Filling Coffers

 
 
By Larry Dignan  |  Posted 2001-02-12 Email Print this article Print
 
 
 
 
 
 
 

The market for initial public offerings may be stagnant, but the market for secondary stock and debt offerings sure is heating up.

The market for initial public offerings may be stagnant, but the market for secondary stock and debt offerings sure is heating up. In recent days, many tech highfliers have floated debt and stock offerings in a move to fill their coffers. These offerings havent exactly been chump change either.

Ciena (Nasdaq: CIEN) raised $1.5 billion last week by floating 11 million shares in a secondary offering and selling $600 million in convertible notes. A convertible bond is a hybrid security that usually offers current income and can be converted into company stock. Exodus Communications (Nasdaq: EXDS) raised $800 million in a secondary and convertible debt offering.

And those companies arent alone. Adelphia Communications (Nasdaq:ADLAC), Intuit (Nasdaq: INTU) and XO Communications (Nasdaq: XOXO) have also either raised cash or announced plans to float securities.

Qwest Communications International (NYSE: Q) is calling about $1.1 billion of its bonds, and plans to offer $3 billion in debt.

The activity represents "the beginning of a resurgence in that sector," says Morgan Stanley bond analyst Anand Iyer.

Ciena says the net proceeds from its offerings will be used to fund operations and for "general corporate purposes," including potential acquisitions. Ciena, armed with a strong balance sheet, can acquire start-ups as a way to get new technologies.

Exodus cited European expansion plans as a reason to go to the funding well. But with the outlook uncertain as Exodus dot-com customers struggle, the company figured it would make sense to strike now and be self-sufficient.

UBS Warburg analyst John Hodulik has written that the Exodus offering should be just enough to fund the companys business plan through to real profitability. First Call expects an operating profit in the first quarter of 2002.

 
 
 
 
Business Editor
ldignan@ziffdavisenterprise.com
Larry formerly served as the East Coast news editor and Finance Editor at CNET News.com. Prior to that, he was editor of Ziff Davis Inter@ctive Investor, which was, according to Barron's, a Top-10 financial site in the late 1990s. Larry has covered the technology and financial services industry since 1995, publishing articles in WallStreetWeek.com, Inter@ctive Week, The New York Times, and Financial Planning magazine. He's a graduate of the Columbia School of Journalism.
 
 
 
 
 
 
 

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