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Rhythms rocks on debut
High-speed Net player closes up 229 percent
By Darren Chervitz, CBS MarketWatch
Last Update: 8:31 PM ET Apr 7, 1999
Net Stocks
Internet Daily
NEW YORK (CBS.MW) -- Wall Street once again felt the need for
speed Wednesday, welcoming Internet access provider Rhythms
NetConnections with open arms.
Rhythms NetConnections (RTHM), Renaissance
Capital's pick of the week, opened for trading at
56. That was good for a 167 percent premium to
the $21 offering price, which came in well above
original estimates for a $15 to $17 offering price
range listed in the company's earlier IPO
registration statements.
The stock added an additional 13 1/8 points by the end of trading, closing
at 69 1/8 with more than 12.6 million shares changing hands.
Englewood, Colo.-based Rhythms NetConnections offers its high-speed
technology, known as digital subscriber line, in 10 U.S. markets. With
DSL, companies can access the Internet at speeds of up to 100 times
traditional dial-up modems.
The company says in its prospectus that it intends
to begin operations in an additional 23 markets by
the end of the year with 17 more markets added by
the end of 2000.
Financial results for the fledgling telecommunication
company aren't surprising, considering it first
offered commercial service in San Diego last April.
Rhythms generated losses of more than $36.3
million on sales of $528,000 last year.
Rhythms recently entered into a marketing
agreements with Microsoft and MCI Worldcom
(WCOM), each of which invested $30 million in
the newly public outfit. Other backers include the Silicon Valley venture
capital firm Kleiner Perkins, which funded Amazon.com, and a unit of
Enron Corp.
Rhythms NetConnections followed the success of Covad
Communications, another provider of DSL technology that recently went
public. Covad Communications (COVD) shares, priced at $18 in the
January offering, dropped 3 7/16 to 65 Wednesday.
Covad enjoys a market cap of $3.16 billion, while Rhythms closed its first
day worth more than $4.88 billion.
Internet-related IPOs expected later this week include Delia's iTurf
subsidiary and Value America, both of which recently increased the
estimated size of their deals.
Other IPO news
Three other companies completed smaller offerings on Wednesday.
Optibase, an Israeli digital video technology developer, sold 4.3 million
shares at $7 each. The stock closed up 1/8. And two banks, FloridaFirst
Bancorp (FFBK) and First Bancorp of Indiana (FBEI), each pulled off
small IPOs of just over $20 million with shares going for $10 each. Their
stocks, however, both fell well below the offering price. FloridaFirst
closed at 7 7/8, while the Indiana bank's stock ended at 9 3/16.
Student Advantage (STAD), a Boston company which provides discounts
on various products and services to its 1 million student members, filed to
raise as much as $80.5 million in an upcoming IPO via lead underwriter
BancBoston Robertson Stephens. And yes, the company has a Web site.
Darren Chervitz is a reporter for CBS MarketWatch.
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