The day after Morgan Stanley Dean Witter started the roadshow for Healtheon - its fifth internet initial public offering of the year - the leading global investment bank in technology investment banking suddenly pulled the plug. Although the firm says it had commitments from enough institutional investors to go forward, the markets suddenly nose-dived on the news that Long-Term Capital Management was sinking. Internet IPOs are blatantly speculative, and Healtheon's aftermarket performance in early October was difficult to predict. So Rex Golding, Morgan's co-head of the global technology group, advised a private placement instead.
"We hit terrible market conditions," says Golding, who had been worrying about the environment for IPOs ever since the summer slowdown, when scores were pulled, and August 31 when there was a sell-off of even big-cap tech stocks such as Microsoft, Intel and Cisco. By late October, however, the markets rebounded, and individual investors propelled internet stocks to record heights. "The markets are challenging for a finance professional," admits Golding. The heavy retail buying, often by young, online investors who buy "anything ending in a .com," has "disintermediated the professional", he complains.
Despite the gloom about Russia, Brazil, Japan and Y2K - a technology boom continues.