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News & Updates - Tuesday, July 12, 2005

How Much Longer Do We Have To Wait For IPOs?

Liquidity these days is all about M&A. There are a good number of companies with impressive numbers that can't IPO so they are getting bought or are sitting on the sidelines pissing their VCs off.

Columnist John Dvorak makes some going points in his prediction that we are in a tech down-cycle and that 2007 will see the return of the tech IPO because:

- There are no fundamental developments, fads, new technologies or inventions that would change the pace of standard growth we are currently experiencing.

- Insofar as basic computer technology is concerned, the drumbeat of Moore's law has and will continue to push computing power to the limit. The problem is that, for the moment, this new power is unneeded and unused except by professionals running image manipulation or CAD/CAM software. Improved broadband penetration will change that.

- Microsoft Longhorn. The new Microsoft operating system will be released in 2006 as will Intel-based Macs triggering an upgrade cycle that will be doubly powerful as the MacOS becomes a threat to Microsoft dominance forcing it to become more competitive.

- To these we would add that there needs to be a new sense of speculation on tech stocks. Some very strong companies have had luke-warm receptions on Wall Street because investors don't want to be fooled again by tech IPOs. We expect to see a huge wave of impressive IPOs that have been backlogged coming to market at the same time, which might prompt the return of speculation.

Read - The great tech rally of 2007 (Marketwatch)

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