Worldfinancenet summary:
worldfinancenet.com
Company Symbol Shares Range Lead Underwriter
Telocity TLCT 11 million $10-$12 Merrill Lynch
Broadband access, applications, & services for residential market
This offering is expected to receive a great deal of attention. First, it is sponsored by NBCi, NBC, GE, and several other high profile venture investors. Secondly, it is the first company to focus on bringing high performance broadband Internet access to the residential market.
To date, high performance Internet services has been a highly fragmented industry. There are the content providers and the high performance access providers. At the residential level, the end users are forced to act as their own ?general contractors?, bringing these fragmented providers together. Telocity is bundling the services with an exclusive focus on the residential market. From a content and applications side, it is compiling all of the resources of NBCi and will include ?always on? Internet access, e-mail, personal web pages, online gaming, virtual private networks, voice services (telephony), streaming media, home monitoring, etc.
On the access side, it has created a centrally administered network. Residential needs and support may be managed from a central source. Even the tricky DSL may be managed centrally. For actual network implementation, the firm has strategic alliances with Bell South, Bell Atlantic, SBC, and Rhythms NetConnections.
The service was kicked off in 7/99 in Chicago. By 12/99, the service was operating in 29 of the nation?s top 40 markets, including Detroit, Atlanta, and Miami. However, the firm is really still emerging from start-up. It has not yet completed anywhere near a full year of operation and ?99 revenues were a minuscule $187,000.
Because of the unique bundling nature of the firm?s strategy, close comparables are not available. However, although the industry is fragmented, there is considerable competition. Content and application providers are led by AOL, MSN, and WebTV. High performance access providers are led by Earthlink, Mindspring, PSINet, Netcom Online; cable providers Excite@Home, Rough Rider; and various telco?s and CLEC?s.
Pre-offering demand is reported to be heavy and reflects the participation of NBCi, NBC, GE, Value Vision, the Soros Fund, and various venture capital firms.
This is a unique sector with considerable potential. The firm?s high profile sponsors will only add to the potential. However, it remains a highly speculative offering. The business model, though conceptually attractive, is unproven. Expect a relatively favorable reception (e.g., 60+%) followed by aftermarket volatility.
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