Don't look now, but in the wake of the debacle that was the Facebook (Nasdaq: FB) listing, the IPO market is starting to make a little comeback. A few smaller companies have gone public, and their stock has actually gone up in value, unlike that of the notorious social-media company. Among these young bucks is a software delivery firm called ServiceNow (NYSE: NOW). What's notable about the company is the big bank that lead-managed its IPO is none other than Morgan Stanley (NYSE: MS), which drew lusty and deserved boos for its handling of the Facebook issue.

Pointing fingers
It's hard to determine who looked worse in the Facebook flop -- the company itself, or its lead underwriter. Very shortly before the online company hit the stock exchange, Morgan Stanley's consumer Internet analyst sliced his revenue forecasts on the company. Whoops. Although that certainly wasn't the only factor in the subsequent nose-dive of the shares -- Nasdaq's management of the first day of trading and the defection of big advertiser General Motors from Facebook also contributed -- it definitely didn't help.

As if that weren't enough bad publicity, Morgan Stanley engendered much more when it was revealed that the bank had only informed selected (read: VIP) clients about the lowered forecasts. Fellow underwriters Goldman Sachs and JPMorgan Chase (NYSE: JPM) did the same, but since Morgan Stanley was in front, it took the most heat.

So although it isn't 100% at fault for everything that went wrong with Facebook, it's still going to have to absorb a lot of body blows over the IPO. These include a raft of shareholder lawsuits, not to mention certain regulatory agencies unhappy with the timing of the forecast cuts.

No time for flops
So the company badly needs to get on with its life and repair the damage to its IPO reputation. It's currently No. 1 in the standings for IPO underwriting among banks, thanks largely to the Facebook issue, despite that issue's shortcomings. Strip out the social network, though, and you have a much tighter and more competitive field; for all of 2011, Morgan Stanley was No. 1 with $9.7 billion in proceeds. No. 2, Bank of America's (NYSE: BAC) Merrill Lynch, wasn't all that far behind, at $8.3 billion. Goldman Sachs ($6 billion) and JPMorgan ($3.8 billion), rounding out the top four, were also well in the single billion digits.

Although Morgan Stanley's ranking and proceeds numbers look strong, the bank's final take from IPOs was less impressive on a relative basis. All told, its underwriting revenues declined 12% year on year in 2011. And this was almost entirely due to stocks -- the monies brought in from equity underwriting fell an uncomfortable 22% during that period.

Little guys to the rescue
Of course, two months is a long time in the short-minded view of many stock traders -- which is one reason few were spooked that the name at the top of ServiceNow's stock registration statement belonged to none other than Morgan Stanley. If that gave anyone pause for thought, it was promptly forgotten in the flurry of ServiceNow's first day of trading, which saw it open at $5.75 over its $18 issue price for a 32% gain. The shares have come down some, but not by much; they recently closed at $24.27.

It helped that the company's fundamentals aren't bad for a tech IPO -- its top line nearly doubled from 2010 to 2011, while it turned a profit in the latter year (at a respectable net margin of 12%). Meanwhile, as far as the bank is concerned, it seemed to have learned its lesson from the Facebook flop, conducting a clean IPO apparently free of last-minute forecast revisions and selective information releases.

It's the right time to go clean, as investors are still hungry for new issues, no matter the losses from the now-notorious social network's debut. Around the time ServiceNow took a bow on the exchange, several other companies listed and have since reaped the benefits from doing so. Natural gas pipeline operator EQT Midstream Partners hit the market at $21; it's now trading more than 20% higher at $25.31. Biopharmaceutical concern Tesaro and software specialist Exa have seen much thinner gains, but they haven't stumbled badly, a la Facebook.

Don't get carried away
There's obviously a sustained hunger for IPOs and thus no need to get overly greedy and careless to succeed at them. There are a lot of smart people at Morgan Stanley, and, hopefully for the company's investors, they've come to realize this and will be more proper and cautious when lead-managing issues. If so, look for the bank to stay on top of the IPO league tables and, hopefully, avoid Facebook-like scenarios in the future.

Speaking of the social network, its share price seems to be rising from the mud; while it rises slowly, we have a recent IPO with much more potential we'd like to tell you about. Read which stock it is in our free report "Forget Facebook -- Here's the Tech IPO You Should Be Buying."