Could this be the bottom?
--Olu E.
Headline: Barnesandnoble.com IPO Lags Others
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By RACHEL BECK
AP Business Writer
NEW YORK (AP) - Barnesandnoble.com's much-anticipated initial
public offering of stock received a subdued welcome on Wall Street
Tuesday, the latest sign that the dot.com craze in the stock market
may be waning.
Although shares of the online bookseller rose 27 percent above
their offering price, they failed to triple or quadruple in value
like many Internet peers have done in their first days of trading.
Barnesandnoble.com shares went public at $18 per share and were
at $22.93 3/4 in late trading on the Nasdaq Stock Market.
''Investors just aren't going after Internet stocks like the
used to,'' said Brian G. Belski, chief investment strategist at
George K. Baum & Co., in Kansas City, Mo. ''The market is moving
away from sex appeal and more towards substance, and we are really
seeing that in the prices of Internet stocks.''
Internet stocks, especially IPOs, have been the darling of Wall
Street for the past year, with investors embracing just about any
company with online operations or even online plans.
But the appetite for cyber-stocks appears to be weakening. In
recent weeks, many of the biggest names on the Web - including
''stalwarts'' such as Amazon.com and eBay - have seen their stocks
slump, some falling as much as 50 percent from their peaks.
On Tuesday, the Dow Jones Internet index, a collection of 40
companies, fell nearly 8 percent.
In addition, there's been a cool response to new Internet
issues. Gail Bronson, an analyst with the newsletter IPO Monitor,
estimates that of the 50 or so IPOs this year, most companies'
stock are trading below their first-day highs.
Online toy retailer eToys, for instance, more than quadrupled in
its first day of trading last Thursday, soaring from its offering
price of $20 to close at $76.56 1/4 on the Nasdaq. But since then, it
has fallen more than 30 percent from that peak.
And the relatively tepid demand for barnesandnoble.com shows
that investors aren't as willing to throw their money into Internet
IPOs as many clamored to do in the past.
''Investors are putting more emphasis on the quality of the
businesses that they are putting their money into,'' Belski said.
''When you buy Alcoa, you know they make aluminum. If you buy
3M, you know they make Post-It notes and lots of other things,'' he
said. ''Where as with the Internet, there are more questions about
whether these businesses will make money and be successful in the
longer term.''
Like many online companies, barnesandnoble.com is a
fast-growing, but money-losing business. The company, in a filing
with the Securities and Exchange Commission, said it lost $20.2
million in the first quarter, up from a loss of $9.5 million a year
ago.
Sales, however, rose to $32.3 million, an increase of 25 percent
from the fourth quarter of 1998 and up 259 percent from year-ago
levels.
But barnesandnoble.com still lags behind Amazon.com, which is
quickly building itself into an online shopping hub with a broad
array of books, music, video, gifts and auctions. Amazon's customer
tally was 8 million at the end of the first quarter, compared with
1.7 million at barnesandnoble.com.
With its offering of 25 million shares or 18 percent of the
company, barnesandnoble.com raised $421.6 million, which it plans
to use to expand its features, staff and services and pay for more
marketing and promotions.
Bookseller Barnes & Noble Inc. and German media conglomerate
Bertelsmann AG each own 41 percent of barnesandnoble.com, which
currently sells books, magazines and software and a limited supply
of music and video products.
Analysts still believe the stock has potential because it is a
well-known name and investors have long liked the
online-bookselling concept.
''This will not be a stagnant operation,'' said David Menlow,
president of IPO Financial Network in Millburn, N.J. ''I believe
barnesandnoble.com will transmogrify into a very different site
than it is currently and people will be surprised at what they
see.''
This is the second time in a year that plans have been announced
to sell shares of barnesandnoble.com. Last August, Barnes & Noble
announced its intention to take its online operation public, but
decided to postpone the offering after Bertelsmann purchased half
the company. |
