Spuren...
Motorola cancels unit's spin-off
Lackluster IPO backdrop cited
By Matt Andrejczak, CBS.MarketWatch.com
Last Update: 2:28 PM ET Feb 15, 2001
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NEW YORK (CBS.MW) -- Motorola's wireless services provider arm,
known as Propel, abandoned a proposed $423 million initial public offering
late Wednesday, further signaling how tough the market has become for
parent companies to spin off businesses in the wake of the IPO market
doldrums.
Propel, based in Schaumberg, Ill., had planned to offer 23.5 million shares in
a range of $17-to-$19 each, with Goldman, Sachs & Co. serving as lead
underwriter. It had been plotting its IPO since last June.
So far this year, other failed bids by parent companies to spin off narrowly
focused divisions -- or on the other hand, ones that are a drag on earnings --
have included CMGI's (CMGI: news, msgs) Alta Vista, Nortel Networks'
(NT: news, msgs) Netgear, and Titan's (TTN: news, msgs) Cayenta.
Propel, which operates and owns interests in wireless communications
businesses throughout the world, said in a regulatory filing that it pulled the
deal to protect the interests of its shareholders.
If Motorola (MOT: news, msgs) had elected to go forward and sell Propel
stock to the public, the deal would have certainly faced a major downward
revision -- like a handful of deals that have made underwhelming debuts this
year.
Timing's not right
France Telecom (FTE: news, msgs) , for one, had to slash the IPO price
tag for its Orange mobile wireless unit last week by about 32 percent.
Shares of U.K. carrier Orange got off to a lackluster start in London
trading on Tuesday.
In general, observers say the capital-intensive costs of the wireless industry
-- for instance, the high price paid for spectrum licenses, equipment
purchases and the return on these investments -- worry institutional
investors.
Those concerns may have an effect on the prices that possible wireless
IPOs may command later this year.
BellSouth (BLS: news, msgs) and SBC Communications (SBC: news,
msgs) are widely expected to file with the Securities and Exchange
Commission for permission to float their joint venture Cingular Wireless in
the near future, and Verizon Wireless (VZ: news, msgs) is believed to be
planning to resurrect its deal this summer.
"It's not as attractive an industry as people once thought," remarked Todd
Bernier, stock analyst at Morningstar.
Beating the drums
Meantime, companies such as Cabletron Systems
(CS: news, msgs) , Siemens AG (SMAWF: news,
msgs) , Lucent Technologies (LU: news, msgs) and
Reuters (RTRSY: news, msgs) are trying to drum
up IPO support for their prospective units that
operate in the telecommunications, semiconductor
and electronic brokerage industries.
Cabletron's Riverstone Networks (RSTN: news, msgs) , an Internet
infrastructure equipment maker, is reportedly set to get priced Thursday
night for trading on Friday.
For the most part, however, Wall Street has not
embraced spin-offs over the past year.
"It's been good for the parent companies but not for
the market," commented Irv DeGraw, research
director at WFNUSA, an investment research firm.
Indeed, some high-profile deals have fallen off their offering prices. AT&T
Wireless (AWE: news, msgs) is down 26 percent and AOL Latin America
(AOLA: news, msgs) is off 35 percent, based on Wednesday's closing
prices.
Still, others have faired better. The most recent
sizable deal seen in the IPO market, KPMG
Consulting (KCIN: news, msgs) , is holding on to its
gains. The stock is up 25 percent over its offering
price. And leather-goods retailer Coach (COH:
news, msgs) has surged 112 percent.
Gruß Dampf
Motorola cancels unit's spin-off
Lackluster IPO backdrop cited
By Matt Andrejczak, CBS.MarketWatch.com
Last Update: 2:28 PM ET Feb 15, 2001
Newswatch
Latest Headlines
Get Alerted
NEW YORK (CBS.MW) -- Motorola's wireless services provider arm,
known as Propel, abandoned a proposed $423 million initial public offering
late Wednesday, further signaling how tough the market has become for
parent companies to spin off businesses in the wake of the IPO market
doldrums.
Propel, based in Schaumberg, Ill., had planned to offer 23.5 million shares in
a range of $17-to-$19 each, with Goldman, Sachs & Co. serving as lead
underwriter. It had been plotting its IPO since last June.
So far this year, other failed bids by parent companies to spin off narrowly
focused divisions -- or on the other hand, ones that are a drag on earnings --
have included CMGI's (CMGI: news, msgs) Alta Vista, Nortel Networks'
(NT: news, msgs) Netgear, and Titan's (TTN: news, msgs) Cayenta.
Propel, which operates and owns interests in wireless communications
businesses throughout the world, said in a regulatory filing that it pulled the
deal to protect the interests of its shareholders.
If Motorola (MOT: news, msgs) had elected to go forward and sell Propel
stock to the public, the deal would have certainly faced a major downward
revision -- like a handful of deals that have made underwhelming debuts this
year.
Timing's not right
France Telecom (FTE: news, msgs) , for one, had to slash the IPO price
tag for its Orange mobile wireless unit last week by about 32 percent.
Shares of U.K. carrier Orange got off to a lackluster start in London
trading on Tuesday.
In general, observers say the capital-intensive costs of the wireless industry
-- for instance, the high price paid for spectrum licenses, equipment
purchases and the return on these investments -- worry institutional
investors.
Those concerns may have an effect on the prices that possible wireless
IPOs may command later this year.
BellSouth (BLS: news, msgs) and SBC Communications (SBC: news,
msgs) are widely expected to file with the Securities and Exchange
Commission for permission to float their joint venture Cingular Wireless in
the near future, and Verizon Wireless (VZ: news, msgs) is believed to be
planning to resurrect its deal this summer.
"It's not as attractive an industry as people once thought," remarked Todd
Bernier, stock analyst at Morningstar.
Beating the drums
Meantime, companies such as Cabletron Systems
(CS: news, msgs) , Siemens AG (SMAWF: news,
msgs) , Lucent Technologies (LU: news, msgs) and
Reuters (RTRSY: news, msgs) are trying to drum
up IPO support for their prospective units that
operate in the telecommunications, semiconductor
and electronic brokerage industries.
Cabletron's Riverstone Networks (RSTN: news, msgs) , an Internet
infrastructure equipment maker, is reportedly set to get priced Thursday
night for trading on Friday.
For the most part, however, Wall Street has not
embraced spin-offs over the past year.
"It's been good for the parent companies but not for
the market," commented Irv DeGraw, research
director at WFNUSA, an investment research firm.
Indeed, some high-profile deals have fallen off their offering prices. AT&T
Wireless (AWE: news, msgs) is down 26 percent and AOL Latin America
(AOLA: news, msgs) is off 35 percent, based on Wednesday's closing
prices.
Still, others have faired better. The most recent
sizable deal seen in the IPO market, KPMG
Consulting (KCIN: news, msgs) , is holding on to its
gains. The stock is up 25 percent over its offering
price. And leather-goods retailer Coach (COH:
news, msgs) has surged 112 percent.
Gruß Dampf
