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Interest in Systems Integration IPOs.
Wave Of Net Offerings Heading To Market
By Kimberly Weisul
April 14, 1999 4:29 PM ET
Over the next two weeks, the initial public offering market will see a wave of Internet services companies.
Razorfish (www.razorfish.com), with a heavy marketing and design bent, and Proxicom (www.proxicom.com), a systems integrator, are slated to go public this week. Consultant iXL Enterprises (www.ixl.com) plans to follow suit, going public the week of April 19.
Analysts still think the next few weeks will be critical for the stocks of systems integrators. "These three are a good representative of the sector,"aid Scott Smith, senior analyst at Current Analysis. "They all kind of make the market for each other. It's not surprising they're all coming together."
The systems integrators aren't as glamorous as the eBays of the world, and they have to convince investors that having a single primary
revenue stream is a good thing. But there have been some early forerunners. Consultant USWeb/CKS went public in December 1997;
its stock hit a low of $7.88 in fall 1998 and now trades at close to $38. Modem Media.Poppe Tyson debuted earlier this year, and its shares
have risen from $24.63 last month to $48 late last week.
Said Irv deGraw, an independent initial public offering analyst: "Web site development is a real business." He especially likes iXL, which
is considered a Web specialist. The company lost $72.6 million on revenue of $87.1 million in 1998. DeGraw wouldn't be surprised to see
Razorfish, which had $31 million in revenue and $3.6 million in losses in 1998, delay its offering to let iXL go first. Such jockeying,
deGraw said, makes the IPO calendar increasingly unpredictable.
Rhythms NetConnections was last week's star, pricing 9.4 million shares at $21 each and seeing them close at $69.13 after just one day
of trading.
USinternetworking, the first of the applications service providers, and iTurf, the online division of retailer Delia's, were also highly anticipated. USinternetworking's 1998 revenue was $14 million, its losses $35.9 million. iTurf actually showed a small profit - $464,000 - on $4 million in 1998 revenue.
Last week also was kind to both ValueAmerica and Claimsnet.com, which had been unable to complete offerings last winter. Claimsnet.com raised $17 million; ValueAmerica raised $126.5 million.
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