webmethods in TheStreet.com:
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thestreet.com
so I'll just post part of the article:
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More alluring is the story of WebMethods, a Fairfax, Va., company that is set to position itself smack in the middle of the
mania for business-to-business, or B2B, stocks. Morgan Stanley Dean Witter will sell 4.1 million shares of WebMethods,
also on Thursday, in a deal currently expected to be priced at between $11 and $13 per share. Expect that to rise. There are
no selling shareholders, the company had almost $18 million in cash at the end of the year and its customer list includes SAP
(SAP:NYSE ADR), Ariba (ARBA:Nasdaq) and W.W. Grainger(GWW:NYSE).
There's more. Investors Goldman Sachs (GS:NYSE) (not an underwriter) and Dell (DELL:Nasdaq) are buying shares in
the IPO, as is customer Eastman Chemical (EMN:NYSE). Other backers include Mayfield and the same venture unit of
FBR that's backing VarsityBooks. It should be an interesting day at those two venture firms.
WebMethods makes software that aids in integrating B2B software applications for other vendors. Think of WebMethods as
a subsystem for Ariba in the same way last week's hot IPO, Avanex(AVNX:Nasdaq), is a subsystem for equipment-maker
Sycamore Networks (SCMR:Nasdaq). Revenue through the first nine months of 1999 was $12.6 million, up sixfold from
the year-earlier period, and gross margins were 67%. Never mind the net losses of $20.2 million for the same period -- this is
going to be a very profitable company.
Yes, there are risks. SAP alone accounted for 31% of WebMethods' revenue through the first three quarters of last year.
WebMethods almost certainly will win an inflated multiple due to its full-on embrace of the B2B craze. This will fade when
the craze does.
Until then, the bias toward companies that at least show the way toward profitability and away from those only hinting at it
will continue.
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- Netconductor.com |
