RealTime IT News

Blistering Gains: Internet IPOs Sizzle On Wall

You know that the stock market is hot when investors call a 47% gain for an Internet initial public offering a bad day on Wall Street. The numbers playing out in the IPO screen are blockbusters by any gauge. Our tally shows an average 140% runs from offering.

The dash for cash prompts many Internet hopefuls to file for offerings also in the race for marketshare and mindshare in several of the Web's new categories including retailing and local guides.

Fueling the activity are those looking for the next Amazon.com and day traders who buy and sell shares in video vigilante 'Duke Nukem' fashion (thumb twitching cowboys).

See How They Run: Four Recent Net IPOs

Offering price

Close June 29

% difference

Broadcom

BRCM

$ 24.00

$ 69.88

191%

Inktomi

INKT

$ 18.00

$ 41.00

128%

NetGravity

NETG

$ 9.00

$ 13.25

47%

Software.net

SWNT

$ 9.00

$ 19.69

119%

AVERAGE

$ 15.00

$ 35.95

TOTAL

$ 60.00

$ 143.81

140%

Broadcom (NASDAQ:BRCM) leads the pack with 191% upside from pricing (see June ISR archives June for Broadcom report). Fueling its ozone-leading orbit is the rush by telco and techno firms investing in cable.

Anecdotal evidence comes from AT& ;T's $48 billion bid for cable king TCI, and Microsoft's billion bets on Comcast. Even Compaq jumped in the coaxial wired war with an investment in cable.

Who's supplying the fast chips for that broadband nirvana mantra humming from these deals? Broadcom, for one. Our shorthand version of Broadcom's potential: this could be the 'Intel' of the Internet on steroids era playing soon on PCs and TVs.

On the other side of the need for speed comes Inktomi (NASDAQ:INKT), which provides software that saves copies of popular Web pages on servers--caching. Inktomi also provides search engine technology to several high-profile Web companies including Yahoo!, Microsoft, Disney and Wired (see ISR archives June 12 for Inktomi report).

Software.net (NASDAQ:SWNT) first quarter 1998 generated $6.2 million in revenue selling software via the Web through downloads and shrink-wrap fulfillment. Since launch in 1994 more than 140,000 customers have tried and bought from Software.net's assortment of 300 software publishers and 2,800 titles. Key marketing alliances include AOL, Excite and Netscape.

NetGravity (NASDAQ:NETG) sputtered to a start, pricing below high range as the market debated where the ad software server maker fit into the overall big picture (see ISR archives May 22 for NetGravity report). It managed a 47% run once the engine kicked in.

In The IPO Pipeline

The IPO pipeline

Target price =

Broadcast.com

$ 12.00

Citysearch

TBD *

Digital River

TBD

PointCast

$ 11.00

*to be determined

Investor enthusiasm for these prompts more firms to step into the on-deck circle. PointCast is one (see ISR archives May 19 for PointCast report) that looks to price at $11 per share. And here comes Web broadcast aggregator and aptly-named Broadcast.com, in a similar range at $12.

Digital River, a rival to software.net, hasn't priced the offer yet but has filed to go public. Our analysis shows software.net could be trading at about 17x estimated 1998 revenue, so we would expect Digital River to try and find that height. The twist on Digital River is that it sells software through a network of 274 online retailer clients, including Corel Corporation, Cyberian Outpost, Lotus, Micro Warehouse and Internet.com to name a few. (see ISR archives June 4 for Cyberian report).

Citysearch becomes the first local guide to the Web to test the IPO pipeline. No share price target yet but it wants to raise $50 million. The guide serves several U.S. metro areas including Austin, Greater Los Angeles, Nashville, New York City, Portland, Raleigh, Durham, Chapel Hill, Cary, San Francisco Bay Area, Utah and Washington DC. International cities featured are Melbourne and Sydney. Look for our in-depth report on Citysearch this week in Internet Stock Report.