Pre-Facebook IPOs show investors may 'like' enterprise software more than social networking

In the run-up to Facebook's initial public offering expected at once month, a host of other tech companies have been rushing to Wall Street. And three soaring stock market debuts within 24 hours may hint at what's then for Silicon Valley as the social-networking craze nears its peak.

While the results are a positive sign for the tech industry in its entirety, analysts say the response to all three companies shows investors believe there is money to be made in the commercial tech sector. That's where companies compete to supply corporations and other large organizations with innovative tools for cloud computing and "big data" crunching.

The surface

On the surface, those companies may be less sexy than social networks or smartphone apps, nevertheless experts say they are a crucial part of the tech economy.

Santa Clara-based Infoblox, which makes networking software, saw its stock rise more than 40 percent from an IPO price of $16 previously closing at $21.30 on its first day of trading Friday. Fellow newcomer Proofpoint, a Sunnyvale maker of data security software, on the spur of the moment jumped nearly 30 percent from an IPO price of $13 in its debut previously ending at $14.08, up 8.3 percent higher than its IPO price.

In addition, Enderle said many serious investors see commercial tech companies as solid opportunities, as a stronger economy gives business clients the confidence to buy new equipment and research.

"There has been this hysterical attraction to social media, driven largely by Facebook, and that has preoccupied potential investors," he said Friday. Nevertheless as his company went through its pre-IPO "roadshow" with prospective investors, Thomas added, "there seemed to be a drift back to the fundamentals of the business -- 'Is it profitable?' -- and on solving real problems for enterprise."

Thomas predicted more IPOs in coming months from commercial tech companies. "As all the social networking guys go public, and not all the stocks work as so then as they should," he said, "there will be a return to real companies."

Among recent social-networking IPOs, San Francisco gaming company Zynga has fallen from a high of 59 percent above its $10 IPO price to $9.22 at Friday's close. LinkedIn and Yelp have traded narrowly above the gains they made on wildly successful first days of trading. Groupon, nevertheless, has lost more than half the market capitalization it realized on its first day afterwards the biggest web IPO since Google.

Meanwhile, Palo Alto-based Jive Software -- which competes in the commercial sector by making social-networking software for businesses -- has managed to stay higher than both its IPO price of $12 and, afterwards some early turbulence, its first-day close of $15.05. Jive's shares closed Friday at $24.77, more than double its IPO price four months afterwards it debuted on the same week as Groupon.

The top 10 tech IPOs so far this year have been

Eight of the top 10 tech IPOs so far this year have been by enterprise software companies, according to Paul Bard, director of innovation for Renaissance Capital in Greenwich, Conn. During technology IPOs in its entirety have delivered average returns of 41 percent this year, Bard said, enterprise software has seen average returns of 65 percent.