INKT news...
Inktomi Moves To Triple Shares, Could Split Or Seek Acquisitions
Dow Jones Online News, Friday, February 05, 1999 at 17:40
By Nancy Beiles, Staff Reporter
NEW YORK -(Dow Jones)- Less than two weeks after its stock split went
into effect, Inktomi Corp. is moving to triple its authorized shares,
possibly laying the groundwork for another split or an acquisition.
The provider of search-engine tools is asking its shareholders to
approve the new authorization at its March annual meeting. According to
a proxy statement filed with the Securities and Exchange Commission,
Inktomi (INKT) is seeking to boost the number of authorized shares to
300 million from 100 million.
With more authorized shares at its disposal, the San Mateo, Calif.,
company would have greater latitude to split its stock. It could also
make acquisitions or form alliances using stock as currency, according
to the filing.
The move to increase the pool of shares comes on the heels of
Inktomi's 2-for-1 stock split that took effect Jan. 27. At the same
time, there have been several high-profile stock splits in the
technology sector by such companies as Microsoft Corp. (MSFT) and
International Business Machines Corp. (IBM).
Stock splits are typically made by confident firms that expect strong
growth to continue. Splits are often aimed at creating a wider
stockholder base by making the share price more attractive to individual
investors, who are less demanding than institutional investors and tend
to stick with a company much longer.
A Rice University study found that from 1975 through 1990, stocks got
an initial 3.5% boost from a split announcement, but the latest wave of
stock-splitters has drawn far better responses. That could make another
Inktomi split even more appealing to investors and the company.
Dramatic surges are hardly unfamiliar to Inktomi, which in its first
day of trading last June finished at $36, double where it was priced.
Since then, the stock has been on a tear, reaching as high as $95.25
last month, adjusted for the stock split. The stock often has moved
10-15 points up or down in a single day.
In part, Inktomi has benefited from the current hoopla surrounding
Internet-related issues, with many rising to astonishing levels. While
Inktomi's shares have fallen off its high since the split of $74.875, -
its its rich valuation could make it attractive currency for deals. The
Nasdaq-listed shares closed Friday at $54.875, don $3.063, or 5.79%, on
volume of more than 1.1 million shares.
Industry observers said using its stock for acquisitions or alliances
would be a prudent move for Inktomi. In recent weeks there have been a
slew of deals in the sector, and in order to stay competitive, Inktomi
may have to bulk up.
Should Inktomi opt to use its increased cache of stock for alliances
instead of acquisitions, there would be no shortage of interested
parties, said Richard Doherty, director of the Envisioneering Group, a
New York market research firm. Inktomi's niche of providing better
accuracy for Web applications would be attractive in particular to
Internet service providers, who could combine their Internet speed with
Inktomi's Internet accuracy, he said.
An Inktomi official was not available for comment. Inktomi provides
search-engine technology used by customers such as Microsoft Corp.'s
on-line unit, Yahoo! Inc. and HotBot, a unit of Wired Ventures Inc. Its
search tools are considered the most powerful available. The company
also makes software to ease Internet traffic. In November, Inktomi
licensed its so-called network cache, which provides high-speed Internet
access using cable-TV networks, to PSINet Inc. (PSIX), an
Internet-services and communications concern.
In a blow to the start-up, Microsoft announced last month that it
will phase out use of Inktomi Corp.'s Internet-search technology and
switch to AltaVista, a Web-search and navigation site that Compaq
Computer Corp. (CPQ) is spinning off. Analysts said the Microsoft
business represented only about 5% of the Inktomi's revenues, Business
Week reported in its Feb. 8 issue. Last year, the magazine added,
Inktomi's sales quadrupled, to $20.4 million, although the company is
still in the red.
The company's stock performance is also a boon to Chief Executive
David Peterschmidt, who received options to buy 200,000 shares with an
exercise price of $24.50 as part of his 1998 compensation, according to
the same proxy filing. Assuming a 5% stock appreciation, the options,
which expire in September 2008, are worth about $3 million. In 1997,
Peterschmidt, who is also chairman and president, did not receive any
options.
Peterschmidt's 1998 base salary of $150,000 was flat with 1997, while
his bonus fell to $125,000 from $280,000.
- Nancy Beiles; 201-938-5393
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