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Snow and Ice Cool an Otherwise Hot IPO Market

By David Armstrong   Fox Market Wire
The massive snow storm that covered much of the East Coast paralyzed the Securities and Exchange Commission and froze up some Initial Public Offerings planned for Thursday. But one, Extensity, Inc., made it through the ice.

Extensity markets software that promises to reduce a company's cost of processing its employees' travel and business expenses. Extensity, based in Emeryville, Calif., has licensing agreements with nearly 60 companies, including Cisco, Sara Lee, and the University of California.

The company came to Wall Street offering 4 million shares at $20, but began trading at $71.25. The price briefly popped above $80, but looked to end the day near $73.

Irv DeGraw, research director at Worldfinancenet.com, believes Extensity is a rarity in the dot.com world, because it has tapped a unique niche in a strong sector.

"Anything which works at getting more productivity out of the labor force is very strong," he said. "They were in the right place at the right time."

The company's success also seemed to reassure increasingly skeptical investors, who have wondered how the IPO market would perform this year.

After an early dry spell, offerings such as Extensity, and last week's highly valued Neoforma, demonstrate that while e-commerce may be falling out of favor with investors, all is not dead in the high-tech world. If a company can tap the right sector, it can still reap substantial gains in a Wall Street debut.

One of the delayed offerings expected to heat up the winter freeze when it debuts later Friday is 724 Solutions of Toronto, which will offer 6 million shares at about $21 a share.

The company markets Internet-enabled wireless technology to financial companies for remote online banking, brokerage and e-commerce services. Degraw describes it is a "solid company in a breakthrough sector."

But the biggest IPO story on the street Thursday also was the most boring. John Hancock Financial Services, Inc. began trading 102 million shares on the New York Stock Exchange Thursday. Originally priced at $17 a share, the deal looked to raise Hancock $1.73 billion. An additional 229.7 million shares were distributed to policy holders.

In Thursday's trading, after briefly bouncing up to a high of $18 5/16, John Hancock's stock looked to close the day close to where it began, at $17 �.

Though that kind of steady price on the first day of trading is uncommon in the age of Internet start-ups with extreme valuations and first-day moon shots, analysts weren't surprised.

"It's doing what's expected," DeGraw said. "It's a large deal, and large deals never have large run-ups."

Instead, a behemoth as well known as John Hancock comes out of the gate behaving like a real security, he said. But enthusiasm for John Hancock stocks may have been dampened by rising interest rates.

"Their timing was horrible," DeGraw said. "The rates are up and we expect them to go a little higher. That has a bit of a depressing effect."

John Hancock's decision to "demutualize," or go from a company owned by policy holders to one owned by stock holders, is necessary to compete in a world of consolidating financial services firms, the company has said.

It's a decision also taken by the Metropolitan Life Insurance Company, the nation's second largest insurance company behind Prudential. MetLife also filed with regulators to demutualize and sell 255 million shares of stock at $14 to $24 a share. That stock is expected to be offered in March.

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