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July 31, 2002

Public Offering a Bomb

By John A. Byrne

OTC Bulletin Board firms are noticing little demand for publicly-traded Nasdaq shares, despite a still pending official IPO of Nasdaq stock.

In a development that Nasdaq officials are playing down, about 45 percent of Nasdaq's outstanding shares - 34 million - became eligible for trading on Nasdaq's OTC Bulletin Board in July (ticker symbol: NDAQ).

So far, however, the response from investors for Nasdaq stock has been tepid.

As of mid-July, an average of 3,000 Nasdaq shares were trading daily on the bulletin board. The small volume could be attributed to several factors, including the obscure nature of the bulletin board, a lack of distribution channels and, of course, a bear market. A full-blown IPO on Nasdaq itself would garner the support of an underwriter, the benefit of retail brokerage distribution and widespread research.

Nasdaq Chief Executive Hardwick Simmons tells shareholders that his company will undertake an IPO or "another liquidity providing event" at the "appropriate time." Simmons says, "Nasdaq does not intend to participate in, or encourage these bulletin board activities generally associated with underwritten public offerings at this time."

Among the earliest bulletin board dealers in Nasdaq shares were Bear Stearns; Hill, Thompson, Magid; Weeden & Co.; Schwab Capital Markets and Citadel Securities. One dealer was quoting a market of $11.60 to $12.00, at the close of business on July 18.