High Technology Stocks Stay Hot

NEW YORK _ Following a week when investors snapped up new shares of hot high-technology companies, some analysts wonder how long it will be before the supply of solid companies runs out and buyers are left to pick among second-tier stocks.

Last week's market for initial stock sales _ otherwise known as initial public offerings, or IPOs _ produced a string of winners, including UUNet Technologies Inc., a provider of access to the Internet global computer network; NexGen Inc., a computer chip maker; Maxis Inc., a computer software company; VideoServer Inc., a multimedia equipment supplier; and Number Nine Visual Technology Corp., a supplier of video and graphics equipment.

"It was a hell of a week," said John E. Fitzgibbon, editor of the IPO Aftermarket for New York-based Lynch Jones Ryan Inc. "There was a lot of pent-up demand for high tech and communications stocks. It was a feeding frenzy."

Fitzgibbon said 11 companies began trading stock to the public last week, out of which nine rose in price. The other two remained unchanged.

The biggest gainers included NexGen, whose 3.55-million-share initial stock sale was priced last week at $15 each. Trading opened at $30.50. By Tuesday, the stock had lost some of its initial momentum, closing at $22.81 a share, down $1.93, or 8 percent.

UUNet priced its 4.725-million-share initial stock sale at $14 a share, and the shares climbed to $27.25. On Tuesday, the stock fell $3.50 a share, or nearly 13 percent, to close at $24.

Maxis priced 3 million shares at $16 each before the stock rose to $20.25. On Tuesday, Maxis stock lost 50 cents a share, or 2.5 percent, to close at $19.50.

In addition to the fear that the supply of new high-tech stocks may run out, the IPO market also must contend with the coming summer doldrums, when investors' fancy turns to getting out of Dodge and away from red herrings.

"Traditionally, the summer months are laced with apathy and lack of aggressiveness on the part of new issues players," said David Menlow, president of the IPO Financial Network in Springfield, N.J. "There's not enough depth in the aftermarket and that's going to be a negative."

Menlow figures 13 companies will begin trading this week. Preliminary research suggests the following deals could fare well: Midcom Communications Inc., a Seattle telecommunications company, plans to offer more than 5 million shares at $11 to $13 each. ResMed Inc., an Australian company which makes and markets products for the diagnosis and treatment of a severe sleep disorder known as obstructive sleep apnea, plans to offer 3 million shares at $10 to $12 each. VidaMed Inc. of Menlo Park, Calif., plans to offer 2.5 million shares at $9 each. The company designs, develops and markets systems for the treatment of benign prostatic hyperplasia, a condition characterized by an enlarged prostate gland that causes discomfort and disrupts normal activity.

Securities Data Co. of Newark, N.J., reported that the dollar volume for high-tech IPOs this year is about $1.4 billion, or about 20 percent behind last year's level. Through May 24, 51 deals for high-tech companies had been completed, compared with 79 deals for the same period last year.

However, 30 high-tech IPOs have raised more than $660 million since April 1.

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