Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Microcap & Penny Stocks : Bid.com International (BIDS) -- Ignore unavailable to you. Want to Upgrade?

To: Goldbug Guru who wrote (2986)	12/4/1998 2:59:00 AM
From: Goldbug Guru	Read Replies (1) \| Respond to of 37507

UBID auction likely to get out of hand Sneaking in through the back door doesn't always work By Darren Chervitz, CBS MarketWatch Last Update: 5:55 PM ET Nov 30, 1998 SAN FRANCISCO (CBS.MW) -- The idea is simple enough. Investors looking to get in on a hot initial public offering go through the backdoor by buying shares of an already public firm that owns or has a significant stake in the soon-to-be-public company. In the past couple of weeks we've seen several examples of this phenomenon, most notably with Creative Computers (MALL), which plans on spinning off its uBID auction unit this week. Before Monday, the stock had zoomed ahead more than 525 percent this month on news that it was reviving plans for the uBID offering, originally announced in July. There's little question that uBID will be a screamer and in the first few days of trading could even outperform Ticketmaster Online/CitySearch, the other, more solid Internet offering coming this week. Company Symbol Location # of Shares uBID UBID Elk Grove, Ill. 1.58 mln Offering price Major underwriters Long-Term Rating $13 to $14 Merrill Lynch William Blair & Co. Impeccable timing Credit the expected strong performance of uBID, which is a so-so company competing in a crowded market, to a display of impeccable timing. Not only has the interest in IPOs come roaring back, but Internet stocks have taken off for outer space faster than John Glenn. The bidding for the online auctioneers has been particularly intense. Take, for instance, eBay (EBAY), which before Monday was up more than 1000 percent since its September IPO. Or Onsale (ONSL), which more than quadrupled in recent weeks. Onsale's meteoric rise came in spite of a disappointing third quarter that spurred a couple of analysts to downgrade the stock (Unlike uBID, these analysts did not enjoy impeccable timing). Not only are uBID's competitors trading at much higher valuations, but the supply/demand imbalance that's fanned the flames of recent IPOs like Theglobe.com (TGLO) is going to be much more severe with uBID, since the company will only be selling at most 1.82 million shares. Given the powerful retail broker army of co-manager Merrill Lynch, I wouldn't be surprised to see uBid's IPO match the first-day success of Theglobe.com and at least temporarily near triple digits. Since Creative Computers intends to distribute to its own shareholders sometime in 1999 the 7.3 million shares it will own in uBID after the IPO, Creative's stock was indeed a, well, creative way to play the uBID offering. But like this entire Internet craze, things got out of hand. On a diluted basis, Creative Computers has 10.4 million shares outstanding, meaning that a Creative shareholder will get about 0.7 shares of uBID (7.3 million shares/10.4 million) for each Creative share when and if the distribution is eventually made (tax issues could still derail the payout). Assuming the appropriate value for a uBID-less MALL is about $10 (about where it was before the madness began), then shareholders buying Creative at its height on Friday were paying about $53 to get 0.7 shares of uBID, implying a stock price for uBID of about $75.70 and a market cap for uBID of about $690 million.