October 1999

Contents

Foundry IPO Awes Wall Street

Computer networking firm Foundry Networks Inc. awed the stock market as it outpaced other debuts and made Wall Street's record books as the second largest first-day percentage gainer for a U.S. initial public offering. Shares of the Sunnyvale, Calif. firm, which makes low-cost switches and routers for computer networks, closed up 131-1/4, or 525 percent, at 156-1/4 on the Nasdaq with about 12.1 million shares traded. Its gains came despite a down day for stocks that saw the Dow Jones Industrial Average fall 28 points to 10,276. Foundry priced five million shares at $25, above its upwardly revised price range, and raised $125 million in the deal. Deutsche Banc Alex Brown was the lead underwriter.

The company's performance nudged Marketwatch.com, which had climbed 474 percent on its first day in January, out of the No. 2 spot on the list of top first-day percentage gainers for IPOs, according to Thomson Financial Securities Data. TheGlobe.com still holds the No. 1 spot, with its 606 percent gain in November 1998. Unlike most recent new issues, Foundry has already turned a profit of $3.3 million on revenue of $39.5 million for the six months ended June 30.

Its performance confirmed the recent euphoria for fast-growing infrastructure firms that provide the ``plumbing'' to make the Internet and e-commerce work more efficiently. Cisco Systems Inc.'s $6.86 billion purchase of Cerent Corp., which had planned to go public, set the stage for high valuations in the networking arena. Cisco is also one of Foundry's competitors in the enterprise network space. Internet-based voice and fax services provider ITXC Corp. raised $75 million in its IPO. It, too, was poised to benefit from the growth of the Internet. The Princeton, N.J.-based firm's shares closed up 16-1/4 at 28-1/4 on the Nasdaq after its $12 a share IPO. Intel Corp. holds an 11.6 percent stake in the Internet firm. Shares of wireless communications provider AirGate PCS Inc. closed up 9-13/16 at 26-13/16 after its $17 a share IPO. AirGate, which offers digital products and services under the Sprint PCS Group (personal communications services) and Sprint brands in the southeast, raised $113.9 million after pricing the IPO at the top of its upwardly, revised range.

Chase To Buy Hambrecht & Quist

Chase Manhattan Corp., the nation's second biggest bank, said it would buy San Francisco-based Hambrecht & Quist Group for $1.35 billion in cash to extend its reach in the lucrative investment banking business. The bank said it would pay $50 a share -- a 22 percent premium -- for the West Coast investment bank. Hambrecht & Quist is the last major San Francisco-based investment bank to be snapped up by a commercial bank. It launched high-flying technology companies such as Apple Computer Inc. but has lost market share to deep-pocketed Wall Street rivals such as Goldman Sachs Group Inc. and Morgan Stanley Dean Witter & Co.

Both Chase and Hambrecht & Quist in recent months have been linked with other brokerages and banks as potential deal partners, following last year's industry consolidation that gave rise to powerful full-service financial services rivals such as Citigroup Inc. Hambrecht & Quist's stock price jumped 7-13/16 to 48-7/8 while Chase's share price fell 5/16 to 73-13/16. Hambrecht & Quist, whose recent third-quarter profits rose 167 percent to $37.1 million, helped take public tech companies such as Amazon.com Inc. and Netscape Communications. In this deal, it would assume the Chase name and remain based in San Francisco. By teaming up with Chase and adding lending to its product line-up, Hambrecht & Quist could take aim at larger Wall Street competitors who have stolen market share in technology stock underwriting.

Chase, for its part, would gain a foothold in the technology sector's explosive growth and plug a hole as it builds its investment bank. Operationally, Hambrecht & Quist would join Chase's investment banking arm. As part of the deal, Chase would set up a $200 million retention pool of its own stock, payable over four years, to Hambrecht & Quist employees. The retention of top investment bankers is vital in an acquisition, because of the bankers' personal relationships with companies. The agreement has been approved by the boards of both companies and is expected to be completed by the end of this year. Chase said it would commence a cash tender offer within the next five business days.

Techies.com Boosts New York Companies With Unprecedented Opportunity

Addressing the most critical issue currently facing New York area business, techies.com announced the launch of a local technology career source. Featuring insider industry information and a wealth of career opportunities, techies.com is the most comprehensive online resource for the leaders of the next millennium and the corporations who desire them.

As technology continues its unprecedented growth, the need for qualified technology professionals looms larger than ever. Led by individuals who live and breathe the technology industry and know the New York marketplace, techies.com effectively manages the career growth of technology professionals by connecting them directly to established local companies who recognize their professional interests, creative vision and market worth. By connecting New York corporations to qualified candidates, techies.com effectively eliminates the inefficiency and costs associated with headhunters and middlemen as well as assure that shared and supplied personal information is secure.

By linking to the New York Area career community at www.newyork.techies.com, technology professionals receive real-time career resources such as career planning tools, a job search engine, industry-related articles and reference materials. Based on its success of attracting significant employers and quickly establishing its presence in other preciously launched markets, techies.com is now able to offer New York area job seekers the same in-depth information about the technology department behind the jobs as it has in other large U.S. cities.

Moving far beyond a basic job description database, techies.com is a locally customized site in which corporations can reach potential employees by sharing information about upcoming projects and the cultures of their organizations.

