To: TokyoMex who wrote (8916 ) 11/6/1998 2:28:00 PM From: William Bach Respond to
10% Pop In Week:
Up, Up And Away For IPO Index
By Steve Harmon
Senior Investment Analyst
Internet.com
"Where Wall Street Meets The Web"
Rumor has Amazon.com (NASDAQ:AMZN - news) apparently considering
acquiring a software etailer. There's a few offering this type of thing
now: Beyond.com (NASDAQ:BYND - news) , software etail network Digital
River (NASDAQ:DRIV - news) , Egghead.com (NASDAQ:EGGS - news) to name a
few. Most of the buzz centers on Beyond.com, whose CEO Mark Breier,
coincidentally, was VP marketing at Amazon for two years, helping the
bookseller grow revenue from $16 million in 1996 to $150 million in
1997.
It would be slightly ironic if Mark landed back in Seattle at Amazon as
VP software sales if a deal gets done here.
The rumors flying around help boost Beyond.com (formerly Software.net
but which changed it's name--some say--so that it rhymes with ".com" as
Amazon.com also does). BYND gained 86% to $14.875 per share since
October 29 putting its market cap north of $400 million, probably
already too much of a premium even if the rumor has merit.
INTERNET.COM'S Ticker Share price Share price % change
IPO INDEX symbol 11/5/98 10/29/98 period
Beyond.com BYND $14.88 $8.00 85.9%
24/7 Media TFSM $15.25 $11.81 29.1%
Verisign VRSN $37.25 $29.94 24.4%
Cyberian Outpost COOL $14.88 $12.25 21.4%
Netgravity NETG $11.38 $9.63 18.2%
DoubleClick DCLK $35.25 $30.00 17.5%
ISS Group ISSX $32.75 $28.00 17.0%
Inktomi INKT $89.75 $79.06 13.5%
CDnow CDNW $8.50 $7.50 13.3%
GeoCities GCTY $33.75 $31.38 7.6%
Exodus EXDS $33.50 $31.25 7.2%
Broadcom BRCM $84.25 $80.19 5.1%
Digital River DRIV $11.00 $10.75 2.3%
eBay EBAY $81.19 $79.88 1.6%
Broadcast.com BCST $49.38 $52.50 -6.0%
TOTAL 552.94 502.13 10.1%
AVERAGE 36.86 33.48 (c) 1998 Mecklermedia, Internet.com
Overall cumulative customer accounts for Beyond.com increased 47% to
431,000 3Q98 vs. 2Q98. Even so, at this juncture we don't think it makes
sense for Amazon to acquire given the recent success of its home-made
music store opening which in one quarter surpassed the then-existing
Internet music retailer CDnow (NASDAQ:CDNW - news) in sales.
Something as "non-brand" as Digital River (NASDAQ:DRIV - news) makes a
much better fit in our view with Amazon should it decide not to go the
"do it yourself" route. Recall that Amazon acquired IMDB, Junglee and a
Euro Web-book seller recently so it's not avert to buying.
Beyond's rise, and the recent resurgence in etail stocks, helped boost
Internet.com's IPODEX up a collective 10% since October 29 and a blended
132% from original IPO price. Each of these companies went public in
1998.
24/7 (NASDAQ:TFSM - news) , meanwhile, benefited from Microsoft's
reported $250 million stock deal for privately-held LinkExchange, an ad
network with a reported 400,000 sites but what could be an actual
800,000 depends on who's counting. That values each Web site--majority
of them small business Web sites--between $300 to $600 each.
Said another way, Microsoft just acquired a Web network for pennies to
the dollar. For a few hundred dollars per site it now has an open
channel to reach that small business segment with its host of offerings
from NT to email to commerce.
LinkExchange, we hear, also may enjoy gross margins in the 90% range,
something that probably clinched the deal.
DoubleClick (NASDAQ:DCLK - news) enjoyed the deal rub off also, up 17.5%
the past week. It's notable, though, that LinkExchange chose to sell
privately rather than go public. We attribute that to the topsy-turvy
nature in September and October of the IPO market.
Interest in advertising extended itself to Netgravity (NASDAQ:NETG -
news) which approaches the Web ad market with a software rather than
service solution. It sells ad server software
ISS Group (NASDAQ:ISSX - news) agreed to acquire technology from
database security assessment firm DBSecure November 2. The technology
allows customers to find security holes in Microsoft SQL Server and
Sybase databases, two of the more popular database formats, as well as
year 2000 problems.
