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The unexpected Facebook effect

by Tom Park  |  Published May 24, 2012 at 4:37 PM
In the wake of Facebook Inc.'s bungled initial public offering last week, the two companies set to launch their stock debuts on Nasdaq this week have gotten cold feet.

Corsair Components Inc., a Silicon Valley maker of memory modules and other peripherals for PC-based video games, on Thursday, May 24, postponed its $84 million IPO with plans to "relaunch when equity market conditions are more favorable," company CEO Andy Paul said in a statement.

Such considerations also pushed Dublin, Calif.-based Tria Beauty Inc., a maker of laser hair-removal products, to delay its IPO. The company had planned to raise as much as $69 million.

Both postponements came the week after Facebook launched its $16 billion IPO. The landmark offering, which had been viewed by some as a potential spark that would ignite the languishing IPO market, instead appears to have chilled it. Securities regulators and congressional panels are reviewing allegations that Morgan Stanley and the other Facebook IPO underwriters improperly disclosed changes to their analysts' performance forecasts for Facebook. Investors have filed lawsuits against Facebook and its underwriters on the matter.

Certainly, the rocky overall equity markets have played a role in the two postponements this week, but the ripple effect from the troubles surrounding the Facebook offering likely played a part too, said independent IPO analyst Tom Taulli.

"These are smaller deals, so the problems facing them might be more company-specific, but right now it's hard to get investors' attention, given what is going on with Morgan Stanley and Wall Street," Taulli said. Morgan Stanley is a lead underwriter, alongside Piper Jaffray Cos., on the Tria Beauty IPO.

The Facebook IPO also was a black eye for Nasdaq, following technical glitches that delayed trading in the company's shares May 18 and left some investors unable to determine whether their orders to buy or sell the stock had been fulfilled. According to reports Wednesday, NYSE Euronext was attempting to court Facebook to move its stock listing there.

A spokesman for the exchange denied Thursday that any talks were taking place.

"There have been no discussions with Facebook regarding switching their listing in light of the events of the last week, nor do we think a discussion along those lines would be appropriate at this time," said NYSE Euronext's director of corporate communications, Keara Shea Everdell.

One major IPO was filed this week. Intelsat SA, the largest provider of satellite services, on Monday filed to raise up to $1.8 billion in an IPO. The Luxembourg-based company, which is owned by private equity firm Serafina SA, plans to list on the NYSE.

Facebook shares, meanwhile, climbed more than 2%, to $32.66 in afternoon trading Thursday, still well-below their IPO price of $38 apiece.

Tags: Andy Paul | Corsair Components Inc. | Facebook Inc. | initial public offering | Intelsat SA | IPO | Keara Shea Everdell | Morgan Stanley | Nasdaq | NYSE Euronext | Piper Jaffray Cos. | Tom Taulli | Tria Beauty Inc. | underwiters

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Tom Park

Research Analyst, PIPEs

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