Then the Nasdaq Composite turned south. The fireworks of yesteryear may be over for now. But the party goes on. Silicon Valley is alive and well.

Four of the 23 companies that have gone public this year fly their flags over the Valley. They are FormFactor (FORM: chart), InterVideo (IVII: chart), iPass (IPAS: chart) and NETGEAR (( NTGR)).

Each IPO was priced above its original filing range. That’s a good gauge of investor demand. Each company reported rapid growth in revenues. That’s very helpful if a company wished to go public in today’s IPO market. Each company reported profits.

Profits??? Now that’s something new from The Valley.

As a result of these condiments being sprinkled into the IPO vat, the Valley’s IPOs have been outperformed all other 2003 IPOs in the aftermarket and they have outperformed the Nasdaq Composite Index as well.

As of Friday, Aug. 22, 2003, the average gain for the four horsemen of Silicon Valley was up 39.1 percent each from their initial offering prices. Compare this to the average gain for all other 2003 IPOs, up 24 percent each, and the Nasdaq Composite Index, up 32.8 percent. The Nasdaq Composite closed Friday at 1,765.32, up from its close of 1,335.51 on Dec. 31, 2002.

But the birth or revival of an IPO industrial sector requires a successful launch from an industry leader. Let’s take a look at a past hit and a past flop.

A Hit Named eBay:
In 1998, the stock market slid and the Nasdaq Composite lost 29.5 percent of its value -- falling from its closing high of 2,014.25 set on July 20 to its closing low of 1,419.12 set on Oct. 8. In that span of less than three months, the IPO production line dried up.

From January through August 1998, bankers had priced an average of 40 IPOs each month, according to “The IPO Aftermarket,” a now defunct weekly newsletter. In September 1998, bankers priced just three IPOs. But one was eBay (Nasdaq: EBAY). It exploded for an opening-day gain of 163.2 percent. The Nasdaq Composite continued to slide to its yearly low by early October. But the Internet era had quietly been ushered in.

A Flop in Cleveland:
During the summer of 1998, the Cleveland Indians Baseball team was in first place in the American League Central, and its outlook was bright. The team was defending American League Champion, after winning the pennant in 1997. The Indians went public at $15 a share on June 4, 1998. There were rumors that the New York Yankees and the Pittsburgh Pirates would soon follow. While the baseball team was hitting home runs in the American League, its IPO was striking out on Wall Street. The stock sank to about $5 a share, and the dreams of any other baseball teams going public went up like smoke on a windy day. By 2000, the Cleveland Indians were taken private.

Fast forward to August 2003: Four companies from Silicon Valley have gone public this year; each IPO has done very well in the aftermarket. However, no Valley companies have filed plans to go public this year. These four companies were holdovers from the past. Two deals were filed in 2000 and the other two in 2002.

As of now, the IPO cupboard is bare of Silicon Valley companies. But what has happened over the last few months in the 2003 IPO market has not escaped anyone’s notice in the Valley. And it has not been missed by venture capitalists. Most important of all, it has not been missed on the Street.