Standard & Poor on Modem Media- An IPO to Play the Web Advertising Boom.
I just ran into this little write-up in S&P's Personal Wealth magazine,thought I post it here for the thread to read.
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Tuesday February 02, 1999 (4:07 pm ET)
Modem Media.Poppe Tyson's punctuation may be funny, but its bid to be a leader in online marketing is serious
By Mark Basham, S&P New Issues Analyst
NEW YORK, Feb. 02 (Standard & Poor's) - This week there are a handful of initial public offerings on the calendar. Of these, we recommend purchase of the Modem Media.Poppe Tyson (MMPT) offering.
Lead underwriter BancBoston Robertson Stephens is expected to sell 2.6 million common shares at $11-$13 each, although judging from the average 12% markup at which the nine IPOs in January were offered over the maximum of the expected price range, the deal's offering price could be increased from that $11-$13 range.
MMPT provides complete online marketing services to Fortune 500 and emerging e-commerce companies, such as AT&T, Citigroup, and Delta Airlines. The company usually starts out doing a single or a few projects for a client, but often that relationship develops into a long term arrangement whereby the company is hired on an annual retainer. This is clearly no fly by night outfit.
The market opportunity is large and expected to grow rapidly, with Jupiter Communications forecasting that online advertising from 1997 to 2000 will quintuple to $5 billion.
The potential for the stock can be estimated by comparing MMPT to online ad leader DoubleClick, which was recently trading at 13 times annualized revenues. At half that multiple of the $43 million in revenues that I project MMPT had in 1998, it would have a market value of $280 million, about twice the market capitalization at which the offering is expected to be priced.
S&P's Emerging & Special Situations (ESS) newsletter provides advice for investors seeking IPOs and small-cap stocks for superior capital gains. To subscribe, call 1-800-852-1641, or visit the S&P Marketplace (accessible from the Personal Wealth Home page).
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