Ariba IPO Keeps Hope Alive

Where did that one come from?

Sure, Ariba was tabbed by many analysts as one of the hot Internet IPOs
this week. But in a market where more Internet IPOs have fizzled than
flown, no one could have predicted that shares of the
business-to-business e-commerce software vendor would end their first
day of trading on Wednesday at nearly triple the offer price.

Ariba (ARBA) shares closed at $90, a whopping 291% above the ambitious
$23 offer amount. That’s the fourth-best Internet IPO debut of the year,
and the best since’s 331% moonshot on March 31. The
Sunnyvale, Calif.-based company raised $115 million in the offering of 5
million shares, giving it a market capitalization of $3.7 billion. Not a
bad day’s work.

Before you declare the Internet IPO slump over, however, keep in mind
that Ariba’s performance comes hot on the heels of flat debuts by,, AppNet Systems, Student Advantage and, each of which closed Day 1 at or below their respective
offer prices.

And the most successful of the past week’s Internet IPOs have managed
only to close about 50% above their offer prices.

Still, it’s blastoffs like Ariba’s that entice other Internet companies
into the bulging IPO pipeline and send investors scurrying to place
orders with their brokers, even as they watch the vast majority of
initial offerings achieve little or no altitude.

The question now becomes, does Ariba have coattails?

Not likely. The company benefited from good word of mouth and solid
positioning in a market — business-to-business e-commerce — that has
been tabbed by venture capitalists, high-tech analysts and investment
brokers as potentially huge and lucrative.

Rather than kick off a new Internet IPO gold rush, Ariba’s outstanding
debut is likely to bolster the prevalent belief that infrastructure
plays — in Ariba’s case, software infrastructure — are the surest
winners on the Web landscape.

Which could bode well for two of the three Internet companies that have
priced shares for trading Thursday.

One of those companies, CyberSource, sells back-end transaction
processing applications to businesses conducting e-commerce. CyberSource
is offering 4 million shares at $11 under the Nasdaq symbol CYBS.

The other,, markets messaging products to Internet service
providers such as telco carriers, ISPs and Web portals that allow them
to offer Web-based e-mail, voice mail and fax services. has
priced 6 million shares at $15 under the Nasdaq symbol SWCM.

The third Internet IPO due Thursday,, is a Spanish-language Web portal. The company is offering 4 million shares at $12 each.

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