Imbedded search engine software replaces Alta Vista on Yahoo! - possible competition -
not sure - copied from another thread - didn't read all, ran out of time.
Best regards, Jack
Interesting read reprinted in its entirety from WSJ re: another "hot" internet issue-
June 11, 1998
Inktomi's Shares Double
In a Sizzling Street Debut
By SCOTT THURM and GEORGE ANDERS
Staff Reporters of THE WALL STREET JOURNAL
SAN MATEO, Calif. -- Inktomi Corp.'s initial public offering touched off another frenzy over Internet technology, making multimillionaires out of the company's young founders.
Eric Brewer, a 31-year-old University of California, Berkeley, professor, and Paul Gauthier, 25, one of his former students, conceived of Inktomi less than three years ago. Each owns more than two million shares of the company; at Wednesday's closing price of $36 a share, their holdings are valued at more than $75 million apiece.
Inktomi provides search-engine technology used by customers such as Microsoft Corp.'s on-line unit, Yahoo! Inc. and HotBot, a unit of Wired Ventures Inc. In addition, Inktomi makes software that eases Internet traffic. The company's name is derived from a mythical Lakota Indian spider that defeated its larger enemies through cunning.
Like many Internet-related companies with big stock-market valuations, Inktomi has yet to report a profit. For the six months ended March 31, it had revenue of $5.9 million and a net loss of $7.9 million.
Nevertheless, investors seemed willing to take a rosy view of Inktomi's prospects. The company raised $36 million by selling two million shares for $18 each. Existing stockholders sold an additional 254,000 shares.
Inktomi shares quickly surged above $30 in Nasdaq Stock Market trading. More than seven million of the company's shares changed hands on the day, giving Inktomi a market value of $738 million at the end of its first day.
Shares of Inktomi kept rising Thursday, climbing another $3.25 to $39.25 in afternoon dealings on Nasdaq.
Pre-trading demand for the shares was such that Inktomi, and its underwriting team, led by Goldman, Sachs & Co., increased the pricing range to between $16 and $18 a share from the previously expected range of $12 to $14.
While Internet IPOs have tended to perform robustly, analysts had feared that Inktomi's debut might be marred by a recently weakened overall IPO market. Nearly every previous IPO this month had priced at the low end of expectations or below.
While other search engines race to become "portals" through which users navigate the Web, Inktomi is concentrating on supplying its search-engine technology to many Web services. Yahoo adopted Inktomi's search engine last month, displacing Digital Equipment Corp.'s Alta Vista engine. CNET Inc.'s Snap service, in which NBC bought a stake Tuesday, also uses Inktomi's search engine.
Inktomi's search tools distribute requests to multiple computers, which then work in parallel. The engines are considered the most powerful available, and HotBot has been ranked among the Web's top search services.
Inktomi also makes "flow-control" software, which helps users attached to corporate networks surf the Web more efficiently by storing copies of pages from remote sites on the company's own computers, so they needn't be downloaded repeatedly. Some analysts think this service is the key to Inktomi's future.
"The core of that company solves an important problem, the speed of the Internet," said Alan Braverman, an analyst at Credit Suisse First Boston. Rather than build bigger pipes, Mr. Braverman said, Inktomi makes the Internet faster with "a smarter architecture."
But Clay Ryder, an analyst at Zona Research in Redwood City, Calif., questioned whether those technologies are enough to make Inktomi profitable in the long run. Both the searching method and flow control can be copied by others, he said. "I'm not so sure what all the excitement's about," Mr. Ryder said. He suggested that Inktomi's stock was largely riding the winds that have pushed the stocks of other Internet-related companies to stratospheric levels.
Inktomi is the latest in a series of hot IPOs by Internet-related companies, including ISS Group Inc., Verisign Inc. and Exodus Communications Inc. These offerings have created their own "self-fulfilling prophecy," said Claudia Mott, director of small-stock research at Prudential Securities Inc.
The Internet sector is the only area of the new-issues market that has consistently performed well, Ms. Mott said. Consequently, fund managers clamor for the offerings, driving up demand and price.
But Ms. Mott warned that Internet stocks will likely succumb to the same cycle as other high-flying niches from years past. The market will eventually become saturated, she predicted, and only a few of the companies will survive as long-term profitable investments.
Inktomi got its start in 1995, when Prof. Brewer was conducting government-funded research at UC-Berkeley on ways to link many computer workstations to function like a supercomputer. His first demonstration project involved creating an Internet search engine. Realizing that it had commercial potential, he and Mr. Gauthier formed Inktomi.
The two men agreed to pay the university a licensing fee, in stock, for work done at Berkeley. Details of that licensing arrangement aren't public, but the university holds less than 5% of the shares. The largest holder in Inktomi, with about 15% of the stock, is Oak Investment Partners, a venture-capital group with offices in Westport, Conn., and Palo Alto, Calif.
At Inktomi's offices Wednesday, about 30 employees gathered to watch a video feed as the stock was posted on the Nasdaq for the first time. But Shernaz Daver, Inktomi's vice president for corporate marketing, said it was mostly a normal day -- aside from employees occasionally checking the new stock price. "People are trying to figure out what to do next," Ms. Daver said.
--Dunstan Prial of Dow Jones Newswires contributed to this article.
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