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Playboy, Others Stripped of IPO Dreams

Playboy.com topped the list of a handful of firms that put an end to hopes of going public amid adverse market conditions Tuesday.

Playboy.com enjoyed 152.8 million page views in September, which bested the previous year's hits by 97 percent. In fact, Playboy.com was doing well enough to announce that it was expanding overseas into Germany in a few months.

And that's the good news. The bad news is that, contrary to popular myths, the adult-entertainment site is losing money. It posted a third-quarter net loss of $6.5 million, or 27 cents per diluted share, compared to a net loss of $1.1 million, or 5 cents per diluted share, in the prior year. $4.2 million of its net loss came from the of non-operating expenses related to the sale of its Critics' Choice Video catalog and to the planned IPO of a minority interest in the company's online business.

Its total EBITDA, or Earnings Before Interest, Taxes, Depreciation and Amortization, was $4.6 million as opposed to $30.9 million in the prior year period, but 99 percent of that came from the $30 million Playboy TV International pumped into it.

Christie Hefner, chairman and chief executive officer of Playboy Enterprises Inc., said Playboy.com was counting on the international push, which will go beyond Germany and into Asia and Latin America, and online gaming, to resurrect its sales.

The daughter to the man with one of the most famous mansions in the world tried to remain upbeat in a company statement Tuesday:

"We do not believe that under current market conditions we would receive a valuation that reflects the extraordinary potential of this business," Hefner said. "We are very pleased with the growth we've seen in our online business this year. The strength of our existing business combined with the potential of new revenue streams and the power of the Playboy brand make us confident that Playboy.com will become one of our largest and most profitable businesses."

While its hard to question the strength of the brand and the age-old idea that "sex sells," Playboy.com may weather, but can't beat the market, which has sustained plenty of drubbings as of late. The NASDAQ dipped below 3000 for the first time since November of last year, finishing at 2966.72.

Also, one of the most successful companies in history, Hewlett-Packard Co. is being blamed in some circles for lagging tech stocks despite meeting most of its targets. That and the wavering elections have caused buyers to be wary.

Playboy.com Tuesday wasn't alone in the barren IPO desert, however. Joining the dot-com version of the 47-year-old enterprise in withdrawing its planned IPOs were teen-oriented site Bolt Inc., AutoTrader.com and ProcureNet Inc.

Michael Lehmann, an economics professor at the University of San Francisco, told InternetNews.com Tuesday the combination of companies pulling IPOs, massive layoffs and streamlining is an early indication that the market could be headed for a recession.

"I look at high-tech as the leading edge," Lehmann said. "My guess is that we're in for a dry spell. New firms are having difficulty getting funding because venture capital is drying up. Other straws on the camel's back are that oil prices are high, and costs are going north while revenues are going south."