Question: What IPOs are you looking at this week?
Reply: I think the big ones include:
Agilent Technologies: The company is a spin-off from Hewlett Packard (HWP)
and is a leading provider of diagnostic and performance measuring
technologies. The lead underwriter is Morgan Stanley.
CacheFlow: The company develops ultra-sophisticated caching
technology to speed the delivery of Web content. The lead underwriter is
Morgan Stanley.
Quintus: The company develops software solutions that manage
customer relations. The lead underwriter is Donaldson, Lufkin & Jenrette.
But there is another one that looks interesting — but so far has been under
the IPO radar screen. It is Mediaplex (the lead underwriter is Lehman
Brothers). The company is an infrastructure play that allows companies to
integrate their internal business data with online advertising and direct
marketing. The technology is known as MOJO (which stands for mobile Java
objects) and can function with many diverse information systems.
For example,
Tickets.com (TIXX)
used the technology for its ticket auction by linking user profiles
with inventory levels. So let’s say a user from New York goes to the Heavy
Metal section of the site. In real-time, MOJO will process its extensive
database, look for available Heavy Metal concerts in the New York area and
in real-time, generate banner ads specific to the user’s preferences.
So far, the results have been tremendous. Click-through rates have
increased 440 percent.
Interestingly enough,
DoubleClick (DCLK)
is using the Mediaplex service for its DART service. Further,
Mediaplex has signed a deal with
Ariba (ARBA)
, as well.
Healtheon: A Healthy Future
Healtheon (HLTH)
has been volatile lately. What do you think of the company at these
levels?
Reply: This week, Healtheon
(HLTH)
completed its merger with WebMD and also reported third-quarter
results. Net losses were $17.1 million, up from $13.5 million a year ago.
The results were worse than expected and the stock took a hit, falling
5-3/8 to 37-1/16. Despite this, News Corp. announced that it is interesting
in invested $1.1 billion in Healtheon-WebMD.
Of all the healthcare sites — and there are many — I consider
Healheon-WebMD to be the top. The company, of course, has the lofty goal
to link-up everyone within the medical infrastructure: patients, doctors
and insurers.
This is will take lots of time; in fact, the company’s CEO
announced this week that Healtheon-WebMD will not be profitable until at
least 2001. However, I think it is worth the wait, as the market for
healthcare is immense, reaching about $1 trillion per year. What’s more,
there is a strong incentive to reduce costs. This is what Healtheon-WebMD
will do. In a sense, it is a healthcare super B2B site.
Hat Off to the Leader
What’s your take on
Red Hat (RHAT)
, especially with the Microsoft decision?
Reply: No doubt, Red Hat is the leader in the Linux market, which is
growing at break-neck speed. However, there are many competitors clawing
after it, such as
VA Linux, Caldera and LinuxCare. These companies will raise
lots of money from their IPOs and put even more pressure on Red Hat. With
a $7 billion market capitaliztion, Red Hat looks risky.
As for
Microsoft (MSFT)
, they always seem to find a way to prevail, such as against the
threats of the Netscape browser and Java. Microsoft loves a fight and
should definitely be a big concern for Linux companies.
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