Mpath Goes Live With IPO
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Online live community site and technology provider Mpath Interactive isn't playing around with its IPO. The company, best-known for its interactive games site, priced Wednesday at $18 per share, far above the original $10-$12 range set in February.
Indeed, Mpath twice upped its pricing range this week alone, to $12-$14 on Tuesday and $14-$16 on Wednesday. With 3.9 million shares set to begin trading Thursday, the company now hopes to pull in $70.2 million, nearly two-thirds higher than the $42.9 million initially sought in the offering.
And why not? The splashy post-correction debuts of Log On America and Razorfish prove that demand for Internet IPOs remains high, even though the Internet stock market isn't quite back on its feet. No sense in leaving money on the table.
Based in Mountain View, Calif., Mpath runs two of its own live community sites, mplayer.com and HearMe.com. Mplayer is a multiplayer interactive games service that allows Internet users to square off against each other for free. Games range from the sedate (chess, Scrabble, poker) to the violent (Annihilation Center, Gangsters and Alien vs. Predator).
Virtually all of Mpath's revenues from its own sites are derived from advertising. Gross revenue from the Mplayer site grew from $686,000 in 1997 to $3.02 million last year, a 341% increase.
The company's biggest revenue generator is its Mpath Foundation business unit, which licenses technology and provides fee-based services to online companies seeking to create live communities on the Web. The Foundation unit's revenues grew from $2.04 million in '97 to $5 million last year.
Mpath's proprietary technologies include POP.X, an end-to-end system for deploying people-to-people applications on the Internet, and customer management software used to analyze user behavior, provide service and enable billing. Major customers include CSK/Sega, Sony and Electronic Arts, which accounted for 45% of Foundation revenues last year.
The growth in revenue from Mpath's own sites - which should accelerate as the new HearMe site draws more traffic - has provided better balance to Mpath's revenue mix. Live community revenues went from 25% of the $2.7 million in total revenue from 1997 to 38% of last year's $8.03 million in total revenue.
On the minus side, Mpath accumulated $53 million in losses from its inception in January 1995 through last December. One good trend: Net loss dropped from $13.6 million in 1997 to $11.8 million in 1998. Mpath faces competition from other companies building Web-based live communities, including Cendant, E-Pub Services, Lipstream, SegaSoft, Sony and Microsoft. More traditional media companies such as Disney, NBC and CBS also could enter the fray.
For now, though, there's plenty of running room in this market. With its growing base of visitors and more sites expected to need technology for creating their own live communities, Mpath appears to be well-positioned for success, and should enjoy a good opening day of trading.
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