Shoot, another internet IPO company that forgot to confirm about the minimum 10 million dollar annual run rate, and aren't they glad:
BTW they also made less last quarter than FNet:
Friday July 9, 6:26 pm Eastern Time
Liquid Audio shares more than double after IPO
(New throughout, adds analyst comments, details.)
By Duncan Martell
PALO ALTO, Calif., July 9 (Reuters) - Shares of Liquid Audio Inc.
more than doubled in their first day of trading after it raised $63 million
in an initial public offering, the second Internet music firm in a week to
see its stock rocket.
Money-losing Liquid Audio rose $21.56 to $36.56 from its offering
price of $15, giving the three-year-old company a stock market value
of $659 million. The stock, which was sold above the expected range
of $10 to $12, opened at $43 and rose as high as $48.
The rise of Liquid Audio (Nasdaq:LQID - news) and the 71 percent
gain that Musicmaker.com racked up on Wednesday when it first sold
shares to the public showed that demand has not weakened for
Internet issues and, more specifically, for online music companies.
Analysts expect MP3 Inc., slated to go public later this month, to do
even better than Liquid Audio.
''Enjoy it while it lasts,'' said David Menlow, president of IPO Financial
Network in Millburn, New Jersey. ''There will indeed be a few
music-delivery issues that will do very well.''
Yet increasing even more than their stock prices is the debate over
which technology is used to compress and send digital music, how to
stop piracy which exists with the competing MP3 technology and how
quickly consumer electronics companies can make enough of the
portable devices to play the music that consumers buy and download
from the Internet.
These issues, far from settled, make it a virtual crap shoot as to which
company's technology wins out, analysts said. But Redwood City,
Calif.-based Liquid Audio does indeed have some mighty backers,
including chip giant Intel Corp. and Microsoft Corp. co-founder Paul
Allen's Vulcan Ventures.
And because the recorded music industry was $38.7 billion in 1998,
Liquid Audio has also attracted plenty of competition.
Microsoft Corp. has its own competing digital music format,
International Business Machines Corp. has another and is teaming up
with consumer electronics giant Sony Corp. to develop it.
''If this is the way the technology looks when consumers begin to
adopt digital music, it will confuse them,'' Lucas Graves, an analyst at
New York-based Jupiter Communications said about the competing
standards for digital music. Jupiter Communications is a technology
market research and consulting firm based in New York.
Liquid Audio lost $4.14 million on sales of $531,000 for the three
months ended March 31. Its loss in 1998 was $8.54 million on sales of
$2.8 million, widening from a loss of $6.22 million on sales of $256,000
in 1997.
That said, Liquid Audio does -- for the moment -- have an early lead
over its competitors. Major recording companies -- themselves
working to come up with a way to encrypt music called the Secure
Digital Music Initiative -- such as BMG and Rounder Records are using
Liquid Audio technology to reach buyers on the Internet.
In recent months, Liquid Audio, whose technology compresses and
encrypts music so it can't be copied illegally, has shifted its attention to
building a music distribution network and now boasts some 240 sites
that offer songs using its technology.
That puts it more in direct competition with Musicmaker.com, a site
that lets consumers compose their own CDs by choosing from
200,000 titles online, after which the CD is mailed.
Musicmaker.com also has a powerful backer, EMI Group Plc., the
world's third-largest music company, owns a 40 percent stake in
Musicmaker.com and has granted the Reston, Va.-based firm a
five-year exclusive license to EMI music.
EMI's stable of labels includes Capitol, EMI and Virgin.
Though small, the online music market is forecast to grow rapidly. At
$37 million in 1997, Jupiter Communications expects it to swell to $1.4
billion by 2002. Still, the firm said only 3 percent, or 4.4 million, of
projected online consumers will buy downloaded digital music by 2003.
Hampering that growth, Graves said, are the unpalatable choices of
devices that play digital music.
The Rio player from Diamond Multimedia Systems Inc. lets users
download music in the popular MP3 format, but Graves said the sound
quality still lags traditional CDs and to add or change songs, you still
have to use a personal computer to access the Internet.
''It's a sexy gadget, undeniably, but it's hardly a convenient way to
play music,'' Graves said. ''Just because you build something and it's
cool and it involves the Internet doesn't mean it will explode right off
the bat.''
Like any fledgling industry, and particularly in technology, it will take
time for the industry to settle on a standard and for privacy bugs to be
addressed, analysts said. And in technology, which moves at Warp
speed, today's hero can quickly become tomorrow's has-been.
''It's clear to just about any high-tech investor that today's technology
is really about today and doesn't necessarily have any foot hold of
assurance into tomorrow,'' Menlow said. ''The changes can be very
quick and a new kid on the block can upend the entire sector.'' |
