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Technology Stocks : NetObjects, Inc. (NETO)

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Nov 6 4:00 PM EST

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To: Mohan Marette who wrote (34)	5/6/1999 3:44:00 PM
From: Gerald Walls	Read Replies (1) of 278

Briefing.Com sez: 15:30 ET ****** NETOBJECTS INC (NETO): Seven down, and as many as three more to go. We're referring to the seven Internet-related deals that have already hit the market this week, and the three more that could potentially be released tomorrow. Web site development software company, NetObjects, is one of the deals tentatively scheduled to price tonight and begin trading tomorrow. The proposed offer range on the BT Alex Brown managed IPO is $11 to $13... Description: The company is essentially being spun off from IBM. Big Blue currently owns more than 75% of the Redwood City, CA-based company's shares. No surprise that IBM has also been a major customer of NETO, accounting for more than 36% of total revenues in 1998. IBM-related business grew to 45% of total revenues in the first six-months of 1999. Within the prospectus, NETO warns that it expects software license fees from IBM in the remaining quarters of fiscal year 1999 to decline, "perhaps substantially." Financials: For the fiscal year ended September, NETO logged revenue of $15.3 mln, up 102% from the 1997 period. The company's net loss widened to $22.2 mln from $17.8 mln. A pricing at the top end of the $11-$13 range would give NETO a market-cap of $339 million and trailing Price/Sales ratio of 16.5... Competition: Publicly traded competitors include Macromedia (MACR), Adobe Systems (ADBE) and Microsoft (MSFT). These companies sport an average P/S sales ratio of approximately 11.5. NETO is planning to use approximately one-third of the IPO proceeds to repay debt owed to IBM.

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