The way Internet IPOs have been skyrocketing lately, youd think the launching pad would be crowded this week with companies aiming for yet another triple-digit debut.
Instead, there are only a handful of Net offerings on tap, including two from start-ups with very different business plans that nonethless are trying to accomplish the same thing apply the efficiency of the Internet to older industries.
One is HomeGrocer.com, the latest Internet-based grocery delivery service to go public. Backed by lead underwriter Morgan Stanley Dean Witter, the company is offering 22 million shares in the $10-$12 range under the Nasdaq symbol HOMG in hopes of raising $220 million.
Like competitor Webvan (WBVN), HomeGrocer.com intends to use money from its large offering to build a delivery infrastructure that includes high-tech warehouses. Based in Kirkland, Wash., HomeGrocer.com currently delivers orders in Seattle, Portland, Ore., Los Angeles and Orange County. It plans to break out beyond the West Coast by adding service in eight to 10 more metropolitan areas this year.
The other Internet company challenging a traditional industry is iPrint.com, which runs a Web site enabling customers to order a variety of printing jobs (business cards, letterhead, invitations, t-shirts, mousepads, etc.) without having to venture out to a printing shop. IPrint.com is offering 4.5 million shares in the $8-$10 price range under the Nasdaq symbol IPRT. Lead underwriter is Credit Suisse First Boston.
Neither of these companies is close to being a sure winner in the long run HomeGrocer.com faces great up-front costs and an untested business model, while iPrint.com is in an already competitive market with low barriers to entry. But with a potentially strong brand and a business model that effectively leverages the Internet, look for iPrint.com to attract the most initial investor support.
Indeed, given the markets proven skepticism about online grocery services, HomeGrocer.com is a candidate for the years worst Internet IPO debut (an honor currently held by VarsityBooks.com (VSTY), which closed on Feb. 15 at 9 7/8, nearly 1 percent below the $10 offer price).
Consider the fate of Webvan. Backed by Goldman Sachs, the companys much-anticipated IPO gained only 66 percent on its first day of trading last Nov. 5, closing at 24 7/8. Since then, shares of WBVN have gone almost straight downhill and were trading Monday afternoon at 13 >, below the $15 offer price.
Then theres Peapod (PPOD), the first online grocer to go public, way back in June 1997. PPOD shares were offered at $16. Monday afternoon they were going for slightly more than half that amount.
With far less revenue ($1.1 million in 1999) than either Webvan ($13.3 million that same year) or Peapod ($73 million), its not likely that HomeGrocer.com will generate much investor enthusiasm, especially since, like the others, it is drowning in red ink, with an accumulated loss through Jan. 1 of $93 million.
Will HomeGrocer.com flop in its debut? Discuss it here
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