Stone Cold IPO Market
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That World Wrestling Federation's IPO is starting to look better and better. At least it doesn't have .com tacked onto it.
If it did, it would be body-slammed to the mat like virtually every other Internet company that has gone public in recent days. Six of the last 10 Internet IPOs finished their first day of trading below their respective offer prices.
The best debut of the remaining four came Wednesday from Internet Initiative Japan (NASDAQ: IIJI), which closed trading at $31.31, just 36% above its $23 offer price. Not exactly a crowd-pleasing victory; more like escaping the ring intact.
Yet four more callow contenders step into Wall Street's squared circle Thursday to take on the formidable, villainous tag team of Alan Greenspan and The Masked Internet Stock Bubble. Moments after the bell rang, three of the new IPO entrants were being pummeled on the ropes.
The Cobalt Group (CBLT), a Web advertising and marketing firm targeting auto dealers, began trading at $9.88, more than 10% below its $11 offer price. Located in Seattle, the company is selling 4.5 million shares on Nasdaq for a total offering of $49.5 million. Lead underwriter is BancBoston Robertson Stephens.
Internet Capital Group (ICGE), a Pennsylvania investment firm that seeks to become the next CMGI, opened at $12.13, barely above its $12 offer price. ICG owns stakes in companies working the business-to-business Web space. Though it has several 'Net firms in its portfolio, only online trade community VerticalNet has generated revenues. ICG seeks to raise $178.8 million in an offering of 14.9 million shares.
Still to come out of the locker room as of 1 p.m. is perhaps the most interesting 'Net offering of the day: Homestore.com (HOMS), a real estate Web network seeking to raise $140 million in an offering of 7 million shares at $20.
Homestore.com has ambitious plans to dominate the potentially huge online real estate information and services market. Founded in 1993 as InfoTouch, the company initially intended to develop public kiosks to allow people to search for home listings.
Within three years it discovered the Internet, switched its name to NetSelect, and opened Realtor.com, the most popular househunting site on the Internet. Since then the company, which changed its name again prior to this IPO, has added three more sites: HomeBuilder.com, CommercialSource.com (which helps businesses locate offices) and rental unit site SpringStreet.com.
That's an impressive collection of URLs for an online real estate network. Unfortunately, there's a sizable risk, which the company addresses in its S-1 filing: The National Association of Realtors (NAR) holds the REALTOR.com trademark and Web site address and exerts great control over how Homebuilders.com operates REALTOR.com as well as SpringStreet.com.
Further, should NAR terminate the operating agreement, the trade association would take full control of REALTOR.com. This is the first risk listed by Homebuilders.com in its prospectus, and should giveinvestors pause.
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