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On Tap for the IPO Market

Traditionally, the IPO market shuts down at the end of August, as people go on vacation. That's why there are only two IPOs on tap this week.

But I think prospects look good for the rest of the year.

Indications are that Christmas will be very big for e-tailers. Also, there are exciting IPOs on the calendar, such as Martha Stewart, Akamai Technologies (improves the speed of the Net), Sycamore Networks (software for the optical networking market), and Charter Communications (Paul Allen's cable-broadband powerhouse).

Here are things to expect in the IPO market:

New Source of Cash: Traditional money sources -- such as leverage-buyout firms -- are scrambling to jump into the Net game. Their backers want to see more dot-com's in their portfolios.

One example is the premier LBO firm, Kohlberg Kravis Roberts. For example, the firm was part of a group (which included Sequoia Capital and Accel Partners) that invested $29 million in Desktop.com.

Linux: The first Linux IPO, Red Hat (RHAT) , has sustained its valuation very nicely. Other Linux companies will see this as a great opportunity for an IPO. Two that look like good possibilities: LinuxCare and VA Linux.

Business-to-business (B2B): To be competitive, companies want efficiency -- and the Web offers this, by allowing B2B e-commerce. The leaders in B2B have had incredibly successful IPOs, such as Ariba (ARBA) and Internet Capital Group (ICGE) .

Infrastructure: With the huge surge in Net activity, it is critical to have a sophisticated infrastructure. Infrastructure IPOs have been red-hot this year and this will continue. For example, Juniper Networks (JNPR) , which develops high-speed routers, was priced at $34 and is now selling for $216-1/2. Foundry Networks, which also develops high-speed networking products, has filed to go public. Others will, too.

Foreign IPOs: Of course, there are tremendous opportunities overseas for the Web. Interestingly enough, the competition may not be as tough and you are likely to find more first-mover opportunities in the IPO market. This has been the case so far with such companies as China.com (CHINA). Look for more foreign ISPs and portals to hit the market.

Spin-Offs: Many brick-and-mortar companies have valuable Net properties, which are attractive as spin-offs. For example, Disney (DIS) plans to spin-off Go.com to the public.

Spin-offs make lots of sense -- especially in the Net world. Net companies need to move fast, which is often difficult in bureaucratic organizations. Also, it is easier to attract talent to a spin-off company --as options are tied to the Net business, not the brick-and-mortar business.

In fact, this week, Nordstrom.com has signed a partnership with VC firm Benchmark Capital (the firm has funded such companies as eBay, Juniper Networks and Ariba ).

Further, last week, there were rumors that the online division of the New York Times (NYP) would go public. It appears that revenues will be about $25 million in 1999.


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