IPO VIEW-Internet deals crowd into autumn pipeline
Reuters Story - August 23, 1998 17:07
By Holly Rosenkrantz
NEW YORK, Aug 23 (Reuters) - With only a handful of initial public offerings slated for the rest of this summer, Wall Street is
focusing on a slew of new Internet stocks lining up for the fall, wondering if they all can become high-flyers.
Stocks with a cyber twist have been the stars of the summer's dreary IPO marketplace, which has been flattened by investor
jitters in the broader stock arena. Most IPOs not related to the Internet were either slimmed down or postponed for a better
day.
But the unsatiable hunger for new Internet stock, both as IPOs and once they begin trade, has created a frenzy among
start-ups to go public before investors are satiated, sources said.
"It's very unnerving," said Joshua Harris, founder of Internet research firm Jupiter Communications and president of the
still-private Pseudo Programs Inc., a New York-based competitor of hot -- and publicly-traded -- Internet company
Broadcast.com Inc. . "You want to get a piece of the pie before the roof caves in."
And several Internet companies will try to get a piece of that pie in the coming months.
Tech-related offerings have been announced from high-profile companies like barnesandnoble.com and Ticketmaster
Online-CitySearch. Though neither company has filed detailed plans yet with the Securities & Exchange Commission, the deals
are expected to draw widespread attention.
Also, theglobe.com, NetGrocer Inc., EarthWeb Inc. and InternetWorld Corp. are among the Internet ventures hailing from
New York's Silicon Alley that plan fall IPOs. The neighborhood, a loft zone spanning from Manhattan's 23rd Street Flatiron
Building down to the top edge of the Wall Street district, is home to many hip new media start-ups.
On top of all that, the calendar of upcoming deals remains full of West Coast technology companies, such as eBay Inc. and
audiohighway.com. and Healtheon Inc., whose board includes Netscape Communications Corp. co-founder James Clark.
"The truth is, investors don't look at IPOs as part of a long list," said Jack Hyland, a partner with McFarland Dewey & Co., a
firm that advises companies on public offerings. "They look at individual deals in front of them."
But can all these deals be hot?
When looking at Internet IPOs, market share is a key in measuring a hot company, analysts said.
But typically, the first company in its category to go public -- the first online bookstore, or the first Internet audio and video
broadcaster -- tend to do better in the stock market than the ones that follow, analysts said.
"Anyone who is first to the market creates a lot more excitement," Harris said.
That could be bad news for Harris' Pseudo Programs, which he said he hopes will go public but has no immediate plans for an
offering. Broadcast.com, a Pseudo competitor, generated such frenetic bidding when it went public this summer that its stock
price posted the largest first-day gain on Wall Street ever.
And while barnesandnoble.com has the cachet of the Barnes & Noble Inc. bookstore chain behind it, some analysts question
whether its stock will become as high a flyer as rival Amazon.com Inc. . Amazon trades at about $125.38, well above Barnes
& Noble's $36.75 price.
But even if every upcoming Internet IPO is not as hot as its competitors, they are still likely to be among the more coveted
deals in the months ahead.
While scores of new issues were put off until after Labor Day, analysts don't think demand for the general IPO market will pick
up unless the broader stock market stops see-sawing.
"I don't think investors will seriously look at IPOs again unless the market gets back up to 9300," said Standard & Poor's
investment officer Mark Basham, referring to the level where the Dow Jones Industrial Average peaked in July. The Dow
closed Friday at 8533.65 points.
"If things stay shaky, those postponed IPOs will have to lower their prices if they want to get done," Basham added.
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