With the debut of public offerings from Demand Media and Nielsen already this year, analysts expect the tech industry to see a large number of new issuances in 2011.
While some late-stage Silicon Valley companies like Facebook and Zynga have raised massive amounts of capital in the private markets and are unlikely to go public this year, strong demand for LinkedIn and Pandora—both of which have filed in the last month—might trigger other high profile start-ups to take the plunge, say analysts.
Seven technology companies have gone public so far this year, more than any other industry, according to Renaissance Capital, an IPO research firm based in Greenwich, Conn. Tech has performed better than other sectors, too, with a 21.3% average total return.
Scott Sweet, a senior managing partner at IPO Boutique, an IPO advisory firm in Lutz, Fla., says the number of public offerings in the tech sector is estimated to double this year over last year, when 42 companies in the space priced.
Top IPO candidates for this year include smart-grid star Silver Springs Networks, local daily deals site Groupon and Brightcove, an online video company that recently hired a new CFO with public company experience.
There are also 31 tech companies in the IPO pipeline—companies like Internet calling service Skype that have filed an S-1 but have yet to price—that will likely be tracking the performance of recent public offerings to determine the right time to take the plunge.
Here's a look at five of the best performing newly public tech stocks, based on their prices' percentage increase and selected with help from Renaissance Capital.
What it Does: Provides voice-over-Internet (VoiP) services
BroadSoft, a communications software company based in Gaithersburg, Md., had a troubling start when it first launched its initial public offering in June 2010.
The company priced at $9, on the low end of its initial range of between $9 and $11, and shares sank on its first day of trading.
But despite this initial setback, shares of BroadSoft have skyrocketed more than 317% since going public, making it the best-performing tech stock to debut within the past year.
The company reported third-quarter 2010 revenue of $22.3 million, up 22% from the year-ago period. Going forward, BroadSoft anticipates fourth-quarter revenue $31.0 to $32.0 million when it reports earnings on March 7.
Tech watchers expect BroadSoft, which recently announced it was launching Web-based software designed for 4G smartphones and tablets, to continue to grow going into 2011.
"BroadSoft ranks as one of the fastest growing communications companies," Pacific Crest Securities analyst Brent Bracelin wrote in a research note. Bracelin places the company in the same fast-growing league as tech heavyweights Research In Motion and Riverbed .
BroadSoft's competitors include Alcatel-Lucent, Cisco and Nortel.
What it Does: Software and web development outsourcing
HiSoft raised $74 million in its June IPO as it priced below its expected range.
The Chinese software-development outsourcing service, however, has seen its shares jump 214% since pricing.
HiSoft announced a 70.8% year-over-year increase in third-quarter revenue, which rose to $38.9 million
Deutsche Bank analyst Tim Fox recently raised his 12-month price target on the company from $30 to $34.
HiSoft will report its fourth-quarter financial result on March 1, with analysts expecting EPS of 21 cents per share on revenue of $42 million.