OT SigmaTel rings up 20 percent gain
Chipmaker's IPO gets warm reception
By Steve Gelsi, CBS.MarketWatch.com
Last Update: 12:04 PM ET Sept. 19, 2003
NEW YORK (CBS.MW) -- SigmaTel rose 20 percent over its raised price in a warm reception Friday for the semiconductor chipmaker's initial public offering.
With the Nasdaq rallying nearly 43 percent this year amid strength in the tech sector, relatively few technology deals have come to the IPO market.
The low supply of tech IPOs has been translating into high demand once they trade. Another plus is that tech listings nowadays usually offer much more solid financials than deals from the bull market era.
SigmaTel (SGTL: news, chart, profile) opened at $18.20, well above its $15 price. The stock changed hands at $18 on volume of 4.8 million in recent action.
Strong interest from investors made the deal richer ahead of its debut.
SigmaTel upped its price to $11 to $13 from $9 to $11 last month, but late Thursday the deal priced at $15 per share.
The Austin, Texas, company is raising $150 million by offering 10 million shares with lead underwriter Merrill Lynch (MER: news, chart, profile).
"SigmaTel is getting lots of attention since it is the leading supplier of chips for portable MP3 players, products that have been selling like hot cakes around the world and should be big sellers this holiday season," read a note posted on the Renaissance Capital Web site.
SigmaTel rang up net income of $150,000 on revenue of $32.5 million in the first six months of the year, up from a net loss of $7.6 million on revenue of $9 million in the year-ago period.
The firm designs semiconductors for MP3 players, notebook and desktop PCs, DVD players, digital televisions and set-top boxes. It has about 100 employees.
"Our focus on providing system-level solutions enables our customers to rapidly introduce and offer electronic products that are small, lightweight, power-efficient, reliable and cost-effective," the company said in its IPO filing.
Shareholders include chipmaker Creative Technology (CREAF: news, chart, profile), Battery Ventures, Invesco Private Capital and Telesoft Partners.
Research firm Renaissance Capital, which also runs the IPO Plus Fund (IPOSX: news, chart, profile), has noted that technology IPOs such as SigmaTel's lately have been gaining traction in the market. See full story.
The IPO from SigmaTel comes after successful IPOs from Netgear (NTGR: news, chart, profile), Intervideo (IVII: news, chart, profile) and Formfactor (FORM: news, chart, profile) in recent months. All the IPOs are trading well above their IPO prices.
Steve Gelsi is a reporter for CBS.MarketWatch.com in New York.
