Eyretel and Advanced Technology suffer from new-economy malaise

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Investors' increasingly cautious approach to technology shares led to disappointing stock market debuts for Eyretel and Advanced Technology yesterday. However, while both companies' shares closed below their issue price, they suffered from a lack of buying interest rather than heavy selling.

Eyretel, which produces software to analyse company phone calls, was worst hit, closing at 116.5p, 22 per cent below its issue price of 150p. There were just three sellers, resulting in a turnover of 5 per cent of the company. New issues typically see up to 20 per cent of their shares traded on the day of issue.

Roger Keenan, Eyretel's founder and deputy chairman, said: "I'm very pleased the institutions we placed shares with have been so loyal. This company was set up in a garage nine years ago and we're very proud to be part of a public company."

Eyretel's management own 22 per cent of the company while employees own 8 per cent.

The lacklustre debut did not, however, spoil the group's flotation party on Monday, when conditional dealings in the shares began. The float was last week scaled back to raise £30m, £15m less than envisaged.

Advanced Technology, which provides remote meter-reading services, surged from 250p to 320p as brokers marked it up following its admission to AIM. But lack of interest saw the shares close at 245p. There were just two trades, at 253p and 250p.

The setbacks are likely to mean forthcoming technology new issues will be priced more conservatively. These include Yes TV, the video-on-demand provider looking for a £810m float. Yes TV's institutional offer closed yesterday. Its pricing is due on Monday. Scott Beattie, a capital markets director at Robert Fleming, the bank handling the float, said: "To price it at the top end of the range in these markets would perhaps not be a sensible thing to do."

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