It Must Be Comeback Week

One day after the ticker debut of — the online music
seller that went public just two months after postponing its IPO —
another Internet company has dusted off a scrapped public offering.

Shares of Web services company Interliant (Nasdaq: INIT) — which
initially filed registration papers on March 12, days after it was
purchased by Sage Networks, only to delay the IPO in June — began
trading Thursday. The opening price of $15.56 per share was 56 percent above
the $10 offer price for 7 million shares. (HITS), meanwhile, opened trading Wednesday for its 8.6
million shares at $20.25, or 45 percent above the $14 offer price. HITS shares
finished first-day action at $23.94, a respectable debut. However, while
shares opened higher on Thursday ($24.88), they had dropped below $22 by
early afternoon.

It’s unusual for one company to buy another and then take the name of
the acquired firm, but Sage Networks clearly saw greater brand value in
“Interliant.” (Of course, the way networking IPOs have been
skyrocketing, share flippers probably wish the new entity had stuck with
the Sage name.)

With a vast target market (Internet services/infrastructure) and an
A-list underwriter (Merrill Lynch), many analysts expect Cambridge,
Mass.-based Interliant to be a hot offering. The company provides a
number of services for its 37,000-plus customers, including hosting Web
sites, software applications and server-based data .

Interliant launched services in December ’97 and recorded $4.9 million
in revenue last year, against a net loss of $9.7 million.

But Interliant is relying on an ambitious acquisition strategy, and in
the past 18 months has acquired 17 companies that offer Web hosting and
other Internet services. Using pro forma numbers, 1998 revenue was $41.3
million versus a net loss of $39 million.

The company’s competitors are many and formidable. They include global
telcos such as AT&T and British Telecommunications, national ISPs such
as UUNET and MindSpring and other Internet services companies such as
Exodus Communications and AboveNet Communications, which is being
purchased by Metromedia Fiber Network.

Maybe Later, Maybe Never

In a May
, I wrote that we may start to see more Internet companies bail
out of IPO plans because the market is saturated with ‘Net plays and
investors are becoming choosier.

Besides, several other Internet companies have
postponed their IPOs, including e-tailer DVD EXPRESS, e-mail services
provider USA.NET and Focal Communications, a CLEC that provides data and
voice service to corporations and ISPs.

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