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Q3 IPOs: Few but Still Notable

Despite the usual seasonal slowdown, some deals are succeeding


The third quarter is generally light for IPOs because of the August doldrums. And this year was no different: Only 23 deals came out. But of course, the implosion of the Facebook (NASDAQ:FB) IPO was another key factor.

Despite all this, there were some bright spots. Just look at Palo Alto Networks (NYSE:PANW), which is a next-generation provider of security solutions. Since coming public in mid-July, the company’s shares are up about 52%.  Palo Alto is certainly growing at a torrid rate, with revenues spiking 88% to $75.6 million in the latest quarter.

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The security business has a variety drivers. For example, the surge in new technologies like mobile devices and social networks has created huge demand. At the same time, governments are getting more serious about issuing new regulations to protect consumers.

As a result, the IPO market will likely continue to be a hotbed for security deal. Consider that Qualys is planning to go public this week. The company leverages cloud technologies to provide security.

And speaking of the cloud, this is another strong spot for IPO investors. A good example is Eloqua (NASDAQ:ELOQ), which has software that helps companies manage their marketing. The company came public in early August, and the stock has since gone up about 56%.

Cloud technology essentially delivers software via the Internet. Because of this, customers have no need to build out their own data centers and hire expensive info-tech consultants. They also have the benefit of real-time updates because the data is centralized.

Over the next few months, the IPO market will see more interesting cloud deals. One of the most anticipated is WorkDay, which provides enterprise resource planning (ERP) solutions. The founders actually created the pioneer in the space, PeopleSoft.

And yes, mobile is another popular area for IPO investors. Interestingly enough, this was the angle for the Trulia (NYSE:TRLA) deal. The company is a search engine that helps consumers look for homes.

Yet Trulia gets about a third of its weekend traffic from its mobile devices. In fact, its mobile ad rates are higher than what it gets from the desktop. The main reason is that if someone is using a mobile app to search for real estate, he or she is probably thinking about making a purchase. This is certainly something advertisers are willing to pay a premium for.

Last week, Trulia came public at $17 and the shares are now up 31%. Here’s to a busier — and more prosperous fourth quarter.

Tom Taulli runs the InvestorPlace blog IPOPlaybook, a site dedicated to the hottest news and rumors about initial public offerings. He also is the author of “All About Short Selling” and “All About Commodities.” Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.

Article printed from InvestorPlace Media,

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