Technology stocks selloff may turn IPO chill into IPO freeze

Tue Feb 16, 2016 1:23am EST
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By Heather Somerville

SAN FRANCISCO (Reuters) - This winter was supposed to be Nutanix's time to shine.

The high-tech computing and storage company filed for a hotly anticipated initial public offering in December, ready to woo investors early in the New Year.

But so far, Nutanix hasn't been able to shake the chill of what is shaping up to be a largely barren season for IPOs. And with the battering technology stocks have suffered in the past couple of weeks, and the dismal performance of technology IPOs in the past couple of years, any idea of a springtime busy with technology offerings may also be wishful thinking.

Eric Jensen, an IPO attorney for Cooley LLP, said his firm has "a pretty significant pipeline of deals," with about 32 companies that have filed with regulators for IPOs, either confidentially or publicly. But he said plans by the five or so technology firms with a $1 billion-plus valuation in that queue, "are all stalled out."

For a graphic showing the number and value of U.S. technology IPOs, see here

The cratering in technology stocks has also helped to push down the valuations of private tech companies and interest in investing in them, say capital markets experts. Fewer options for capital raising means that high-flying companies may need to rein in spending, delay some ambitious expansion plans and even lay off staff, according to investors and tech consultants.

IPO experts also say they expect more startups will get acquired cheaply, and go the way of Good Technology, a mobile security company once valued at $1 billion and last year sold to Blackberry for $425 million. It had planned an IPO but that never got off the ground.

"A lot of these companies are going to have to rein in their costs in order to survive," said Matt Brady, co-founder and chief operating officer of investment firm Militello Capital.   Continued...

The Nasdaq logo is etched into glass at the headquarters for the Nasdaq in New York March 3, 2015. REUTERS/Lucas Jackson