E-Mailbag Monday: IPOs for the Week, Healtheon, Red Hat
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Question: What IPOs are you looking at this week?
Reply: I think the big ones include:
CacheFlow: The company develops ultra-sophisticated caching technology to speed the delivery of Web content. The lead underwriter is Morgan Stanley.
But there is another one that looks interesting -- but so far has been under the IPO radar screen. It is Mediaplex (the lead underwriter is Lehman Brothers). The company is an infrastructure play that allows companies to integrate their internal business data with online advertising and direct marketing. The technology is known as MOJO (which stands for mobile Java objects) and can function with many diverse information systems.
For example, Tickets.com (TIXX) used the technology for its ticket auction by linking user profiles with inventory levels. So let's say a user from New York goes to the Heavy Metal section of the site. In real-time, MOJO will process its extensive database, look for available Heavy Metal concerts in the New York area and in real-time, generate banner ads specific to the user's preferences.
So far, the results have been tremendous. Click-through rates have increased 440 percent.
Healtheon: A Healthy Future
Reply: This week, Healtheon (HLTH) completed its merger with WebMD and also reported third-quarter results. Net losses were $17.1 million, up from $13.5 million a year ago. The results were worse than expected and the stock took a hit, falling 5-3/8 to 37-1/16. Despite this, News Corp. announced that it is interesting in invested $1.1 billion in Healtheon-WebMD.
Of all the healthcare sites -- and there are many -- I consider Healheon-WebMD to be the top. The company, of course, has the lofty goal to link-up everyone within the medical infrastructure: patients, doctors and insurers.
This is will take lots of time; in fact, the company's CEO announced this week that Healtheon-WebMD will not be profitable until at least 2001. However, I think it is worth the wait, as the market for healthcare is immense, reaching about $1 trillion per year. What's more, there is a strong incentive to reduce costs. This is what Healtheon-WebMD will do. In a sense, it is a healthcare super B2B site.
Hat Off to the Leader
Reply: No doubt, Red Hat is the leader in the Linux market, which is growing at break-neck speed. However, there are many competitors clawing after it, such as VA Linux, Caldera and LinuxCare. These companies will raise lots of money from their IPOs and put even more pressure on Red Hat. With a $7 billion market capitaliztion, Red Hat looks risky.
As for Microsoft (MSFT) , they always seem to find a way to prevail, such as against the threats of the Netscape browser and Java. Microsoft loves a fight and should definitely be a big concern for Linux companies.
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