Sam:Here is piece published by CNET News.Also don't forget how GEEK performed a much smaller ISP out of Dallas with only 50K customers.I also think ONEM will do fine in the coming days.I particularly like Bob Dole's association with the company as a board member,a very important factor in my opinion.
OneMain makes a splash on Wall Street
By Bloomberg News
Special to CNET News.com
March 25, 1999, 3:30 p.m. PT
OneMain.com, an Internet service provider for rural and less populous markets, rose 80 percent in its first day of trading following an initial public stock offering.
The Southampton, New York-based company rose 17.5625 to 39.5625. About 16.8 million shares changed hands on the Nasdaq Stock Market. It traded as high as 46.75. The company, a consolidator of ISPs that began business in August, closed with a market value of $748.4 million.
OneMain acquired 17 ISPs with the proceeds from its initial sale yesterday, and now has about 350,000 subscribers, making it one of the ten largest ISPs in the United States.
"Our markets are Wal-Mart-type markets," said Stephen Smith, 38, the company's chief executive officer. "We're the first national ISP focused exclusively on secondary and rural markets."
The company's founders--Smith, financial chief Dewey Shay, 40, and Washington financier Jonathan Ledecky--have stakes worth about $45.5 million, $34.5 million, and $61.1 million respectively at today's close. Ledecky specializes in combining small companies within a single industry.
"It's a pretty good idea to consolidate these rural ISPs for now, but that is not going to be the future," said Bruce Kasrel, an analyst with market research company Forrester Research, who believes that OneMain must now quickly move to expand the services it provides customers.
"The challenge for OneMain is to scale up to enhanced services and possibly broadband services," he said. "An ISP that is offering Internet access alone is going to look like a dinosaur in the next few years."
ISPs will come under increasing competitive pressure from national ISPs and telecommunications companies to offer a wider range of services, such as bundled voicemail and paging, and to offer quicker access to the Internet through swift cable and other technologies, he said.
Yesterday, OneMain sold 8.5 million shares at $22 each, raising $187 million before expenses. The shares were sold at the top end of the $20 to $22 range set by BT Alex. Brown, which managed the sale. Earlier yesterday, BT Alex. Brown raised the range from $18 to $20, and the number of shares from 8 million.
Bob Dole, the former Senate Majority leader, will join OneMain as a member of its board of directors, the company announced yesterday. OneMain will benefit from Dole's "knowledge, experience and relationships," Smith said in a statement.
OneMain will use about $71.8 million of the proceeds from the offering to pay for its acquisition of the 17 ISPs, and about $52.5 million for general corporate purposes, the company said in its filing with the Securities and Exchange Commission.
"Our focus is on growth," Smith said. "Our No. 1 focus is on building density around existing POPs [points-of-presence], and keeping our churn rates very low by providing high levels of customer service."
The ISP industry is highly fragmented, with about 4,855 national and local ISPs in the U.S. as of Sept. 1, according to OneMain's IPO filing. Revenue from ISP services is expected to grow to $21.8 billion in 2002 from $6.5 billion in 1998, the company said.
OneMain's primary competition comes from national ISPs that focus on individual and small business subscribers. These competitors include America Online, Microsoft Network, Prodigy, MindSpring, and EarthLink, the company said.
OneMain trades under the symbol "ONEM."
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