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Technology Stocks : Buying IPOs on the open market -- Ignore unavailable to you. Want to Upgrade?

To: Frederick Langford who wrote (5238)	12/16/1999 3:43:00 PM
From: mact	Read Replies (1) \| Respond to of 5529

think more people will take interest in xpdr soon...their revenues blow away their competitions and rev. growth excellent too. Internet e-business professional services firm This is yet another in the parade of e-commerce professional services firms spawned by the size and growth of the industry. Internet professional services is expected to grow from $7.8 billion in '98 to $78.5 billion in '03. In any industry this large and dynamic there is plenty of early room for entrants. Xpedior has been following a roll up strategy, acquiring and integrating smaller firms. As a result, it has built a considerable practice with 1,000 staffers in 15 US and 3 international offices. It's customers include the American Medical Association, Citibank, GTE, Hewlett-Packard, MCI WorldCom, PepsiCo, and Sears. So the firm has established a reputation and has demonstrated marketing muscle. It is an estimated $120 million firm with a 10.8% operating margin. Because of the roll up strategy, reliable growth estimates cannot be developed. On the downside, this firm is being carved out of Metamor Worldwide, which is planning to distribute the remaining 80% of the shares in 2000. This subsequent distribution may be expected to depress valuations. Valuations in this sector have been very favorable, as shown by some recent IPO's. Modem Media.Poppe Tyson was offered on 2/5 at $16 and closed at $45, up 181.3% the first day. It recently traded at $61.88, up another 37.5% in the aftermarket. Proxicom was offered on 4/20 at $13 and closed at $19.50, up 50% the first day. It recently traded at 87.63, up 349.4% in the aftermarket. Razorfish was offered on 4/27 at $16 and closed at $33.50, up 109.4% the first day. It recently traded at $79.50, up 137.3% in the aftermarket. Scient was offered on 5/14 at $20 and closed at $32.63, a 63.2% first day gain. It recently traded at $85.50, up 162% in the aftermarket. IXL Enterprises was offered on 6/3 at $12 and closed at $17.88, a 49% first day. It recently traded at $43, up 140.5% in the aftermarket. Viant was offered on 6/18 at $16 and closed at $24.38, for a 52.4% first day. It recently traded at $109.13, up 347.6% in the aftermarket. Most recently, Agency.com was offered on 12/8 at $26 and closed at $76, up 192.3% the first day. Pre-offering demand has been reported as strong, further supporting the expectations of favorable valuations. Despite the specter of the share overhang in 2000, we expect the initial valuation will be driven by the sector's strong performance. Some "halo effect" from last week's Agency.com deal is also expected to influence this offering. We further expect this deal to receive a very favorable initial reception (e.g., 100+%) followed by early and modest appreciation.