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Technology companies continue to set the pace for initial public offerings in the U.S. According to a new report from Ernst & Young, 94 companies registered to go public in the third quarter, up from 64 in the previous period. Technology was the most active sector in the third quarter, as 32 companies filed document to go public, followed by pharmaceutical firms, with 27, and oil and gas players, 19. According to Renaissance Capital LLC's IPOhome.com, 154 companies have gone public through Sept. 30, raising a total of $38 billion. That's on pace to eclipse the 198 IPOs that raised $43 billion in 2006. Tom Taulli, founder of DealProfiles.com, a research firm focused on the IPO and venture capital markets, said that despite several successful offerings, the tech IPO market remains hit and miss. "We're in no way at a point of euphoria in the IPO market," he said. "The hurdle is still high for getting the interest of investors. But fast-growing areas, like data storage and infrastructure tools, are doing extremely well." According to research firm Dealogic LLC, 44 tech companies have gone public this year, raising $7.5 billion, a 144% increase over the year-ago period. VMware Inc., which makes software used by companies to run their computer networks, continues to be among the top-performing IPOs of 2007, with a more than 250% return from its $29 offering price. In late-day trading shares of the Palo Alto, Calif., "virtualization" specialist traded at more than $100 each. Starent Networks Corp., a Tewksbury, Mass., provider of software that lets wireless carriers offer online multimedia, is up more than 130% from its $12 offer price in June. Of the 44 tech stocks that have debuted this year, 23 have priced above their projected price range, 15 priced within the range and six came in below the range, according to Dealogic. As a whole, the new issues have yielded an average investment return of nearly 48%. By contrast, there have been some notable busts. Content delivery provider Limelight Networks Inc., a ballyhooed provider of technology for delivering "rich media" online whose stock rose 50% in its first day of trading in June, recently was off 30% from its IPO price. The Tempe, Ariz.-based company has faced heavy competitive pressures from industry leader Akamai Technologies Inc. of Cambridge, Mass., and missed earnings numbers in its first quarter as a publicly traded company. Largely absent from the IPO market are Internet companies, which these days are more likely to seek an exit through acquisition by larger enterprises. Among those taking that route are Photobucket Inc., a picture- and video-sharing service that agreed to be acquired by Fox Interactive Media Inc. in May for roughly $300 million. At the same time, Fox also acquired a much smaller company, Flektor Inc., which allows users to create "widgets," digital items that can be embedded in a Web page, from photos, video and text. "VCs want to see bells and whistles that solve a little problem in a bigger ecosystem--that's why we're seeing so much excitement for companies that build applications for Facebook," said Ashkan Karbasfrooshan, president of WatchMojo.com, a blog that covers advertising, finance and technology. "If an entrepreneur says he's going to attack the market and come up with an improvement for an existing product that has critical mass, his investor will see an easier relationship and a way to get his money back in a couple of years." Karbasfrooshan noted that even Facebook, Inc., the enormously popular Palo Alto-based social networking site, is on the record as saying it would not pursue an IPO for a few years as it expands. That could change in 2008. According to industry chatter, online advertising company Quigo Technologies Inc. of New York and online professional network LinkedIn Corp. of Mountain View, Calif., could be in line for IPOs next year.  Deal Video
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