IBeam IPO proceeds to build Net broadcast network
cbs.marketwatch.com
By Tom Taulli, CBS MarketWatch
Last Update: 9:01 PM ET May 12, 2000 IPO Report
Commentary
SUNNYVALE, Calif. (CBS.MW) -- No doubt, the past week was pathetic for the IPO market. However, next week should be better. We hope.
One offering to keep an eye on is IBeam. The company plans to issue 11 million shares in the price range of $9 to $11 -- reduced from the $13-to-$15 range. The lead underwriter is Morgan Stanley, and the proposed ticker symbol is "IBEM" (IBEM: news, msgs).
With the move to high-speed Net access, there will be huge demand for audio and video content.
IBeam is a new-age Internet broadcast network, which delivers video/audio content to large numbers of simultaneous users. This is done by creating a "smart" network architecture -- for instance, by using satellite broadcasting and the placement of servers in proximity to users. In all, the IBeam network can accommodate 300,000 simultaneous Net users accessing data at 20 kilobits per second. By the end of 2000, the company plans to up that capacity to 1 million simultaneous users.
Building a high fence
True, building this network will not come cheap (that's why the company is doing the IPO). Then again, once in place, it will be a definite barrier to entry.
To bolster its service offerings, IBeam purchased Webcasts.com. This allows IBeam to provide online training and even interactive trade shows. Once it's a public company, expect to see more acquisitions.
The company is relatively young: Its service launched in October 1999.
Yet the company has already signed deals with over 100 customers. IBeam also has two major strategic investors: Intel (INTC: news, msgs) and Microsoft (MSFT: news, msgs).
The market looks promising for IBeam. According to the Gartner Group, about 50 percent of Web sites will employ streaming media by 2001. This is a fivefold increase from 1998.
Running the numbers
The company, though, has substantial losses. In the first quarter of 2000, losses were $21.7 million. The accumulated deficit is $66.3 million. As for revenue, it's minimal. In the first quarter of 2000, sales totaled $532,000.
In the new IPO marketplace, investors are definitely skeptical of losses.
This will likely mean that IBeam will not skyrocket upon opening (although the fact is that most new stocks will not see debut-day moonshots in the foreseeable future). But this also means that rank-and-file investors can get in at a better valuation. So long as the company is successful in building its infrastructure, its shareholders should be happy. |
