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Tuesday, July 10, 2012 - Page updated at 07:00 p.m.
IPO market perks up again after Facebook's big letdown
By Ari Levy
NEW YORK — Palo Alto Networks and Kayak Software led companies that announced plans Monday to raise almost half a billion dollars in initial public offerings, a sign the market is recovering from a monthlong drought after Facebook's disappointing debut.
Palo Alto Networks seeks to raise as much as $229 million, while online travel site Kayak aims for $87.5 million, according to regulatory filings Monday. Morgan Stanley is the lead underwriter for the IPOs, which are set to price July 19, according to Bloomberg data.
The offerings follow the June IPO of ServiceNow, the first technology firm company Morgan Stanley took public since leading Facebook's share sale, which froze the U.S. market for more than a month.
While ServiceNow surged 37 percent in its debut, Palo Alto Networks and Kayak will face investors more skeptical of IPO promises from Morgan Stanley, said Matt McCormick, who helps oversee $6.2 billion at Bahl & Gaynor.
"Their only possible solution is to hit the ball out of the park on their next couple launches, and the onus is on them to succeed," he said. "Expectations are going to be high and people are going to be looking for issues, and if they can compete positively, that's a win."
Fender Musical Instruments, the largest seller of guitars in the United States, filed Monday to raise as much as $160.7 million in an IPO to repay debt.
IPOs globally raised $41.3 billion in the three months ended June 30, 34 percent less than in the same period a year ago, according to data compiled by Bloomberg.
At least 50 companies shelved sales as Europe's debt crisis spread, growth prospects slowed in China and Facebook's stock sank as much as 32 percent after the IPO before recovering somewhat.
ServiceNow raised $210 million June 28, pricing the shares above the planned range. Morgan Stanley, which led the share sale, is on track to be the top underwriter for technology and global IPOs, according to Bloomberg data.
The more successful technology offerings, the easier it will be for investors to forgive Morgan Stanley for Facebook's decline, McCormick said.
Palo Alto Networks said it plans to offer 4.7 million shares for $34 to $37 each, according to a filing, while its shareholders are offering 1.5 million. The company will list under the symbol PANW on the New York Stock Exchange.
In its filing, Norwalk, Conn.-based Kayak said it plans to sell 3.5 million shares for $22 to $25 each. The stock will list under the ticker KYAK on the Nasdaq.
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