It's not a terribly accurate article -- the author doesn't seem to understand IPO prices, stock splits, and quiet periods, so don't pay attention to the details.
But the main point -- Mothernature.com isn't a house afire -- is true and interesting. I recall Rene and others going back and forth with me on this one (and furniture.com). So far, the market agrees with me on this one: buying herbal supplements on the Web ain't a Sycamore kinda IPO proposition... Regardless, we only have ~8+ percent of this one, so it's not worth losing sleep over, either...
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Does mother need a little helper?
Sluggish Wall Street performance not natural for CMGI-backed firm
By Dyke Hendrickson senior staff writer DHendrickson@MassHighTech.com
MotherNature.com could use some life-enchancing vitamin supplements right about now.
MotherNature.com, a CMGI-related company, recently went public. But unlike most companies that spin out from under the CMGI umbrella, its performance has been anemic.
The stock opened at $13 per share in early December, but by late last week had fallen close to 30 percent to $9 per share.
Michael Bayer, chief financial officer of the Concord company, declined comment, citing a federally required 25-day quiet period following a launch.
But the downward slide of the stock has intrigued local analysts. Unlike other Andover-based CMGI-supported companies that have gone public in recent months, such as Engage Technologies Inc. and Navisite, MotherNature.com of Concord has failed to show Wall Street that it is a promising property.
?It could be that they are selling herbs and vitamins, not Internet infrastructure,? said analyst Howard Anderson, who heads the Yankee Group. ?Wall Street values (technology) companies like Akamai and Inktomi.
?Or it could be too many IPOs lately. The market on (dot-com) companies is getting saturated.?
MotherNature.com, established as an Internet site in 1995, sells an array of vitamins, minerals, supplements and herbal products over the Net. It also is a leading provider of health information.
Earlier this fall it launched a $17 million marketing campaign, using radio and print ads to create a buzz prior to its IPO.
Some analysts thought the stock would be a hot property, in part because it?s rare when a CMGI protege doesn?t sizzle. But the vigor of the stock price has been about as exciting as chronic-fatigue syndrome.
?One factor in its slow start is that this is a crowded space,? said Claudine Singer, an analyst for Jupiter Communications. ?There?s Vitaminshop.com, Health-shop.com, Drugstore.com, and many other health-oriented sites that offer similar goods.
?The company did have a big ad campaign, but it?s possible that those who take vitamins and supplements seriously were less susceptible to the buzz the company tried to create.?
The inertia of the MotherNature.com stock is in sharp contrast to two recent IPOs of other CMGI-related companies.
Navisite, which provides hosting and infrastructure support for major corporations, opened at $29 per share in October. Late last week it was trading at about $77 per share.
Engage, which provides corporations with anonymous profiling of website visitors, opened in July at $31. Recently it was trading at $59 per share. Other CMGI-related offspring that have thrived after going public include Lycos, GeoCities and Silknet.
David Wetherell, chairman and chief executive officer of CMGI, recently said that CMGI companies that going public in coming months include Furniture.com, Vicinity, Ancestry.com and AltaVista. He gave no dates.
Of course, there are few success stories as glittering as that of CMGI itself. Company officials say the stock was offered at 38 cents per share in 1994.
Last week it hit $226 per share ? and that was after it had split five times. CMGI board members, in fact, last Wednesday authorized its sixth stock split as it again downsizes its price so it will be accessible to more investors.
CMGI, which owns or has interest in more than 60 Internet companies, rarely turns out a loser. It owns 8.3 percent of MotherNature.com.
And some analysts say that a slow start doesn?t mean MotherNature.com won?t eventually thrive. Its IPO raised close to $53 million, which should enable it to execute plans for growth and development.
Anderson of Yankee Group suggested that dot-com companies, although not as hot as infrastructure enterprises, can begin building momentum once they prove their operation works.
Still, the sluggish performance of a promising CMGI company has re-introduced the notion locally that not all Net-related IPOs thrive on first entry.
?The herd mentality is following infrastructure and communications, not retail,? said John Friar, director of Northeastern University?s Center for Technological Entrepreneurship.
?Also, it?s possible MotherNature.com did not get the word out. There are more and more niche retailers out there. In order to become known, you have got to do a great job of selling the company.? |
