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Really Green Thumbs: Net Grocer Plans IPO; PeaPod Sales Stronger

With rival PeaPod (NASDAQ:PPOD) struggling to get Wall Street's attention, here comes far smaller dry goods etailer Net Grocer with its own plans to go public. With all of $406k revenue for the quarter ending March 31 we wonder if this one may be a little too green?

PeaPod, for example, just posted $17.53 million revenues for its June quarter. In the six months up to that point PeaPod generated $36.39 million. Annualized that's $72.79 million. PPOD market cap on August 3 was just over $100 million, which implies a 1.4x sales multiple. If we extrapolated Net Grocer's sales multiple at that rate it implies a trip to the calculator farm to recharge the battery.

Net Grocer

IPO snapshot

Proposed maximum offering

$ 37.95

Revenue

1997

$ 0.28

Three months ending 3/31/98

$ 0.41

Annualized per March quarter

$ 1.63

Loss

1997

-$3.58

Three months ending 3/31/98

-$3.04

all figures in millions

) 1998 Mecklermedia. www.Internet.com

Net Grocer's plans get to the forefront of the Web-based dry goods (canned, boxed, non-perishable type foods and items) market goes like this: Buy exclusive spots for two to three years on AOL, Yahoo!, and Excite which Net Grocer says in its filing statement have 75% of unduplicated Web reach.

Users of those services may see a Net Grocer ad or offer pop up prompting them to buy. Typically, this involves the service to get a cut of Net Grocer's sales. Deliveries are made via FedEx.

As part of its deal with Net Grocer, AOL has two warrants for stock at unknown terms. Clearly Net Grocer plans on riding the growth of three of the top 10 Web services and networks. What's the possible potential?

In two years time AOL could have 25 million users to its closed service and perhaps another 40 million unique monthly users on its Web-based service. Yahoo! could have 50 million to 75 million unique monthly users and Excite may be in the 35 million to 45 million unique monthly user range (or acquired and part of a larger consolidated network).

That reach could fuel Net Grocer to PeaPod-type sales levels if people cotton to buying groceries via the Web. Selling dry goods looks like a safer play than selling lettuce like PeaPod does but PeaPod also has branched out to drugs and other goods.

PeaPod is already the leader and its stock gets zero interest on Wall Street. There's already a green giant and investors are as excited about PPOD as most people are about brussels sprouts.

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