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Second Internet IPO boom is more modest

NEW YORK -- Quietly, the IPO market has entered the second coming of the Internet age.

It's a far cry from the dot-com boom years that led to the most buoyant period for initial public offerings, only to be followed by the new-issues market's most dramatic collapse. But Internet-related companies are playing an increasingly more important role in IPO issuance this year.

"You needed time to heal the wounds" from the dot-com collapse of 2000, said John Fitzgibbon Jr., an IPO analyst based in Jersey City, N.J. "Well, we've had enough time. The Internet has come back."

Some of the highest-profile IPOs this year have come from the Web, notably the $1.67 billion auction of online search giant Google Inc. (Nasdaq: GOOG)

But there were a slew of smaller deals ranging from May's $77 million IPO of online retailer Blue Nile Inc. (Nasdaq: NILE) to the $42 million offering in October from gay and lesbian Web community PlanetOut Inc. (Nasdaq: LGBT).

Even the infamous ".com" suffix -- shunned by many Web companies since the technology bubble burst -- has made a comeback in 2003. Companies like customer-relations online-software company salesforce.com Inc. (NYSE: CRM) and price-comparison company Shopping.com Ltd. (Nasdaq: SHOP) avoided changing their names to drop the ".com," even as dozens of companies have rebranded over the past few years. Shopping.com went a step further: It did change its name -- from Dealtime.com Ltd. -- and decided not to rid itself of the ".com."

This isn't to say that the Internet boom years are back. Indeed, though the IPO market is having its best year for new stock issuance since 2000, Internet-related companies are still faced with some skepticism. Having no revenue, no earnings and thin business plans, like many IPO companies did at the end the 1990s, doesn't work in the current market.

Yet, the more established companies, particularly the ones that found a way to survive over the past several years as their online competitors shuttered their doors, are seeing some enthusiasm.

"What you're seeing coming aren't those companies with 20-something CEOs," Fitzgibbon said. "Today, you have to be established in your marketplace, have revenue and you almost always have to have turned the corner on profitability."

One company typical of this pattern plans to come to market this week. Online real-estate broker ZipRealty Inc. (Nasdaq: ZIPR), based in Emeryville, Calif., plans to sell 4.55 million shares at between $10 and $12.

ZipRealty, which was started in 1999, only started to report profits in the second half of last year. Over the nine months ended Sept. 30, ZipRealty reported net income of $2.3 million on revenue of $44.7 million.

The good news for Internet companies like ZipRealty is that the sector has been by far the best performer for IPOs so far in 2003. In fact, four of the five companies to rise the most from their offering prices this year are all Internet-related companies.

The best performer has been Chinese online gambling company Shanda Interactive Entertainment Ltd. (Nasdaq: SNDA), which is up 177 percent from its $11 offering price. The second-best overall gainer is another Internet-related company, online software maker RightNow Technologies Inc. (Nasdaq: RNOW), which has gained 154 percent since going public.

Rounding out the top five are online discount retailer eCost.com Inc. (Nasdaq: ECST), which is up 154 percent for the fourth-best gain, and Chinese online jobs tracker 51job Inc. (Nasdaq: JOBS), which is up 129 percent for the fifth-best gain. The one non-Web company in the top five is the third-best performer, oil company Jed Oil Inc. (AMEX: JDO).

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