E-Mailbag Monday: WebMethods, Buy.com, ASPs
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What do you think will be the hottest IPO this week?
Reply: Despite Greenspan and volatility in the NASDAQ, the IPO market has been unstoppable. It is not easy to guess the biggest IPO. But I do like WebMethods.
The company is a leader in the latest cool thing: business-to-business integration, which is known as B2Bi. Essentially, this technology integrates customers, partners and suppliers with real-time exchange of data. Benefits include: increased revenues, better relationships with outside suppliers and partners, increased efficiencies in the supply chain and higher rate of return on existing technology. In all, WebMethods has over 130 customers.
The lead underwriter is Morgan Stanley and the proposed ticker symbol is WEBM. The price range is $11-$13.
Buy.com has been delayed several times. But the IPO is expected this week. Are there problems?
Reply: Delays can occur for a variety of reasons. Perhaps the SEC is inundated. Or, maybe the company's bankers are slow. But the worst reason, of course, is if the IPO is having problems finding takers.
I'm not sure what the cause of the delays were, but I consider the chances for Buy.com to be problematic. The e-tailing sector has been pulverized in the past few months. When there are so many high-flying companies -- such as WebMethods -- hitting the IPO market, it makes it difficult for a company like Buy.com.
Buy.com has an awesome site, with a selection of over 850,000 items for sale. Then again, Amazon.com has an awesome site, but also higher sales and movement towards profitability. The scorched-earth pricing policy of Buy.com will likely scare many investors and should dampen enthusiasm for the IPO. In fact, Buy.com is party to two class action suits because of alleged mispricing of some of its products.
The lead underwriter is Merrill Lynch and the proposed ticker symbol is BUYX. The price range is $10-$12.
Asking About ASPs
What is an ASP?
Reply: ASP stands for Application Server Provider. In the traditional software model, much of the code of an application resides on a PC (known as the client). With an ASP, applications are hosted on a central server and can be accessed with thin-client software, such as a browser. A company would rather use an ASP for a variety reasons: it tends to be cost effective; it is easy to modify the application (it is changed only from the central server, not the many PC installations); and, an ASP company will likely have expertise and cutting-edge experience. Examples of successful ASPs include Breakaway Systems and Navisite.