Shares of Red Hat sizzled at nearly three times their offering price as the Linux software specialist heated up the new issues market with a red hot performance Wednesday in its public debut on Wall Street.
Meanwhile, the plot line for Blockbuster (BBI) took a melodramatic turn as the initial public offering for the video retail giant barely budged from its offering price.
Durham, N.C.-based Red Hat (RHAT) closed at 52 1/16, a gain of 272 percent from its offering price of 14. The company's 6-million-share, $83 million IPO opened red hot at 46 and climbed.
Shares hit a high of 56 3/4 in feverish trading of 17.9 million shares. It was the fifth most active stock of the day in a Nasdaq rally.
"It's obvious it was going to do well because it's playing to the fear and loathing for Microsoft," said Gail Bronson, senior analyst for IPO Monitor and founder of InternetAssist Ventures of Silicon Valley. "The question is, Can they sustain it?"
Blockbuster (BBI), a unit of Viacom (VIAB) priced its shares at $15 per share, below the expected price range of $16 to $18. It closed at 15 on volume of 11.7 million shares.
Viacom paid $7.7 billion for Blockbuster in 1994, when the company was still publicly traded under the ticker "BV."
Based on the IPO offering price, the company has a market value of $2.6 billion for its 175 million shares.
The company rang up a loss of $318 million on $3.9 billion in revenue last year.
Along with what some see as a glut of new issues, a possible hurdle for Blockbuster shares could be the coming of broadband technology and video-on-demand services from cable TV companies, which could steal share from Blockbuster's video-rental business.
One analyst said that strength by particular new issues will not necessarily indicate a revived overall IPO market. Of Red Hat, Vincent Slavin of Cantor Fitzgerald said: "It's a quality company. Quality companies will continue to attract investors, and garbage won't."
In addition to underwriter Goldman Sachs, the Red Hat IPO has some heavy hitters behind it, such as Intel (INTC), which will own a 5 percent stake.
Other Linux fans include IBM (IBM) and Oracle (ORCL). IBM said in a statement Tuesday that its Tivoli framework and applications will run on Red Hat's Linux platform.
Oracle said Tuesday it would launch a strategic business unit dedicated to developing, marketing and supporting Linux software.
Oracle also announced that Linuxcare, which provides Linux support solutions, has chosen Oracle's Internet platform to power its Linux database.
Often used in Web servers, Linux is an open operating system that competes with Microsoft's (MSFT) Windows and Windows NT, Apple's (AAPL) Mac OS, the Unix platform and other systems.
Jon Prial, director of Linux marketing for IBM, told CBS.MarketWatch.com that industry estimates put Linux at a growth rate of about 35 percent a year and that ncreasing numbers of Big Blue customers are interested in the platform.
Garden.com was set to debut its $57 million Hambrecht & Quist IPO in a bouquet of floral issues two weeks ago, joining with 1-800-Flowers (FLWS) and FTD.com (EFTC).
But after 1-800-Flowers wilted and FTD.com delayed its IPO, Garden.com decided to postpone its offering indefinitely due to market conditions.
New York-based HotJobs.com (HOTJ) hit the Street's pavement Tuesday slightly beneath its slashed offering price of $8. The job-listing Web site had already trimmed its range to $9 to $11. Shares fell to 7 5/8 by the time the market closed, though they climbed as high as 8 7/8 intraday. Shares rose 3/8 to 8 on Wednesday.
"Net stocks are in the toilet again," Cantor Fitzgerald's Slavin said early in the session. "The enthusiasm has wound down."
On Monday, HotJobs.com trimmed its price by about 30 percent from its previously expected $12 to $14. It decreased the number of shares offered to 3 million from 4.7 million.
"It's more of a tale of the market than of the company itself," said Ryan Jacob, chairman of Jacob Asset Management. "The stronger deals will get interest, but the (IPO) tone is decidedly negative right now. Companies will have to readjust to attract interest."
Written by Steve Gelsi, CBS MarketWatch