Internet IPOs Back In The Saddle
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A week after a precedent-setting day for Internet IPOs, two new offerings will test the roiled waters.
Web services vendor iXL Enterprises and Internet broker onlinetradinginc.com priced shares Wednesday. iXL began trading just before noon and was up 7-23/32 to 19-23/32 in mid-afternoon trading. Onlinetradinginc.com should begin trading later Thursday.
While the one-week drought between Internet IPOs included a holiday weekend, it's still the longest dry spell for 'Net stock debuts since March, when the market had to wait seven days between RoweCom (March 9) and FlashNet Communications (March 16).
Internet IPOs were red-hot back then. Since then the market has cooled considerably toward new Internet stocks. That point was brought home last Thursday when five Internet companies launched IPOs, the most ever in one day. Three of the offerings - from ZipLink, Juno Online Services and EDGAR Online - had among the worst first-day performances of the year.
It looked like Web broker onlinetradinginc.com was going public three weeks ago, and was on record as having priced shares. But company officials said its May 12 SEC filing was misinterpreted. (See When A Pricing Isn't A Pricing.)
So too has the market been waiting for iXL, which reportedly backed out of an S-1 filing at the 11th hour last fall and, after registering with the SEC in February, delayed a planned offering in April.
With Wednesday's pricing, however, all systems now appear to be go for Atlanta-based iXL (IIXL). The company is offering 6 million shares at $12 each in hopes of raising $72 million. Underwriters for the offering are Merrill Lynch, Donaldson, Lufkin Jenrette (parent company of DLJdirect), BancBoston Robertson Stephens and SG Cowen.
Founded in March 1996, iXL provides clients with a range of Internet services, including strategic consulting, Web site development and the design and implementation of e-commerce systems. It targets large corporations and counts among its customers Time Warner and Chase Manhattan.
Like USWeb/CKS, iXL built its reservoir of skills and expertise by buying up smaller companies. This acquisition, or "roll-up," strategy has led to an accumulated deficit of $84 million through March 31, a good-sized hole to dig out of. (Revenue in 1998 was $64.8 million, against a net loss of $48.9 million.)
Also, with 1,475 employees scattered around the United States and Europe, iXL faces formidable growth and integration challenges for a company trying to sell customers on its ability to deliver a range of services efficiently and synergistically.
A couple of months ago iXL would have been a good bet to soar from the opening bell. But with a newly skeptical market and a slew of higher-profile competitors (USWeb/CKS, Razorfish, Scient), iXL's IPO will have to fight for its right to party.
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