some dds for the 2nd IPO of the week, Women.com:
"Shares: 3,750,000 Amount: N/A Offering price: 10
Lead Underwriter: Morgan Stanley Dean Witter & Co.
--> Summary
Women.Com Networks is a female-oriented web site that provides a
full range of content and some e-commerce functionality that caters
to the interests of women. The company's site has been in existence
since 1995 and its recent traffic is impressive, totaling 4.6
million visitors and 136 million page views in August 1999.
The company has strategic relationships with publishers The Hearst
Corporation (also a majority shareholder) and Rodale, which provide
the site with content on topics ranging from finance and health to
shopping and travel through their network of well-known magazines,
including Cosmopolitan and Good Housekeeping. The company also has
content partnerships with Bloomberg and Crayola, among others.
In addition to its content relationships, Women.Com Networks has e-
commerce partnerships with over 35 firms, including Amazon.com,
Clinique, eToys, Hooked on Phonics, J.Crew, John Hancock and
PlanetRx. To round out the visitor's experience, the company offers
a community component that allows for user-to-user and user-to-
expert communication through message boards and chat rooms. Some of
these programs include book clubs, entrepreneurs' forums, investment
clubs and recipe exchanges.
To build brand awareness and increase traffic to its site, the
company has established over 30 online distribution relationships
with leading Internet companies, including America Online, CBS
SportsLine, GeoCities, Infoseek, Lycos, Microsoft, Mindspring,
Netscape, WebTV, Xoom.com and Yahoo!.
One drawback is that the market segment in which Women.Com Networks
operates is highly competitive and few barriers to entry exist. Not
only does Women.Com Networks compete against well-established women-
focused sites, such as iVillage (Nasdaq:IVIL) and Oxygen Media, but
it also squares off against female-oriented publishers such as Conde
Nast and general Internet content providers like America Online
(NYSE:AOL), Yahoo! (Nasdaq:YHOO) and Microsoft (Nasdaq:MSFT).
Although competition in this market segment is substantial, the room
for growth is eye-widening. According to Jupiter Communications,
women represented 39.6 million Internet users in 1998 and this
number is expected to grow to 72.4 million or 50.2% of all Internet
users by the end of 2002. According to Advertising Age, women
controlled or influenced over $2.4 trillion, or 80%, of the $3.0
trillion spent in 1998 by U.S. consumers. In addition, women
currently manage the finances in 72% of the nation's households.
(note: statistics quoted from S-1 registration statement filed with
the SEC)
This excerpt from the Women.Com Networks prospectus explains the
importance and potential of the company's target audience:
"Today women represent an increasingly significant and fast-growing
segment of the online audience. They also represent an increasingly
important demographic group to advertisers and merchants. This
importance is due in part to the growth in women's income and the
role women play as key consumer decision makers, both in the home
and in the workplace. . . . The demonstrated buying power of women,
coupled with the growth of the number of women on the Internet,
presents a significant opportunity to provide content developed
specifically for women and to attract advertisers and merchants that
target this audience. Internet sites offering the right mix of
content, community and commerce are well positioned to take
advantage of this opportunity."
Although revenue growth between 1998 and early 1999 was not
extraordinary, revenue growth picked up in the 2nd quarter of 1999
by jumping nearly 65% to $6.01 million (note, however, that this
jump is largely attributable to the company's combination with two
other business units of Hearst).
--> Investment Analysis
There are several factors leading to our position that Women.Com
Networks is a top-tier IPO, including:
1. Influential and Growing Target Market: The expected growth in
Internet usage by women and the staggering influence that women
continue to have over household financial decisions present big
opportunities, notwithstanding the intense competition which exists
in this space.
2. Key Shareholders: The Hearst Corporation beneficially owns 53%
of the company's shares, which helps to ensure the continued flow of
all-important content to the site. The Walt Disney Company
(NYSE:DIS) will receive up to 1.25 million shares in a private
placement concurrent with the IPO.
3. Important Strategic Relationship: Women.Com Networks has an
agreement with MediaOne Interactive Services, Inc., one of the
leading broadband communications companies, whereby Women.Com
Networks develops content for MediaOne that is then distributed to
MediaOne's customer base. MediaOne Group (NYSE:UMG), an affiliate
of MediaOne Interactive Services, Inc., has agreed to be acquired by
AT&T (NYSE:T), and although the deal has not yet closed, future
synergies with AT&T could provide huge benefits to Women.Com
Networks. The ties between Women.Com Networks and MediaOne are
evidenced by the fact that MediaOne Interactive Services, Inc.
beneficially owns nearly 8% of the company's shares and Natalie
Egleston, who has been a company director since September 1997, is
an executive of a MediaOne Group affiliate.
4. Big Name Advertisers: Recent advertisers include IBM, Jenny
Craig, Kraft, Macy's, Proctor & Gamble, Sears, Toyota, Unilever,
Visa and Volvo. "
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