OT -- E-Loan Update-- FYI...
<<"Online Mortgage Provider E-Loan Files to Sell Shares to the Public"
By Timothy Hanrahan (The Wall Street Journal)
03/24/99
NEW YORK -- Online mortgage provider E-Loan Inc. filed to raise as much as $55.2 million in an initial public offering, as the company races to stay ahead of deep-pocketed competitors including Microsoft Corp. and Intuit Inc.
The IPO filing comes on the heels of a new promotional deal with MarketWatch.com Inc. and the naming of a well-respected auto-industry executive to E-Loan's top marketing post.
The Dublin, Calif., company aims to simplify the home-loan process and drive down costs by giving consumers more lender choices and largely cutting out the middleman. E-Loan's site offers about 50,000 loan products provided by about 70 lenders, and says its service offers transaction-cost savings of over 50% compared with mortgages from traditional mortgage brokers or single-source lenders.
E-Loan said in the filing that about $1 billion in closed loans originated through the company's site last year, making it the biggest online-mortgage firm. Revenue rose nearly sevenfold to .8 million for the 12 months ended Dec. 31, from $1 million a year earlier.
This fast growth hasn't gone unnoticed by bigger e-commerce companies. E-Loan faces competition from the online loan units of much bigger companies, including Intuit's QuickenMortgage unit and Microsoft's MSN HomeAdvisor unit. E-Loan also faces competition from single-source lenders such as Countrywide HomeLoans Inc. and Norwest Mortgage Inc., the filing says.
E-Loan also said that it is heavily dependent on distribution partnerships, particularly its deal with Yahoo! Inc. During the year ended December 1998, the company said that about 13% of its closed loans were derived from a co-branded Yahoo Web site. E-Loan also has distribution deals with E*Trade Group Inc. and DLJdirect, the online unit of Donaldson Lufkin & Jenrette Securities Corp. Overall, 17% of its closed loans resulted from partnerships, E-Loan said.
The deals with DLJdirect and E*Trade reflect E-Loan's effort to position itself as a financial-services provider -- and not a real-estate seller. Last month, E-Loan hired Joseph Kennedy, former vice president of marketing at General Motors Corp.' Saturn division, to head up marketing at E-Loan.
In an interview last week, Chief Executive Chris Larsen said that Mr. Kennedy could transform the way consumers look at mortgages. "Our objective is to create a loved brand for mortgages and he's the kind of guy who can do that," Mr. Larsen said.
Other risks for E-Loan investors include the company's limited operating history and its fast pace of expansion: The company had 224 employees as of Dec. 31, up from 40 employees a year earlier. Also, the company has never operated during a downturn in the mortgage industry.
Goldman Sachs & Co., Hambrecht & Quist Group Inc., Donaldson Lufkin & Jenrette and E*Trade will underwrite the offering. E-Loan said it will use proceeds from the offering for working capital and general purposes, including capital expenditures.
Like most Internet start-ups, E-Loan isn't profitable and said it doesn't foresee becoming profitable for the "foreseeable future." It had a loss of $11.2 million for 1998, compared with $1.4 million in 1997.
It plans to trade on the Nasdaq Stock Market under the symbol "EELN."
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