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Technology Stocks : Broadcast.com (Acquired by Yahoo) -- Ignore unavailable to you. Want to Upgrade?

To: Sam Nizam who wrote (60)	7/17/1998 1:09:00 AM
From: Francis Gaskins	Read Replies (1) \| Respond to of 1260

"BROADCAST.COM IPO COULD ROCK MARKET" By Dan Mitchell Red Herring Online July 16, 1998 Multimedia aggregator Broadcast.com is tuning up to jam in the speed-metal IPO market. The offering -- expected to price Thursday night -- fits the mold of many recent successful Internet IPOs: The company has big losses; it operates in an uncertain, swiftly changing marketplace; it doesn't expect profits for years to come, and its underwriters are top-tier. In other words, all signs point to the stock taking off. "It's a moonshot," says John Fitzgibbon of the IPO Reporter. "It's got that magic word -- 'Internet.'" Broadcast.com, which changed its name from AudioNet last May, collects content from about 350 radio stations and 17 television stations and streams it over the Net to listeners' desktops. It also offers some full-length CDs, audio books, live sports events, and other content. It began operations in January 1996, and quickly grew to become one of the most popular content sites on the Net. Media Metrix puts it in the top 20 news and entertainment sites, and says it gets about 400,000 unique visitors a day. And with each new media partnership it forges, the company adds to its growing library of archived material. Adding to Broadcast.com's credibility: Motorola and Intel hold significant stakes. Loud buzz But it's bleeding money. The company lost $2.7 million on revenues of $3.2 million in the quarter ended March 31. It has lost more than $12 million since it started operations. Gross margins are high -- Francis Gaskins of Gaskins IPO Desktop puts them at 60 percent. The top line looks good: revenues more than doubled from 1997. But much of the company's reported sales are in the form of barter deals -- trading ads with other sites. It's hard to pin down the actual value of such arrangements, but the company says they accounted for about 15 percent of last year's revenues. Still, heavy losses and unproven business models haven't stopped Wall Street from endorsing Internet stocks, especially when the company in question has managed to create a public-relations stir. "There's definitely a buzz surrounding the deal," says Ken Fleming of the Renaissance IPO Fund. The offering had an expected price range of 11 to 13, but that was raised to 14 to 16 on Wednesday afternoon. Mr. Fleming sees much upside potential. "Every other (recent) Internet IPO -- Inktomi (INKT), Verio (VRIO), DoubleClick (DLCK) -- they are all trading above their offering price. It's Internet mania. What can I say?" Bandwidth blues Broadcast.com may be popular, but it won't reach the masses until Internet bandwidth is substantially increased. For now, most of its offerings -- both audio and video -- are crippled by choppy sound and jerky video streams caused by slow Internet connections. When the company announced in May that it would go public, bandwidth was a major concern. It still is, but with moves like AT&T's (T) purchase of TCI (TCOMA) (which promises to expand the market for high-speed cable modems), it seems likely that Broadcast.com's offerings will eventually gain in mainstream popularity. The company creates no content of its own, but rather acts as sort of a network for traditional media companies to port their content online. So, for instance, a British expatriate can have her BBC no matter where in the world she may be. And Howard Stern fans can continue listening once they get to work, secure in the knowledge that they won't miss a single scatological reference. In some ways, Broadcast.com competes with such online radio outlets such as Imagine Radio and Spinner (formerly TheDJ). The difference is "they're not doing anything original," says John Adams, Imagine Radio's program director. But, he says, that's not a bad thing. "They have a great business model -- they're acting as the middleman" between traditional media outlets and the Net.