Well, they're all gone. If you haven't gotten any @ $17, you ain't getting any @ $17.
GeoCities Sells 4.8 Mln Shares Above Expected Price
(Update2)
GeoCities Sells 4.8 Mln Shares Above Expected Price (Update2) (Adds
stakes of senior executives in 15th paragraph, details on chief executive in 16th
paragraph, use of proceeds in 17th paragraph, settlement of Federal Trade
Commission charges in 18th paragraph.)
Santa Monica, California, Aug. 10 (Bloomberg) -- GeoCities, a company that
lets Internet users set up their own sites on the World Wide Web, raised $80.8
million in an initial stock sale, more than expected, amid strong investor demand.
The Santa Monica, California-based company sold 4.75 million shares, a 15
percent stake, at $17 each -- $1 above the top of the $14-to-$16 expected range
set by lead underwriter Goldman, Sachs & Co. The price range was increased
from $12 to $14 earlier today.
The sale gave the company, which was founded in December 1994 and has yet
to turn a profit, a market capitalization of $521.2 million. ''It's going to be a bit
pricey,'' said Lawrence York, lead portfolio manager for the WWW.Internet
Fund, in Lexington, Kentucky. He expects the company's stock to perform well
initially.
CMG Information Services Inc., a direct marketing firm, holds 9.8 million shares
of GeoCities through its venture capital arm, or about 31 percent of the total
following today's initial stock sale. Softbank Holdings Inc., the U.S. unit of
Japan's Softbank Corp., a software wholesaler, holds 9.1 million shares, or about
30 percent following the sale.
Although many IPOs by Internet-related companies have been spectacular
successes this year, the most recent one, by Cyberian Outpost Inc., wasn't. The
company, which sells computer hardware and software over the Internet, closed
below its issue price of $18 on its second day of trading, last Monday, and has
done so ever since, with the exception of Friday, when it closed at 19.
At least a dozen IPOs were delayed last week after the Dow Jones Industrial
Average shook investors by tumbling 299 points on Tuesday.
Personal Web Sites
GeoCities hosts groups of personal Web sites where users with similar interests
can build their own sites and visit related ones. More than 2.1 million such users,
whom the company refers to as ''homesteaders,'' had set up free sites as of
July, up from 10,000 in October 1995.
GeoCities was the third most visited Web site on the Internet among home users
in June, according to the company's filing with the Securities and Exchange
Commission.
One obstacle to GeoCities' success is the new, undeveloped nature of the
Internet, York said. Standards have yet to be set for electronic commerce,
modems and security. ''For the Internet to flourish, these standards have to be
really developed,'' he said. ''There's a lot of cost involved in doing that.''
Some Internet companies are making initial stock sales before they are ready, he
said. ''By any historical measure based upon fundamentals like balance sheets,
income statements, positive earnings and cash flows, none of these Internet
companies would be able to go public.'' Investors are in effect providing venture
capital, a risky form of financing for start-up companies, by purchasing publicly
traded Internet shares, York said.
Advertising Dependent
Also, GeoCities may be too dependent on advertising, which accounts for about
90 percent of its revenue. ''There's too many (Internet) companies chasing the
same advertising dollar,'' York said. These companies may experience a
shakeout when Fortune 500 companies critically examine their return on Internet
advertising.
GeoCities had revenue of $4.6 million in 1997 and a loss of $8.9 million. The
year before, it had revenue of $314,000 and a loss of $3 million. GeoCities
''anticipates that it will incur net losses for the foreseable future,'' the company
said in its SEC filing.
The stock sale gave David Bohnett, 42, the company's chairman and founder, a
stake worth $42.2 million. Thomas Evans, 43, the chief executive, has options to
purchase stock worth $27.8 million.
Evans joined GeoCities in April. He is the former president and publisher of U.S.
News & World Report and Atlantic Monthly.
Improving Network
GeoCities will use the proceeds from the offering to improve its computer
network, make its Web site more usable, and expand its sales and marketing
capabilities and brand-name promotions.
In June, the company reached a proposed settlement of Federal Trade
Commission charges that it improperly collected and used personal information
about children visiting its Web site. The company has agreed to get parental
permission before collecting information from kids under 13, more clearly explain
how that data will be used and give consumers the ability to delete their personal
information from the company's database.
GeoCities will trade under the symbol ''GCTY'' on the Nasdaq Stock Market.
Donaldson, Lufkin & Jenrette Securities Corp. and Hambrecht & Quist LLC
are assisting Goldman Sachs in the transaction. |
