PointCast files for public offering / CNET
news.com.
PointCast, a pioneer in so-called push technology,
filed to go public today, becoming the latest Internet
company to jump on the IPO bandwagon.
The filing shows that PointCast has been losing
money since its inception in July 1992, and faces
intense competition. It also shows that the company's highly touted chief executive, David
Dorman--recruited from SBC
Communications to help take the
company public--is receiving a generous
compensation package in stock options and
bonuses that could run into the tens of millions of
dollars.
As previously reported by CNET's NEWS.COM,
PointCast was gearing up for an IPO filing this
month--earlier than many people had expected.
According to a registration statement filed with the
Securities and Exchange Commission, the company
registered 4,312,500 shares at a maximum
proposed offering price of $12 per share, bringing
the proposed maximum offering price to $51.75
million. Minus overallotments, the total comes to
3.75 million shares.
Some 21,337,112 shares will be outstanding after
the offering, so the company would have an implied
market valued of up to $256 million. The offering
price range is between $10 and $12 per share.
The underwriters listed are Lehman Brothers, BT
Alex Brown, and BancAmerica Robertson
Stephens.
PointCast's technology, which pushes news and
other information from the likes of CNN and the
Wall Street Journal to users' desktops, has caught
on much more slowly than expected. Many analysts
think PointCast missed its best opportunity by not
closing a deal to sell out to Rupert Murdoch's
News Corporation last year.
Still others think the timing for a PointCast IPO may
be right, citing the sharp run-up in Net stocks, Wall
Street's love affair with content-focused Net
companies, and the recent IPO filing by software
firm Inktomi. They add that a PointCast public
offering may prompt other push companies, such as
Marimba, to go public. Marimba wouldn't comment
on its intentions.
The SEC filing said that PointCast lost $6.4 million
for the three months ended
March 31, compared with a loss
of $6.2 million for the like
period a year ago. Its quarterly
revenue for that period was
$5.1 million, up from $3 million reported for the
same year-ago period.
The company lost $29.1 million for 1997, on
revenue of $18 million, compared with a loss of
$15.1 million on revenue of $5.2 million posted for
1996.
The filing added: "The company does not expect
significant growth, if any, in revenue for at least the
next two quarters, and the company expects to
incur increased net losses for at least the next two
quarters, and significant net losses for the
foreseeable future."
Among other risks, PointCast also faces a possible
licensing dispute with Unisys, although the company
is "currently reviewing the matter" to determine "the
scope of the claims and its response," the filing
states. It says such intellectual property claims
occur from time to time.
It also stated: "The company intends to use the net
proceeds from this offering for general corporate
purposes, including working capital and capital
expenditures, and for the expansion of its sales
capabilities and marketing efforts. In addition, the
company may use a portion of the net proceeds of
the offering to acquire or invest in complementary
businesses, technologies, services, or products."
PointCast does not anticipate paying dividends.
The company's employment contract with the
44-year-old Dorman, a former executive vice
president at SBC, calls for him to
receive a starting bonus of $1.4
million and an annual base salary
of $250,000.
Dorman received nearly 1.7
million stock options last year,
with an exercise price of $6 per
share, and also got an additional
83,334 stock options with an exercise price of
$14.25 per share.
All told, the potential realizable value of the options
is about $7 million if the stock appreciates at a rate
of 5 percent annually, and $17.8 million if the stock
appreciates at a rate of 10 percent annually for the
term of the options. Many Internet stocks are
increasing in value at a much greater rate.
Chris Hassett, PointCast's cofounder, received no
stock options last year.
The filing also shows that Dorman owns 2 million
shares in PointCast. His stake will total 8.7 percent
after the IPO.
Hassett owns 1.6 million shares, for a 7.4 percent
stake, making the holdings worth nearly $20 million
at $12 per share.
Earlier this week, Pointcast said that three of its
affiliates--the New York Times, Wall Street
Journal, and the Boston Globe--renewed their
contracts to supply news to the company's network
for a one- to two-year period.
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