A Flurry of IPOs

Bob Pisani is off today, this post was written by CNBC producer Robert Hum

Following in the footsteps of the weaker European markets, U.S. stocks are off to a weak start this morning. The dollar is strengthening to a 2-week high ahead of a busy week featuring a two-day Fed Reserve Board meeting and the highly-anticipated summit of G-20 leaders later this week in Pittsburgh.

As a result of the dollar’s gains, commodities are falling 1 percent to 3 percent, with gold returning below $1,000 and oil back under $70. Most commodity stocks are falling about 2 percent to 3 percent in early trading.

Getting much buzz on trading desks this week is the flurry of IPOs expected. 8 IPOs are scheduled to price this week in the U.S., 5 of which will trade at the NYSE. If all 8 companies successfully begin trading this week, it will be the market’s busiest week of U.S. IPOs since December 2007. Kicking off the IPO parade tomorrow will be REITs Colony Financial (CLNY) and Apollo Commercial Real Estate Finance (ARI) as well as online dietary supplement retailer Vitacost.com (VITC).

Meanwhile, a string news on international IPOs is the hot topic this morning:

a) Chinese construction firm China Metallurgical soared 26 percent in its Shanghai IPO. The firm raised $5.12 billion and becomes the second biggest IPO of the year, behind the $7.3 billion listing by China State Construction Engineering Corp., another Chinese construction company. China Metallurgical will also list shares on the Hong Kong exchange later on Thursday.

b) Brazilian bank Santander announced it seeks to raise $7.3 billion though an IPO in October in a dual listing on the Brazilian and New York exchanges. The bank’s IPO would match the size of the biggest IPO this year (Shanghai-listed China State Construction Engineering Corp.) and would be the largest U.S. IPO since Visa’s listing in March 2008. Shares are expected to trade under ticker “STD” at the NYSE.

c) Wynn Resorts is reportedly boosting the size of its scheduled IPO in Hong Kong that will give shareholders a 25 percent stake in the casino operator’s Macau assets. The Wall Street Journal reports that the casino operator now seeks to raise $1.6 billion in its Hong Kong-listed IPO (vs. prior expectations of $1 billion) next month.


1) Dell Computer announced it will acquire IT service provider Perot Systems for $3.9 billion in an all-cash deal. The computer maker will give Perot Systems shareholders $30 per share, a 68 percent premium from Friday’s close. The merger is expected to close in January. On the news, Perot soars 66 percent, while Dell is down about 4 percent.

2) Fertilizer producer Potash down 5 percent after slashing its full-year EPS guidance to $3.25-3.75 from $4.00-$5.00. Analysts were expecting 2009 earnings of $4.16. The reduction is result of “lower than forecasted potash sales volumes” due to continuing weak demand.

However, the company is optimistic that a “significant rebound” in demand will be in store for 2010.

3) Lennar down 2 percent despite posting narrower than expected Q3 loss (loss of $0.21 vs. loss of $0.46). Its quarterly loss widened from last year as land writedowns continued to weigh. The number of homes sold plunged 29 percent from last year, while prices also remained weak, falling 11 percent from the year ago period.

Still, the homebuilder saw it cancellation rate improving and a smaller year-over-year decline in new orders. CEO Stuart Miller was also encouraged stating, “our new orders increased sequentially each month during the quarter and we ended the quarter with our highest backlog since August 2008.” Furthermore, the company has boosted its home starts during the quarter, which will help increase its Q4 home deliveries.



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