RealTime IT News

10% Pop In Week: Up, Up And Away For IPO Index

Rumor has Amazon.com (NASDAQ:AMZN) apparently considering acquiring a software e-tailer. There's a few offering this type of thing now: Beyond.com (NASDAQ:BYND), software e-tail network Digital River (NASDAQ:DRIV), Egghead.com (NASDAQ:EGGS) to name a few. Most of the buzz centers on Beyond.com, whose CEO Mark Breier, coincidentally, was VP marketing at Amazon for two years, helping the bookseller grow revenue from $16 million in 1996 to $150 million in 1997.

It would be slightly ironic if Mark landed back in Seattle at Amazon as VP software sales if a deal gets done here.

The rumors flying around help boost Beyond.com (formerly Software.net but which changed it's name--some say--so that it rhymes with ".com" as Amazon.com also does). BYND gained 86% to $14.875 per share since October 29 putting its market cap north of $400 million, probably already too much of a premium even if the rumor has merit.

INTERNET.COM'S Ticker Share price Share price % change
IPO INDEX symbol 11/5/98 10/29/98 period
Beyond.com BYND $14.88 $8.00 85.9%
24/7 Media TFSM $15.25 $11.81 29.1%
Verisign VRSN $37.25 $29.94 24.4%
Cyberian Outpost COOL $14.88 $12.25 21.4%
Netgravity NETG $11.38 $9.63 18.2%
DoubleClick DCLK $35.25 $30.00 17.5%
ISS Group ISSX $32.75 $28.00 17.0%
Inktomi INKT $89.75 $79.06 13.5%
CDnow CDNW $8.50 $7.50 13.3%
GeoCities GCTY $33.75 $31.38 7.6%
Exodus EXDS $33.50 $31.25 7.2%
Broadcom BRCM $84.25 $80.19 5.1%
Digital River DRIV $11.00 $10.75 2.3%
eBay EBAY $81.19 $79.88 1.6%
Broadcast.com BCST $49.38 $52.50 -6.0%
TOTAL   552.94 502.13 10.1%
AVERAGE   36.86 33.48  
(c) 1998 Mecklermedia, Internet.com

Overall cumulative customer accounts for Beyond.com increased 47% to 431,000 3Q98 vs. 2Q98. Even so, at this juncture we don't think it makes sense for Amazon to acquire, given the recent success of its home-made music store opening which, in one quarter, surpassed the then-existing Internet music retailer CDnow (NASDAQ:CDNW) in sales.

Something as "non-brand" as Digital River (NASDAQ:DRIV) makes a much better fit in our view with Amazon, should it decide not to go the "do it yourself" route. Recall that Amazon acquired IMDB, Junglee and a Euro Web bookseller recently so it's not adverse to buying.

Beyond's rise, and the recent resurgence in e-tail stocks, helped boost Internet.com's IPODEX up a collective 10% since October 29, and a blended 132% from original IPO price. Each of these companies went public in 1998.

24/7 (NASDAQ:TFSM), meanwhile, benefited from Microsoft's reported $250 million stock deal for privately-held LinkExchange, an ad network with a reported 400,000 sites but what could be an actual 800,000 depends on who's counting. That values each Web site--majority of them small business Web sites--between $300 to $600 each.

Said another way, Microsoft just acquired a Web network for pennies to the dollar. For a few hundred dollars per site it now has an open channel to reach that small business segment with its host of offerings from NT to e-mail to commerce.

LinkExchange we hear, also may enjoy gross margins in the 90% range, something that probably clinched the deal.

DoubleClick (NASDAQ:DCLK) enjoyed the deal rub-off also, up 17.5% the past week. It's notable, though, that LinkExchange chose to sell privately rather than go public. We attribute that to the topsy-turvy nature in September and October of the IPO market.

Interest in advertising extended itself to Netgravity (NASDAQ:NETG), which approaches the Web ad market with a software rather than service solution. It sells ad server software.

ISS Group (NASDAQ:ISSX) agreed to acquire technology from database security assessment firm DBSecure November 2. The technology allows customers to find security holes in Microsoft SQL Server and Sybase databases, two of the more popular database formats, as well as year 2000 problems.