ISP for Main Street, USA Prepares Wall Street Debut

Whenever I think of OneMain.com’s pending IPO, I picture Oliver Wendell
Douglas climbing the telephone pole outside his farm in Hooterville to
dial into his Internet access provider, as bubble-headed wife Lisa urges
him to come down for a breakfast of rubbery hotcakes that even Arnold
Ziffel would spurn.

OneMain.com is positioning itself as “your hometown Internet,” the ISP
that caters to the millions of Americans who live closer to “Green
Acres” than one of our country’s major metropolitan areas.

But unlike one of Mr. Haney’s typically dubious “deals of a lifetime,”
OneMain.com offers a well-defined and logical strategy that could make
it a solid second-tier national ISP and a potentially solid investment
— the kind of investment (cue patriotic music) that has been the
backbone of the American economy since our Founding Fathers gathered in
Philadelphia to pen the Declaration of Independence.

Since its launch last August, OneMain.com has struck deals with 17
regional ISPs offering local Internet access numbers in 25 states. The
company and its underwriters — BT Alex. Brown, Soundview Technology
Group and WIT Capital – hope to raise $125 million in the IPO, slated
for next week. OneMain.com will trade under the Nasdaq symbol “ONEM”.

While the company has no real financial track record, the 17 ISPs that
comprise OneMain.com collectively generated $56.7 million in revenue in
1998, though with a combined net loss of $67.6 million.

Further, OneMain.com faces the problem all acquisition-driven companies
face – integrating its disparate components, a process that is never as
easy as laid out in PowerPoint presentations. OneMain plans to divide
its 17 ISPs into eight operating groups.

Yet if it works, OneMain.com instantly would be an ISP player, with
331,500 subscribers and more than 650 access points through 1998, more
POPs than ISP powerhouses GTE, MindSpring, Netcom, AT&T WorldNet and
CompuServe.

Most of the planned money from the IPO will go toward buying the 17
ISPs, which come at a combined purchase price of $71.8 million, a figure
one ISP financial analyst says is slightly excessive.

“That total figure is a little high for companies of the caliber they’re
acquiring,” says Paul Stapleton, editor of I$P Report, a financial
newsletter for ISPs.

However, if OneMain.com’s IPO is as well-received as that of other
recent big-play Internet IPOs such as VerticalNet and Healtheon, that
premium won’t matter much to investors.