E-Mailbag Monday: IPOs, Digex, Airprime

What’s on tap for the IPO market this week?

Reply: There is only one IPO planned for this week –
Urban Cool Networks.
But do not be surprised if the IPO does not go out. The company has been
attempting an IPO for many months. In fact, the IPO was filed in early
December of 1999.

The company runs the site
urbancoolnet.com, which is a portal for
– yes – urban consumers. The site has 15 channels for content. The scary
part of the company? Well, here’s a sentence from the prospectus: “We may
never be profitable since we have no revenues, have incurred net losses
since our inception and anticipate continuing losses.”

However, next week expect the IPO market to make its return. So far, there
are eight deals in the hopper.

Digex: Short End of the Stick?

WorldCom announced it would acquire Intermedia Communications Inc. in a deal
valued at $6 billion and take operational control of Digex Inc. What do you think
of Digex Inc. in the short term and long term.

Reply: No question,
Digex is a strong
company in a fast-growing market. Unfortunately, the upside of the stock
could be limiting. Simply put, the reason is that the public shareholders
of Digex are minority owners.

Intermedia Communications
owned 55% of Digex and had 94% voting interest. Several firms
– such as Exodus – were willing to purchase Digex at a nice premium. But
since Intermedia is the majority owner, the offers were ignored and instead
WorldCom purchased Intermedia. Now
WorldCom owns 55% of
Digex and has 94% voting interest. In other words, public shareholders are
still minority holders of Digex. And who do you think WorldCom will favor?
Definitely not minority shareholders of Digex.

CDMA: What Is It?

I’ve heard lots about CDMA. What does it mean?

Reply: CDMA (Code Division Multiple Access) is a wireless technology
for voice and data. The company that has patented the necessary
technologies for CDMA is Qualcomm
.

CDMA is a fast-growing standard, with about 57 million subscribers across
the globe. CDMA is based on complex mathematical algorithms, making it
possible for multiple users to share the same radio channel. That is, CDMA
has been able to increase the capacity of cellular and PCS service
providers.

Expect many hot start-ups to capitalize on CDMA and hit the public markets.
A promising one is
Airprime, which is developing high-speed
wireless solutions for the OEM marketplace. Key to this is proprietary
modem technology that uses RF and baseband technologies.

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