2000 Year-in-Review: Dashed Dreams, Crumbling Fortunes
By Jeffrey R. Hirschkorn, IPO Analyst

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Boy what a difference a year makes. In 1999, the Street was fascinated with money losing operations that yielded first-rate venture capitalists and soared on the first day, but by the time 2000 started that phenomenon began to diminish. The year did start off on the right foot with many new issues generating returns north of 100% as most of the debutants followed the stellar trading of the Nasdaq Composite.

"The 2000 IPO market was a year of extremes, beginning in a frenzy and ending in a collapse," said Renaissance Capital Management in an extensive report that discusses all of the ins and outs of the year. "Companies raised a record amount of proceeds in 2000 due in part to a large number of spin-offs by conglomerates, both domestic and foreign."

With most issuers and investment bankers waiting on the sidelines for the markets to settle into a more leisure pattern, Edmund Cashman, managing director of equity capital markets at Baltimore-based Legg Mason Wood Walker, said in a recent interview that "we are due for a pause and it is healthy to have one, for buyers to get back to the point of judging what is quality and what is not."

Adds Steven Tuen, director of research at IPO Value Monitor and executive advisor to The Internet Fund: "The year started off punch drunk and ended on a rather subdued note. Valuations have always been an issue of great debate for technology concerns because the majority of those entities have no earnings and were still in early stages of corporate life. We saw companies get valued on a multiple of revenues, but that method failed."

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