Last post before bed!
NetRadio files $37.4 million IPO
registration statement
Eric Wieffering / Star Tribune
NetRadio Corp. has filed a registration statement for an initial
public offering of up to $37.4 million, becoming the latest in a
long line of money-losing Internet companies hoping to take
advantage of a market that continues to defy conventional
investing wisdom.
NetRadio, one of the first broadcasters of original content over
the Internet, did not set a share price or disclose the number of
shares that will be sold. Officials at the Minneapolis-based
company did not return calls Wednesday.
NetRadio is the second Twin Cities-area Internet company to
file for an IPO. Last month, Net Perceptions filed to raise up to
$40 million.
They are not alone. More than two dozen dot com companies
have filed to go public since the beginning of the year. Seven
went public on the same day two weeks ago. Most have
soared, despite general weakness in the overall stock market
and in computer stocks in particular. Dell Computers, Compaq
Computer and Cisco Systems, three bellewethers of the
technology sector, have seen their prices plummet after warning
that revenue and profit growth is slowing.
But Internet stocks, most of which are years away from
becoming profitable, continue to hold their own or shoot up.
One electronic commerce vendor that went public at $21 on
Feb. 26, pcOrder.com, closed Wednesday at $41.87½. It lost
$10 million last year. Verticalnet, which helps businesses
develop Web sites, went public at $16 on Feb. 11, closed at
$57.75 on Wednesday. It lost $9.8 million in the first nine
months of 1998.
"A lot of these things are going to blow up," said Jay Ritter, a
University of Florida specialist who studies IPOs. "But for now,
the distinction between a good company and a good stock is a
distinction most investors don't want to make."
Still, NetRadio is one of the smallest companies to file for a
public offering. It booked just $255,000 in revenue in 1998,
and lost almost $4 million.
iVillage, a women-oriented site that has filed to raise $46
million, had sales of $15 million in 1998 and lost $44.3 million.
MiningCo.com, a search engine that has filed to raise $35
million, had sales of $3.7 million last year and lost almost $15
million.
"No question, the amount they want to raise is aggressive," said
Mark Hardie, a senior analyst for Forrester Research in
Cambridge, Mass. But Hardie said NetRadio has done a good
job of building a recognizable brand name in what is becoming
an increasingly competitive market.
Market place tunes up
Recent surveys show that about 27 percent of Internet users
have listened to Internet radio. Those that do tune in stay on
sites for longer periods of time, which presents companies with
a captive audience for targeted advertising and commerce
appeals.
Two weeks ago, Viacom Inc., which owns VH1 and MTV,
acquired a NetRadio competitor, Imagine Radio of Brisbane,
Calif. The media giant said it would invest $150 million in
making Imagine a place where Web surfers could select their
own music programming as well as buy music and related
products.
NetRadio currently does that at its own site. Listeners can
choose from about 120 broadcast formats. They can buy the
music they're listening to, and the broadcasts will be interrupted
with product-related advertisements.
NetRadio's registration statement is replete with terms that are
hot among industry analysts right now, such as "community,"
which it uses to describe visitors who return to particular
channels, and "stickiness," which refers to the fact that visitors
to its site stay for almost 21 minutes, a lifetime on the Web.
NetRadio claims that more than 800,000 people visited its site
in December, according to a survey by Neilsen/I-pro, but a
survey by MediaMetrix, a New York-based Web audience
measurement firm, comes up with different numbers. It said
NetRadio had 234,000 unique visitors in January. RollingStone
.com, which includes an Internet radio station, had 431,000
visitors and Broadcast.com, which carries programming from
other stations and sites, had 3.1 million visitors.
Hardie said the biggest competitive threat to NetRadio and the
other webcasters will come from the giant radio station
conglomerates, which have been slow to embrace the Internet.
Navarre keeps stake
The NetRadio filing had been expected. Navarre Corp., a
music and software distributor that owns 75 percent of
NetRadio's shares, has been trying to spin off the company
since last summer, and in December confirmed that an
underwriting was in the works.
NetRadio owes more than $5 million to Navarre, but the
company will convert its debt to equity and retain a significant,
but not yet determined, stake in the company. ValueVision
International, which currently owns about 25 percent of
NetRadio's stock, also will retain a significant stake.
NetRadio, which has filed to trade under the symbol NETR,
said the proceeds from the offering will be used for general
operating purposes.
But senior executives also will benefit when the offering is
completed. CEO Edward Tomechko's salary will rise from
$175,000 to $200,000, and he will receive a $20,000 bonus.
Other executives will receive a $10,000 bonus and pay raises
between 17 and 30 percent.
Everen Securities of Chicago is the lead underwriter on the
offering.
glenn |
