A Hot And Crowded Launch Pad
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I'm going on vacation next week, but the market apparently isn't. There are as many as 15 IPOs from Internet companies slated to go out in the five days starting on July 19.
Add in leftovers such as Travelscape.com and Cyber Merchants Exchange, and come Monday we could see the busiest IPO launch pad of the month.
Here are what I think are the more notable of the bunch:
HealthGate Data Systems, a provider of health care information via the Internet to medical professionals. Based in Burlington, Mass., HealthGate hopes to raise $50.6 million in an offering of 4.6 million shares in the $10-$12 price range. Nasdaq ticker is HGAT, while the lead underwriter is SG Cowen.
Overall, HGAT is expected to pop on its IPO. If it doesn't, it's worth remembering that Healtheon shares, which were offered in February, didn't take off until mid-May, when the company announced its merger with WebMD.
Hoover's Online isn't a household word, unless there's an investor living with you. The company provides business information, especially financial data, primarily through the Internet.
The Austin, Texas-based company plans to offer 3.25 million shares in the $12-$14 range to raise $42.25 million. Lead underwriter is J.P. Morgan Securities; Nasdaq symbol is HOOV.
Hoover's is a popular stop among investors doing online research. The company racked up $9.4 million sales last year. That's probably more annual sales than most Internet companies have when they go public, but the revenue growth rate from '97 was only 71%.
The online financial and business information market is packed with competitors, but Hoover's brand name within its target audience - investors - should ensure it a solid debut.
MP3.com, the latest in a flurry of online music companies to go public, has the week's largest offering. The San Diego company seeks to raise $209 million in an offering of 12.3 million shares priced between $16 and $18. (Expect a high-end pricing, maybe even $20.)
MP3.com does not own the rights to the MP3 data compression technology that is angling to be the Internet standard for audio downloads. But it owns a swell domain name, and that should confuse enough investors to give the IPO a strong push and some flight time.
The company makes most of its revenue ($1.2 million last year) from advertisers, but I suspect ad revenue will hit a low ceiling because there won't be much driving traffic to this site, particularly the all-important repeat traffic. For while MP3.com offers thousands of songs, they're almost all from the guy you saw down at the open mike night in the local bar.
And even if that guy is great, you'll most likely have to buy a compilation CD to hear him. I don't think a lot of people will go for that.
With long-term revenue growth from advertising and e-commerce far from ensured, MP3.com strongly needs a new revenue stream. Right now it pays nothing for its content (artists submit songs for free in exchange for exposure); it may need to revisit that strategy and pay for rights to commercially viable acts, especially since the IPO will give the company a war chest.
See you on July 26.
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