NEW YORK, July 8: Underwriters are trying to even out the bumps and jolts in the cyclical market for new stocks and keep the lucrative "IPO window" open longer, according to one initial public offering analyst.

President of the IPO Financial Network David Menlow says Wall Street investment banks are pricing new stocks conservatively, knowing sky-high prices can dampen an otherwise healthy market.

Profits from underwriting bulged the bottomline at many firms, another reason to protect the market, he said.

"The IPO market is here to stay. It's a cash cow. Underwriters are not going to kill the goose that lays the golden eggs. And they are no longer going to be held hostage to market cycles," Menlow said from his Springfield, NJ headquarters.

If underwriters get a sense their upward price revisions "are stretching the elastic band too far", they back off, he said. "In the past, they kept pushing and pushing until the market fell under its own weight.

"They are very cognizant of the fact that they can unseat positives in the marketplace easily if they raise prices hastily," he said.

That leaves underwriters battling between wanting to get the highest price for their client, helping the company go public, or allowing speculation into their profitable marketplace.

But underwriters were quick to disagree."The market is a concern. But on a syndicate desk your role is to interpret the near-term demand and ... reflect the fair market price," said Mitch Whiteford, a principal at Robertson Stephens & Co working in capital markets and syndicate, the division that handles new issues.

He said when banks exercise restraint, it is by declining to bring some companies to the markets that might not be suitable for the public stock markets, not in the pricing.

Salomon Brothers' managing director of equity capital markets, William Schreier, also disagreed - "the market's going to do what it's going to. No amount of tweaking will change that. If investors stop becoming receptive to new issues, there's nothing any firm can do to change that," Schreier said.

Menlow said the recent spate of mergers could "clear the way for larger deals and greater competition, which could ultimately be the IPO market's undoing. Larger deals take more money out of the marketplace," which can crimp demand.This year, Nationsbank Corp agreed to buy Montgomery Securities and BankAmerica Corp said it would buy Robertson Stephens Inc. Bankers Trust New York Corp agreed to acquire Alex Brown & Sons Inc, and Swiss Bank Corp agreed to buy Dillon Read & Co.The hottest deal looks like At Home Corp, which analysts say could jump three to five points when shares of the Internet company open for trading. Morgan Stanley will lead the 8-million-share IPO going for $7 to $9 a share.

The biggest is a $300-million offering by Equity Office Properties, a Chicago real estate investment trust (REIT). It could rise based on the success of its chairman, real estate baron Samuel Zell; its large portfolio of properties and the recent popularity of REITS as defensive stocks, analysts say.Other IPOs that could rise include Metals USA Inc, which aims to consolidate the metal processing industry, and Axiom Inc from Lehman Brothers. Axiom's software is used to collect billing data.

Axiom could rise three-quarters to a point or more because of the popularity of its business, according to John Fitzgibbon, editor of the IPO after market.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.