Good morning, found this on the SmartMoney web page. Looks like some fertile ground for Herman Ramirez, VP of Bilingual Programs to explore. I like the last sentence "And as English-language Web portals like Yahoo and Excite have found, getting big before anyone else is what matters." TSIG is on the ground floor, let's get big.
March 30, 1999
How Do You Say Internet in Spanish?
By Joe Hagan
A COUPLE of jalepenos are about to be tossed into the Internet IPO stew: Two Spanish-language Internet sites have filed for IPOs in the last month. QuePasa!com and StarMedia, two Internet portal sites that offer search engines, Web-based email, chat rooms and news feeds exclusively for a Spanish-speaking audience, are the first of their kind to enter the stock market. Quepasa!com, an Arizona-based company, hopes to raise $48 million by selling shares at an offering price of as much as $12; StarMedia, an Uruguay-based company, followed QuePasa!com's lead on March 18, and hopes to raise as much as $75 million.
It seems the Spanish-speaking world is waking from its Internet siesta. According to Nazca Saatchi & Saatchi, the number of Internet users in Latin America is expected to increase from seven million users at the end of 1997 to 34 million users by the end of 2000. In the U.S., Internet access among Hispanics has increased 650% in the last four years. It is estimated that 2.25 million people have Internet access in Spain.
Quepasa!com plans on using the proceeds of its IPO to position itself as a global brand and an Internet focal point for the Spanish-speaking world. The snappily designed site, which uses the same Inktomi search-engine technology as Yahoo! (YHOO), appeals to Latin audiences with a U.S. Hispanic sensibility. The site is just getting started, having reported no revenue for 1998 and $6.9 million in losses. David Menlow, analyst at IPO Financial, sees a company like Quepasa!com as an uncertain gamble and also, perhaps, a sign of the times. "If you're going to look at the actual financials behind the company, there's not a lot to look at. And then [CEO] Jeffrey Peterson's out there at 26 years of age earning $350,000 a year."
StarMedia concentrates on both the Spanish- and Portuguese-speaking audiences in Latin America, and is more established. The company lost $45.9 million last year on $5.3 million in revenue. Despite this, it boasts strong financial backers, including Chase Capital Partners and Intel (INTC). They've also created business partnerships with the likes of Fox and Netscape (for whom they created The Netscape Guide by StarMedia, a Web-users guide for Netscape's Latin American audience).
The public offering by two companies competing for an overlapping demographic now begs the question: Will the Spanish-language Web portals take off? "If it's the first Latin leap into the IPO world, I'd say they have a pretty good shot," says Gail Bronson, analyst at IPO Monitor. "Most Internet IPOs, if they are the first in their market segment to come to the public's attention -- and therefore are a proxy for that marketplace -- have a pretty good chance of gathering a good head of steam."
Most English-speaking sites, like Yahoo and Excite (XCIT), have launched Spanish-language mirrors to their sites. But their effectiveness as separate entities is unknown because the companies don't release information on their page views. "In general, international traffic is going to be just under 10%," explains Patrick Keane, a senior analyst at Jupiter Communications. "And then you'd have to take a percentage that would be Spanish-speaking people. They don't want it to seem small…and it is small."
According to Media Metrix (a firm that estimates Web page views based on a sample audience of 40,000 Internet users), Yahoo en Espanol received a paltry 24,000 unique visits for January. But the idea of an exclusively Spanish-language portal, like the target audience itself, is still moderately untapped. That audience includes about 29.6 million Americans who consider Spanish their primary language. "Most people who have access to the Internet now are English-speaking people," says Keane, "But that's radically going to change as the Internet becomes mass market. And that's already starting to happen."
Case in point: StarMedia's visits-per-month leapt by nearly a million in one quarter in 1998 (2.85 million visits-per-month as of December), so Spanish-language mirrors on English-language sites may reflect little of the real potential of these sites. With Internet access still in its primitive stages for the majority of the world's 400 million Spanish speakers, the success of Quepasa!com and StarMedia will depend on Latin countries becoming more deeply penetrated as PC- and online-buying communities. Analyst Jim Priessler of PaineWebber says this is the key variable and that the risk on these IPOs is in their timing. "If these companies find the right partnerships and mature quickly, they could become the big players ahead of anyone else," says Priessler, who sees these sites as part of a trend toward vertical portals -- portals focused on particular communities. And as English-language Web portals like Yahoo and Excite have found, getting big before anyone else is what matters.
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