Bateman, are you ready to RUMBLE?
Why the flap de flap over the B&N Ipo?
Bezos has already told us its NOT about books,tapes or cd's. Its about e-commerce and who will own it.
<Barnes & Noble Books an IPO
For 18-Month-Old Web Unit
By DUNSTAN PRIAL
Dow Jones Newswires
Barnes & Noble Inc., seeking to replicate the phenomenal success of on-line bookseller Amazon.com Inc., said it plans to make an initial public offering of stock in its Internet unit, barnesandnoble.com.
Barnes & Noble said Thursday it plans to sell a 20% stake in its 18-month-old on-line unit to the public. The move follows a astonishing track record for Internet-related IPO stocks this year, as investors' appetite for all things Internet-related is still going strong.
<Picture: [Go]>Barnes & Noble Meets Estimates With Narrowed 1st-Quarter Loss (May 21)
<Picture: [Go]>Independent Bookstores Are Suing Borders Group and Barnes & Noble (March 19)
And it comes amid a 15-month run-up in the value of Amazon.com shares: Since Amazon's IPO in May 1997, when its stock was priced at $18 a share, the shares have climbed more than sevenfold, closing Thursday at $129.125 on the Nasdaq Stock Market.
Some analysts suggested it's a little late for Barnes & Noble to jump into the Internet-retailing game. "Amazon.com stole its major market position by acting faster, and now Barnes & Noble is playing catch-up ball," said John Hyland, a consultant with McFarland Dewey & Co., a New York firm that advises companies planning IPOs.
'Wildly Ironic'
Mr. Hyland called it "wildly ironic" that a household name like Barnes & Noble should now have to tap into its cyberspace property in order to keep pace with an upstart like Amazon.com. Barnes & Noble, with 1,000 stores and a roughly 25% share of the U.S. consumer retail-book market, is valued at $2.5 billion on the stock market. Amazon.com, with no stores and about a 3% market share, is valued at $6.4 billion.
If completed, the offering would establish an independent market valuation for Barnes & Noble's on-line retail operations, independent of the total company. In such cases, valuations of the parts can often be greater than the whole.
Four of the five most successful recent new offerings were Internet-related, and all of them occurred since June 1, in the midst of a prolonged IPO slump. "Even in a bad market, if you have a very strong Web site generating high growth rates of revenue, there's a good chance for success in the IPO market," said Tom Taulli, research director at IPO Monitor.com, of Los Angeles.
Another Web-site host, GeoCities, had a successful stock-market debut last week, despite a sharp decline in the broader market on the stock's first day of trading and news that the company had settled a Federal Trade Commission complaint that it sold confidential user information to advertisers. GeoCities closed Thursday at $32.3125 on Nasdaq, a 90% premium to its offering price of $17.
Linda Killian, an analyst with Renaissance IPO Fund, Greenwich, Conn., said the company's Internet venture was entering the public market from a "position of weakness rather than strength."
Playing Catch-Up
Barnesandnoble.com is far behind Amazon.com in terms of both the number of on-line customers and the level of technological sophistication, Ms. Killian said. She noted that Amazon.com's Web site already is linked to numerous other nonretail Internet sites, which makes it a popular destination for potential customers.
Barnes & Noble, on the other hand, is starting from scratch on the Web. "Barnes & Noble has a mind-set of a bricks-and-mortar bookseller, and in some ways that's retarded their development," she said.
A company spokeswoman declined to comment on the offering, beyond stating that the parent company will retain an 80% majority stake after the sale. Barnes & Noble said in a statement that the registration filing is expected in the next 30 days, subject to market conditions. Companies are restricted from discussing themselves publicly in advance of planned IPOs.
For the second quarter, Amazon.com's revenue came to $116 million, compared with barnesandnoble.com's revenue of $12.5 million for the comparable period.
By retaining a major stake, Barnes & Noble can consolidate the on-line unit's earnings with those from its stores and use proceeds from the IPO to increase its Internet business, said Ira Berman, a partner at San Francisco investment bank Frost & Berman, which focuses mostly on the Internet sector.
"It's a very clever strategy. From a [Wall] Street standpoint, it makes absolute sense," he said.> |
