The Lead: FireEye, Rocket Fuel and Five Prime ready for market debut
With the financial community abuzz from Twitter's Thursday announcement of plans for an initial public offering, three Silicon Valley companies are expected to make their debuts next week, offering the San Francisco microblogging stalwart a temperature check of the IPO market.
Milpitas security software company FireEye, Redwood City advertising-technology company Rocket Fuel and South San Francisco biotech company Five Prime Thearapeutics are expected to price their initial batch of shares and debut on Wall Street next week, Renaissance Capital reported Friday. If the companies go through with their expected IPOs, the three companies will be the first of a wave of expected Silicon Valleyfiled for IPOs in August.
"There's more of an appetite for IPOs than there's been in some time," Thomas Kellerman, an attorney with Morgan Lewis in Palo Alto who co-chairs the firm's tech practice, told The Mercury News.
The result could be the first week that three Silicon Valley companies reach the market since April 2012, when Proofpoint, Splunk and Infoblox rushed to beat Facebook to Wall Street, just as companies seem to be doing now with Twitter. Overall, it will be a very busy week, as eight other companies are expected to join the Silicon Valley entrants next week, increasing a pace that is already far ahead of last year, when Facebook's IPO stalled the market: Renaissance says that 132 companies have priced their initial batch of shares so far this year in the United States, topping the total pricings from each of the past two years.
However, as Los Angeles Times reporter Chris O'Brien pointed out Thursday, technology companies have accounted for only 22 of those IPOs so far, the lowest percentage for the industry since 1993, with financial and health care companies dominating 2013 so far. The Silicon Valley tech companies that have managed to go to market in 2013 have been inconsistent in their performance despite a pattern of big first-day pops.
Seven Bay Area technology companies -- not counting biotech -- have reached Wall Street this year, with many of them pricing shares higher than originally planned and shooting up on the first day of trading; however, the results since have been mixed.
San Francisco online-payments company Xoom and enterprise software companies Marketo and Gigamon have been unqualified successes for investors who bought in at IPO time. Xoom sold shares at $16 apiece in Silicon Valley's first IPO of the year and closed Friday at $31.54; San Mateo-based Marketo has seen its IPO price of $13 a share more than triple at times since, with the stock closing at $34.42 Friday; and Milpitas-based Gigamon has risen from an IPO price of $19 a share to a Friday close of $40.24.
The market has not been as kind to Model N, Marin Software, Silver Spring Networks and YuMe. Redwood City's Model N and San Francisco-based Marin joined the Wall Street ranks on the same week by pricing shares higher than their expected range, and both enterprise-software companies have struggled to find gains. After charging $15.50 a share, Model N has fallen to $9.98 as of Friday's close, while Marin has declined from an IPO price of $14 to a Friday close of $12.05. After waiting a year after its initial filing to go public, Redwood City "smart grid" company Silver Spring sold shares at $17, but closed Friday at $15.75. The most recent valley tech company to go public, Redwood City video-advertising company YuMe, sharply dropped its price from a range of $12 to $14, selling shares instead at $9, accounting for its ability to gain slightly to $10.13 at Friday's close.
Next week's batch of newly public companies hopes to join the first list. Five Prime Thearapeutics is part of a wave of biotech and health care companies to hit the public markets this year, with three scheduled for next week alone. The 12-year-old company is seeking to sell 4 million shares at $12 to $14 apiece to fund clinical trials of some of its protein therapies, according to its filing with the Securities and Exchange Commission.
FireEye touches a hot segment of the technology industry, security software, which has seen IPO successes such as Palo Alto Networks and some high-price acquisitions, such as Cisco's (CSCO) $2.7 billion deal for Sourcefire. The 9-year-old company, led by former McAfee CEO Dave DeWalt, has more than doubled its annual revenues in each of the last two years, and expects to sell 14 million shares in a price range of $12 to $14, according to its prospectus.
Rocket Fuel, founded in 2008, offers digital advertisers big-data software that can help them target their marketing dollars more effectively. The company doubled its revenues to more than $100 million in 2012 and raked in nearly as much in the first six months of 2013, when it reported sales of $92.6 million; Rocket Fuel expects to sell 4 million shares at $24 to $27 apiece.
RingCentral of San Mateo, Mountain View's Violin Memory, textbook-rental site Chegg are among the other Silicon Valley companies expected to go public ahead of Twitter, with the timing of that much-anticipated debut still unknown. For up-to-date news and live coverage of all the upcoming SIlicon Valley IPOs, go to www.siliconvalley.com.
SV150 market report: Intel soars, Apple and social stocks stall
Wall Street closed out its best week since January on Friday, but Silicon Valley tech stocks were mostly left out of the party: The tech-heavy Nasdaq had the smallest gains of the three major stock indexes, and the SV150 declined as gains from Intel were more than offset by losses from Apple and social-networking stocks.
Intel was the big winner Friday, gaining 3.6 percent to $23.44 amid analyst optimism and an acquisition. The Santa Clara chipmaker purchased Spanish language-recognition company Indisys for an undisclosed amount, which GigaOM reported was $30 million to $35 million; the company may be seeking to pair Indisys technology with another recent acquisition, Omek, to include in its planned television set-top box venture. Jefferies analyst Mark Lipacis likes Intel's direction, upgrading the company from "Buy" to "Hold" and increasing his price target from $27 to $30 because Intel has "seemed to embrace the idea that it needs to dominate the low-end and low-power portion of the market."
Jefferies headed the opposite direction on Apple, with analyst Peter Misek dropping his price target from $450 to $425 after the Cupertino company's iPhone launch event this week, complaining that "Apple had two tough choices with the 5C pricing and the 5S sensor and opted for the higher price/lower market share option for both." Apple dropped 1.7 percent to $464.90 Friday, ending the week with an overall decline of 6.7 percent.
Social-networking stocks declined a day after Twitter announced it would join them on the public markets: Facebook fell 1 percent to $44.31, Yelp dropped 1.4 percent to $62.91, and LinkedIn lost 11 cents to $249.59. eBay (EBAY) declined 0.4 percent to $53.82 after announcing a PayPal policy overhaul eyed at crowdfunding, and Yahoo (YHOO) dropped 1.3 percent to $29.26 a day after cresting $30 for the first time in five years.
The SV150 index of Silicon Valley's largest tech companies: Down 4.04, or 0.31 percent, to 1,318.31
The tech-heavy Nasdaq composite index: Up 6.21, or 0.17 percent, to 3,722.18
The blue chip Dow Jones industrial average: Up 75.42, or 0.49 percent, to 15,376.06
And the widely watched Standard & Poor's 500 index: Up 4.57, or 0.27 percent, to 1,687.99
Check in weekday afternoons for the 60-Second Business Break, a summary of news from Mercury News staff writers, The Associated Press, Bloomberg News and other wire services. Contact Jeremy C. Owens at 408-920-5876; follow him at Twitter.com/jowens510.