AvantGo IPO reflects optimism in wireless-device market

AvantGo, which makes software that lets handheld computers access Web content, surged in its initial public offering today--the latest in a recent series of strong IPOs.

Shares of San Mateo, Calif.-based AvantGo rose $15.75, or 127 percent, to $27.75 before falling back to cose at $20. Yesterday, the company raised $66 million through the sale of 5.5 million shares at $12 each, $1 above the $9 to $11 price range. Credit Suisse First Boston handled the sale.

David Menlow, president of the IPO Financial Network, said AvantGo's debut shows that investors are warming back up to the wireless-device market.

"We've kind of crossed the threshold of uncertainty back into the promise of growth in this sector," Menlow said. "There's strength coming into this entire sector."

Handheld-computer makers Palm and Handspring, which have embraced wireless Web access, have bounced back in the last month, regaining some of their losses from April's market plunge.

Since Aug. 24, shares of Handspring have jumped 100 percent and shares of Palm have shot up 38 percent. Analysts say the strong showings of these companies signal robust health for the larger wireless sector.

"That's a significant move, and it shows that investors are coming back to the wireless," said Bill Crawford, an analyst with Merrill Lynch.

AvantGo's software allows handheld-computer owners to access Web content from The New York Times, the Weather Channel and numerous other sites. AvantGo software also lets employees connect to corporate intranets on their handhelds.

The market for digital-wireless subscribers is expected to grow to 828 million by the end of 2003, compared with 217 million in 1998, according to Dataquest predictions that AvantGo cited in a Securities and Exchange Commission filing.

Corporate customers are a key market for wireless, Crawford said, because they can afford the monthly fees.

AvantGo's IPO follows

IPO forecast

on the tail of an offering by CoSine Communications, which almost tripled yesterday in its first day of trading. On Friday, InRange Technology almost doubled despite a turbulent day in the market that followed a revenue warning by Intel.

Menlow expects to see more strong showings in the near future in the wake of an IPO dry spell at the end of August and beginning of September.

"Investors have been waiting with their arms folded," he said. "We can expect to see some more upward surprises on stocks that otherwise would not show that kind of a performance."