Etoys IPO Tops Upcoming List of Offerings

There is only one marquee name among the handful of Internet companies
expected to begin selling stock this week – eToys, the online etailer
whose IPO was derailed for all of two days last month by its purchase of
a Web company that sells items for babies.

eToys hopes to raise $90.2 million with an offering of 8.2 million
shares in the $10-$12 range.

The Santa Monica, Calif.-based company is betting on the premise that
parents would prefer the convenience of shopping online to the torture
that is taking your children to a retail toy store, where whining and
tantrums rule the day. And on top of that, the kids can misbehave too.

If you believe that successful businesses can be built around an innate
understanding of human nature, then eToys, founded by a former Disney
executive and Internet start-up incubator idealabs!, looks like a

Since its inception in November 1996, eToys has effectively built a
brand name, despite changing its name twice (it started as,
changed to in May ’97, and finally became eToys just one month

The company claims 365,000 customers, of which it says about 20%, or
75,000, were added in this year’s first quarter. Etoys offers more than
9,500 different items under more than 750 brands, according to documents
filed with the SEC.

Customers who visit will find a well-organized site that
allows them to search for products in several ways – by age range, by
brand and by category (dolls, action figures, games, electronics, etc.).
It is an experience that compares favorably to being dragged through a
gauntlet of cluttered, chaotic store aisles by a tyrannical toddler.

This service and formula has allowed eToys to generate $30 million in
revenue in the fiscal year ended March 31, a 419% jump over the previous
fiscal year’s sales of $687,000. That’s slightly deceptive in that the
company only sold products for 10 months in that first year; but even if
you pro-rate the figures, revenue growth is impressive.

If you add in the revenue from BabyCenter, the company eToys bought in
April (the deal is expected to close late next month), pro forma revenue
for fiscal ’99 was $34.7 million.

EToys’ gross margin on ’99 revenues was 19.1%, which is in the same
ballpark as etailers such as (21.9%) and CDNow (19.8%).

But net losses also increased substantially, from $2.3 million in ’98 to
$28.6 in the recently ended fiscal year. Most of that can be attributed
to $20.7 million in marketing and sales expenses last year.

If branding is the name of the game – and it is – then that money is
justified, especially given plans by retail giant Toys R Us to spin off
its Internet unit as an IPO. While so far has failed to
challenge eToys as the leader in online toy sales, a large war chest
provided by a public offering could change the chemistry of this

Lead underwriter for the eToys IPO is Goldman Sachs. The company will
trade on Nasdaq under the ticker symbol ETYS.

What’s the Name Change All

We liked the name. We liked the ticker symbol. But now and
MINE are no more.

As of today the search engine company with the human touch has changed
its name to
In a statement, the company says the change was done “to reflect the
breadth of our network and our continued commitment to being about
everything that you’re about.”

Whatever that means.

The company will stick with the MINE symbol until Thursday, when its
stock will be traded on Nasdaq under BOUT. went public on March 24, closing on its first day of
trading at $47.50. Since then it has gone as high as $100 a share and as
low as $46.43. It opened Monday at $58.75.

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