WSJ article on NETP [Discusses AMZN relationship]
April 23, 1999
Launch Media, Net Perceptions
Are Well-Received by Investors
An INTERACTIVE JOURNAL News Roundup
As usual for a Friday, tech-related initial public offerings made their debut
and were well-received by Wall Street.
Launch Media Inc., an Internet provider of music information, and
marketing-software company Net Perceptions Inc. were the new tech
companies to arrive Friday on the Nasdaq Stock Market.
Launch Media late Thursday priced 3.4 million common shares at $22
each through underwriters led by Hambrecht & Quist Inc. The stock
opened on Nasdaq at $32.75 and rose as high as $36.6875 before settling
to close at $28.375, a 29% premium to the offer price. Nearly six million
shares traded hands.
Net Perceptions, meanwhile, priced 3.65 million common shares at $14
each through underwriters led by BancBoston Robertson Stephens.
Shares opened on Nasdaq at $34.325 and closed at $29.8125, more than
double the offer price.
As with other recent Internet IPOs, investor enthusiasm allowed Launch
Media to price above expectations. Price talk on the offering was $12 to
$14 a share initially, then rose as high as $18 to $20 earlier this week.
Launch Media, of Santa Monica, Calif., has generated much attention
recently, as Internet investors search out content providers to fuel demand
for high-speed, "broadband" Internet services. The company provides
music news, features, interviews, album reviews, artist biographies and
music-related chat. One of the site's biggest draws has been music videos,
which can be viewed in a "streaming" format, but not copied.
Last month, Sony Corp.'s Sony Music Entertainment confirmed it will sell
its music-news service and license its music videos to Launch Media. Sony
also said it would purchase close to $1 million in Launch Media shares.
Launch Media also recently announced distribution deals with three major
Internet gateways. The company will be the primary music-content
provider for Microsoft Corp.'s MSN Entertainment Channel. Launch also
will provide music content to America Online Inc. and Snap, the Internet
portal jointly owned by CNET Inc. and General Electric Co.'s NBC.
Former NBC Entertainment President Warren Littlefield joined the board
of Launch Media earlier this month.
Launch Media produces its music-based Internet site, launch.com, as well
as Launch on CD-ROM, a digital magazine format that focuses on new
music. Launch Media was co-founded by Dave Goldberg, its chief
executive, and has a variety of private investors, including the GE Capital,
NBC, Allen & Co., Intel Corp. and music impresario Chris Blackwell,
among others.
Net Perceptions, based in the Minneapolis suburb of Eden Prairie, sells
software that retailers use to tailor Internet advertisements to individual
customers. Whims of Internet surfers are coming under deeper analysis by
Web sites, and Net Perceptions sells some of the most popular tools for
scrutinizing them. Retailers on the Web increasingly are using such tools to
encourage online shoppers to buy everything from take-out food to wall
art to movies. Thoughtful, personalized suggestions are more likely to open
consumers' wallets and turn them into loyal, repeat customers.
The company has garnered a roster of high-profile clients that include
bookseller Amazon.com Inc., music retailer N2K Inc. and the E! Online
entertainment site. Customers pay between $45,000 and $250,000 to use
Net Perceptions software, called Group-Lens.
GroupLens isn't the only product in a category known as "collaborative
filtering," technology pioneered by a Net Perceptions co-founder in the
early 1990s at the University of Minnesota. But analysts and customers
say the product's no-nonsense packaging has given Net Perceptions a high
profile.
Fans of "collaborative filtering" argue that it can be a more accurate
predictor of buying habits than conventional mass-marketing tools such as
demographic and psychographic profiles. That's because it looks at
behavioral data -- people's purchasing history and stated preferences -- as
opposed to broad criteria such as race, gender and income. A soccer
mom with the cinematic tastes of a 21-year-old urban male, for example, is
more likely to get a recommendation for a Clint Eastwood movie than
"Mrs. Doubtfire" when she uses a filter.
Like many companies with ties to the Internet that have gone public of late,
Net Perceptions has yet to turn a profit. But investor enthusiasm allowed
Net Perceptions to price above expectations. The company said it had
expected the shares to be offered at $10 to $12 each.
Barring a major market reversal, the IPO pipeline isn't likely to dry up any
time soon -- Juniper Networks Inc., Continuous Software Corp.,
Healthgate Data Corp. and Persistence Software Inc. were among the
tech companies that filed Friday for IPOs of their own.
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