower as investors remain wary of IPO prices
By APThursday, April 29, 2010
Convio jumps, Alpha and Omega lower in IPO debuts
NEW YORK — One up, one down: the divergent moves of two technology IPOs Thursday shows that investors remain wary about buying shares of companies new to market.
Shares of chip maker Alpha and Omega Semiconductor Ltd. dropped after pricing within its expected range, while software provider Convio Inc. rose after selling shares to initial investors below the targeted range.
Last week, six out of seven companies priced initial public offerings at the bottom or below expectations, and four closed their first day of trading below the selling price. Given the current uncertainty in the IPO market, underwriters and companies should be extremely sensitive in pricing shares right now, said Scott Sweet of IPOBoutique.
“IPOs right now have too much risk,” Sweet said. “It’s a crapshoot.”
Convio, based in Austin, Texas, offers software and services to help nonprofit organizations raise money. Its IPO fetched $46.2 million after 5.1 million shares priced at $9, below the expected range of $10 to $12. Shares rose $1.14, or 13 percent, to $10.14 in afternoon trading after trading as high as $10.99.
Alpha and Omega was the company with a stronger product, according to Sweet, but the offering didn’t get investors excited. Its 5.1 million shares priced at $18, the middle of the $17 to $19 range. Shares slid 32 cents, or 1.8 percent, to $17.68. Earlier, shares traded as high as $18.44 and as low as $17.06.
Alpha and Omega’s chips improve power efficiency for notebooks, smartphones, flat panel TVs and other consumer electronics. IPOdesktop’s Francis Gaskins noted that Alpha and Omega made chips for the fast-growing consumer electronics sector, but said its gross margins were low for a chip company. Moreover, Alpha and Omega said in a regulatory filing that it had “material weakness” in its accounting, which it said it is addressing by hiring an accounting manager and an outside consulting firm.
That may have spooked investors, Gaskins said.
