Ariba IPO Keeps Hope Alive
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Where did that one come from?
Sure, Ariba was tabbed by many analysts as one of the hot Internet IPOs this week. But in a market where more Internet IPOs have fizzled than flown, no one could have predicted that shares of the business-to-business e-commerce software vendor would end their first day of trading on Wednesday at nearly triple the offer price.
Ariba (ARBA) shares closed at $90, a whopping 291% above the ambitious $23 offer amount. That's the fourth-best Internet IPO debut of the year, and the best since priceline.com's 331% moonshot on March 31. The Sunnyvale, Calif.-based company raised $115 million in the offering of 5 million shares, giving it a market capitalization of $3.7 billion. Not a bad day's work.
Before you declare the Internet IPO slump over, however, keep in mind that Ariba's performance comes hot on the heels of flat debuts by Salon.com, Netivation.com, AppNet Systems, Student Advantage and Streamline.com, each of which closed Day 1 at or below their respective offer prices.
Still, it's blastoffs like Ariba's that entice other Internet companies into the bulging IPO pipeline and send investors scurrying to place orders with their brokers, even as they watch the vast majority of initial offerings achieve little or no altitude.
The question now becomes, does Ariba have coattails?
Not likely. The company benefited from good word of mouth and solid positioning in a market -- business-to-business e-commerce -- that has been tabbed by venture capitalists, high-tech analysts and investment brokers as potentially huge and lucrative.
Rather than kick off a new Internet IPO gold rush, Ariba's outstanding debut is likely to bolster the prevalent belief that infrastructure plays -- in Ariba's case, software infrastructure -- are the surest winners on the Web landscape.
Which could bode well for two of the three Internet companies that have priced shares for trading Thursday.
One of those companies, CyberSource, sells back-end transaction processing applications to businesses conducting e-commerce. CyberSource is offering 4 million shares at $11 under the Nasdaq symbol CYBS.
The other, Software.com, markets messaging products to Internet service providers such as telco carriers, ISPs and Web portals that allow them to offer Web-based e-mail, voice mail and fax services. Software.com has priced 6 million shares at $15 under the Nasdaq symbol SWCM.
The third Internet IPO due Thursday, quepasa.com, is a Spanish-language Web portal. The company is offering 4 million shares at $12 each.
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