LiveWorld Transcripts

NBCi presents

IPO Financial Network President David Menlow
IPO Investing

July 20, 1999

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Wedgebuster-2: Can we trust strong buy/buy ratings from companies and analysts from issuing firm?

David Menlow: There is an axiom in the business, that once you are finished being a buyer, you are now automatically a seller. By the time most of the analysts first start to come onboard with buy recommendations on IPO's much of the buying has already taken place. The actual act of making a recommendation is somewhat obligatory, and we do not place a high degree of confidence in the overall concept of buy recommendations once the 25 day quiet period has expired. Except in the event of a precipitous decline in the price of the stock from it's opening highs till the expiration of that quiet period.

6: Edgar Online stumbled when it debuted, will Hoover's follow the same path?

David Menlow: No, we feel that Hoover's has a better story to tell, and they are far more aggressive and more visible than we saw with Edgar. We have the stock on our Hot List and, although the openings for stocks of this nature may not be of the kind we saw today with Gadzoox Networks, it is still a company that is very sensitive to the demands of the financial investor and will make whatever adjustments are necessary to stay in the front of the crowd of companies in their field.

Lupo: What should an investor look for in an IPO when doing research lets say through Bloomberg, Edgar, etc.?

David Menlow: There are three critical components for any initial analysis of whether or not to invest in an IPO. The first consideration is to have an internet-proven underwriter running the show. Number 2 would be to have a business plan that makes sense to the individual investor and institutions alike. One that will make you feel that you are looking at a company that has a product or service that will be in demand for an extended period. Third, and final, for the cursory evaluation, is to find out who the pre-IPO corporate investors are. If you recognize the names of corporations such as America Online, Motorola, Cisco and related "big money" then it is perfectly acceptable to feel that their commitment to the company in the pre-IPO phase will continue in the aftermarket.

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