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Mail.com Delivers IPO Bid

March must be nostalgia month in the Internet IPO world, for yet another veteran of 1996's "free e-mail" movement has filed to go public.

Like Juno Online Services, which submitted its S-1 on March 5, Mail.com Mail.com is seeking public investor money -- $57.5 million in this case - to finance its expansion and a marketing and advertising blitz designed to kickstart the company toward profitability.

But unlike Juno, which has repositioned itself for better or worse as an ISP, Mail.com is basing its future on the free e-mail revenue model, which relies primarily on advertising dollars. Given the numerous other large vendors that already offer free e-mail - Microsoft, Netscape, America Online, Yahoo and others - it is a dubious proposition.

The New York-based company launched its first commercial e-mail service in November 1996, when it was known as iName (from which it switched to Mail.com two months ago). Its shtick back then was to offer "personalized" e-mail addresses by buying up the rights to dozens of generic domain addresses such as lawyer.com, doctor.com, engineer.com...you get the picture.

This clever idea garnered the company some press attention and subscribers, if not a lot of revenues.

Today Mail.com boasts 5 million registered users - oops, make that 5,000,001, because I just signed up. Of course, I'm never going to use the service, just as I never used my Hotmail account. I merely wanted to see how easy it was to sign up.

And that's the big problem facing the free e-mailers - the user numbers aren't real, a problem Mail.com concedes in its SEC filing and a reality not lost on savvy potential advertisers that already have enough questions about the Web as a delivery vehicle for their messages.

Further, Mail.com relies on numerous high-profile partners such as AltaVista, CNET and Snap! to generate sign-ups, and must pay these partners a cut of relevant revenues (or, in some cases, shares of stock). And contracts with some of the big user generators such as Yahoo! are due to expire this year.

Mail.com's revenues grew from $173,000 in 1997 to $1.5 million last year. So, however, did losses, rising from $3 million in '97 to $13.5 million last year.

Most of that was due to a dramatic increase in sales and marketing costs. In 1997, Mail.com spent $930,420 on sales and marketing, or $5.37 for every dollar of revenue. Last year sales and marketing spending was $7.67 million, which translates to $5.13 for every dollar of revenue generated.

That ratio must improve much more rapidly for Mail.com's strategy to pay off, and for investors to feel comfortable that the company has a shot at profitability in the foreseeable future.

Coming soon, but not that soon

GenesisIntermedia recently was listed on a couple of online IPO calendars as pricing in early March. Well, the IPO hasn't happened yet; not because there are any problems, a spokesman says, but because the company never planned it for that soon.

According to the spokesman, GenesisIntermedia, which sells interactive marketing services to businesses conducting electronic commerce, will likely price its IPO in early April, with late March an outside possibility. An offering of 2 million shares between $7 and $10 each is expected. The company, based in Studio City, Calif., hopes to raise $22 million and will trade under the Nasdaq symbol "GMGI". Underwriter is Millennium Financial Group.



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