DriveOff.com Launches First Ever Auto Buying Site

While numerous web sites claim to offer online car buying, DriveOff.com Inc. launched the nation's first automotive e-commerce web site. Until now, consumers had only two choices when shopping for vehicles online. Most sites merely take consumers' information over the web and sell it to a dealer/returning consumers to the traditional car buying process. Other sites claim to sell cars direct to consumers online, but really only serve as traditional brokers/requiring consumers to reserve their vehicle and finalize financial deal terms over the phone with salespeople. DriveOff.com differentiates itself by offering up-front, binding price and monthly payment quotes, as well as complete online deal disclosure. The terms of the agreement remains consistent through completion of the deal.

Using DriveOff.com's robust research library, consumers select a vehicle on the site and instantly gather binding price and monthly payment quotes -- whether they lease, finance or pay cash -- prior to supplying any personal or financial information. By integrating financing into the payment quote, consumers are guaranteed that the deal they configure online will be honored at vehicle delivery. When ready to buy, consumers confirm their order by placing a $250 deposit online. Consumers are then given password-protected access to their Personal Auto Center, which provides status, financing, vehicle options and delivery information. Consumers use their Personal Auto Center to track, control and finalize the purchase process right up to delivery at a participating local dealer. For those consumers who want human interaction, trained customer service representatives are just a phone call away.

After finalizing their deal online, DriveOff.com delivers a DriveOff Deal Kit to consumers via overnight mail. The Deal Kit contains completed originals of all closing documents, leaving nothing to chance between online deal completion and delivery at the participating dealership. Consumers visit the dealership for their scheduled appointment, sign the agreement forms in their Deal Kit and drive off in their new vehicle.

NCR And Retail Systems Group Announce Alliance

NCR Corporation and Retail Systems Group, LLC (RSG) today announced that RSG has been named an NCR retail solution partner and value added reseller (VAR). Under a sales referral and reseller agreement, RSG's solutions are certified on NCR's store automation platforms and the two companies will partner to deliver business solutions to their mutual customers in the convenience store and petroleum marketing industries.

NCR provides complete business solutions to the convenience store industry, offering industry-leading technology, business consulting and customer support services, and partnering with best-in-class software developers and marketers. RSG is a leading consultant, software provider and systems integrator for the convenience store industry. RSG's Latitude P.O.S.(TM) application is a 32-bit point-of-sale (POS) system designed by convenience store operators to provide an integrated, flexible, open architecture solution.

RSG's Latitude P.O.S. application runs on NCR's 7454 point-of-service (POS) workstations. Designed to withstand the rigors of harsh retail environments, such as those found in convenience stores, the NCR 7454 incorporates advanced multimedia and Web browser capabilities. It not only supports conventional checkout operations, but also can be used as a web kiosk to deliver consumer self-service applications.

Latitude P.O.S. runs under the MicrosoftÆ WindowsÆ family of operating systems and utilizes scanning and touch screen technology, eliminating the need for an external keyboard. Latitude's intuitive graphical user interface makes it easy to learn, reducing training time significantly. Latitude P.O.S. can be integrated to all major fuel dispensing equipment and island card readers. It also supports a wide range of credit, debit, and fleet transactions for many credit networks.

Japanese Business in the United States

  • The city of Iizuka in Fukuoka prefecture has awarded a $50,000 annual contract to Stanford University's Center for the Study of Language and Information to advise it on how to develop an information technology industry Center staff members will travel twice a year to Iizuka to lecture.
  • Aisin Seiki Co. plans to build a new line in the U.S. that will make cast-aluminum products for summer 2001, when it goes into operation. The auto-parts maker will spend about 5 billion yen on the new line at Aisin Automotive Casting Co., its manufacturing unit in Kentucky.
  • Sankyo Co. said it will conduct joint research with U.S. start-up Quark Biotech Inc. on the genes responsible for immuno deficiency disorders. By isolating the genes, the two hope to develop new drugs for treating such ailments as chronic articular rheumatism, hepatitis and nephritis.
  • Nitto Kohki Co. plans to invest 100 million yen in a new U.S. manufacturing subsidiary that will produce pipe couplings. The subsidiary, to be established this month with capital of $300,000, will primarily produce air conduit couplings for automobile production equipment. Nitto Kohki hopes to begin shipping the couplings in the spring.
  • Tokico Ltd. and Visteon Automotive Systems have received a joint order from Ford Motor Co. to supply suspension systems for the Detroit automaker's high-end models. The systems use electronic control technology to reduce the level of vibration from the road surface. Visteon, a Ford affiliate based in Michigan, is to provide the electronic controllers while a Tokico subsidiary in Kentucky is to assemble the main suspension unit.
  • American Honda Motor Co. has decided to embark on a full-scale effort to sell its vehicles over the Internet. The company will introduce Dealer-Point technology to its U.S. computer network linking 1,250 Honda and Acura sales outlets. Dealer-Point, a system product of Microsoft Corp. that is used in Microsoft's CarPoint Internet site, will allow Honda and Acura dealers to respond to Internet inquiries and speedily provide information such as inventory and production data.
  • Ogura Clutch Co., a leading maker of clutches used in car air conditioners, plans to invest 4-5 billion yen to construct a U.S. plant in the state of Michigan to produce major components. The plant, with floor space of 10,000 sq. meters, is slated to come on stream in December 2001.
Contact Information: Morgen, Evan & Company, Inc. Copyright 1999