News from Bloomberg. Another CMGI venture going public. Let the parade begin!!!
Technology News
Mon, 01 Feb 1999, 6:58pm EST
Critical Path, E-Mail Business, Files $51.8 Mln IPO (Update1)
Critical Path, E-Mail Business, Files $51.8 Mln IPO (Update1)
(Adds interview details clarifying size of e-mail market in
5th paragraph.)
Washington, Feb. 1 (Bloomberg) -- Critical Path Inc., which
sells e-mail programs to Internet service providers and other
business customers, filed for an initial public offering of stock
that could raise as much as $51.8 million.
The San Francisco-based company, founded February 1997 by
Chairman David C. Hayden, is raising money to expand by hiring
sales staff, growing overseas and adding data centers where it
connects directly to the Internet, according to its IPO filing to
the U.S. Securities and Exchange Commission.
Critical Path provides programs that manage e-mail for
Internet access providers and ''Web portals,'' including E*Trade
Group Inc., the No. 2 online stockbroker. Critical Path's systems
are designed to be cheaper, more reliable and easier to use for
corporate clients, the SEC filing said.
''We think the company's uniquely positioned to capitalize
on the Internet messaging market, and this is just the next
logical step,'' President and Chief Executive Douglas T. Hickey
said of the IPO, in an interview today.
E-mail is one of the most popular and important functions of
the Internet, creating a fast-growing market for Critical Path's
services, the CEO said. Citing industry data, he estimated that
today's daily worldwide load of about 600 million messages could
grow to over 1.5 billion in 2000, while the number of mailboxes
in use could rise from 238 million to more than 2 billion.
The company lost $11.5 million last year as it recorded its
first revenue, totaling $897,000. E*Trade -- whose chairman and
chief executive, Christos M. Cotsakos, sits on Critical Path's
board -- accounted for 62 percent of Critical Path's 1998
revenue, according to the Friday filing.
Well-Known Customers
Critical Path has signed on other well-known strategic
partners, the filing said. The company manages e-mail for users
of the Web site of Network Solutions Inc., which assigns Internet
domain names. Critical Path also provides e-mail to customers of
U S West Inc., the sixth-largest U.S. local-phone company, and
Internet-service clients of Sprint Corp., the third-largest U.S.
long-distance company.
The company's ability to land strategic partnerships with
big companies ''is a validation of our business concept and the
idea that we're going to deliver carrier-class service (as
reliable as phone service) to our customers,'' CEO Hickey said.
Hickey declined to predict Critical Path's future sales or
when it might turn a profit.
Fortune magazine this month said the company's revenue
should reach $5 million this year. Still, the IPO filing's
standard section on risk factors said, ''We have not achieved
profitability in any period, and we expect to continue to incur
net losses for the foreseeable future.''
IPO Value
Critical Path didn't say how many common shares it expects
to sell in the IPO, or at what price it plans to sell the shares.
The $51.8 million estimated top value for the offering was
provided only as a basis for calculating the SEC filing fee.
Further details will be made available later, Hickey said,
adding that he expects the IPO to be completed late this quarter
or early next quarter.
The company now has data centers in San Francisco and Palo
Alto, California, as well as Laurel, Maryland, midway between
Baltimore and Washington. It plans to open data centers in the
U.S., Europe and Asia, according to the filing.
Critical Path may seek to grow through acquisitions as well,
Hickey said, declining to comment further. The IPO filing said
the company's isn't in any buyout talks now.
Current Shareholders
The SEC filing indicated that no current shareholders expect
to sell stock in the IPO. Existing stockholders will retain
''significant influence'' over the company after it goes public,
with an unspecified percentage of the company's shares, according
to the filing. The S-1 registration statement didn't say what
stake in the company is being offered to new investors.
Hickey joined Critical Path as president and CEO last
October, replacing Hayden. The chairman, 43, founded the company
with Wayne D. Correia, 32, who now is chief technology officer.
Hickey, also 43, formerly was CEO of Frontier Corp.'s Internet
unit, Frontier GlobalCenter, the filing said.
The CEO now holds a 5 percent stake in Critical Path,
although the filing didn't specify his percentage holdings after
the IPO. Chairman Hayden now owns 10.3 percent of the company.
E*Trade holds a 12.9 percent stake and a US West unit owns
8.0 percent. Venture capital investors -- all from Menlo Park,
California -- include Benchmark Capital Partners II LP and Mohr,
Davidow Ventures V LP, both with 15.2 percent, as well as
CMG@Ventures II LLC with 5.8 percent, the filing said.
BancBoston Robertson Stephens Inc. and Hambrecht & Quist LLC
will manage the stock sale, with Dain Rauscher Wessels and First
Albany Corp. Critical Path, whose Web site is www.cp.net, plans
to have the shares listed for trading on the Nasdaq Stock Market
under the symbol CPTH, according to the IPO filing. |
