Hot,hot hot:Y2K's IPO Jitters

Joshua Cho

Amid all the hype and doomsday scenarios, the Year 2000 continues to be a very real aspect of business life. Depending on the type of business, complications resulting from computers not being able to digest the change in the last two digits of 1999 to 2000 could bring some operations to a screeching halt.

Experts agree that cable companies fall into that category. After all, cable networks are controlled by computers. And if an operator's network goes down, millions of customers could be left without service until the problem is located and rectified, causing an enormously expensive situation for the company.

And so in the months leading up to the date change, some initial public offering experts say that fear of this type scenario may lead companies to consider going public before the New Year, just in case they've overlooked a few buggy computers somewhere in their systems.

"After January 1, the market will be a soft cleansing machine as underwriters won't be interested in taking any company public that's not compliant," said IPOfinancial.com president David Menlow. "And if there's any fear that a company is not compliant, then valuation models are dramatically diminished."

However, others downplayed the significance of Y2K's impact on the IPO market and on companies who are planning to go public.

"That's not much of a concern as it was in the summer," said IPO Reporter managing editor Steve Lacey. "In the past you almost had a kind of rush to market because of fears that the Fed might raise rates or from what was going on in Japan. I don't sense any kind of panic now."

Another IPO watcher, IPO Desktop editor Francis Gaskins, said that Y2K concerns regarding companies who want to go public are "yesterday's news." He also believes that even if there are Y2K concerns for a company, they are reflected in the price of the IPO.

"We're so close to (the date change) happening," Gaskins said, "any (concern) in there has already been discounted."

But, regardless of how much importance one assigns to the new year, any fallout can have serious implications.

"A day or two into the new year, it will be more than apparent" which companies are compliant and which aren't, said Menlow. "It will be a black eye for any company (that's not compliant). It's going to be a very serious hit to many financial aspects of those companies."