It’s a red, white and blue week for Internet IPOs.
On Tuesday we looked at the pending initial public offering of Web
etailer Value America. Today we look at the IPO of another company whose
name also employs the not-so-subtle tug of patriotism – Log On America.
(And if we want, we can do USA.NET tomorrow.)
Whereas recent IPO debutante OneMain.com strives to be the national ISP
for rural and small-town customers, Log On America (LOA) is targeting
cities with populations between of 200,000 and 1 million.
Based in Providence, R.I., LOA is a regional ISP – and a CLEC — with
dreams of becoming a one-stop provider of Internet, telephone and cable
TV services, primarily to businesses in Northeast metropolitan areas.
The strategy is to build this line of services through acquisitions,
hence the IPO. LOA is hoping to raise up to $23 million in an offering
of 2 million shares priced at $10 each (though the trend lately for
Internet companies is to jack up the offer price on the eve of the IPO,
so this figure may go up).
LOA is no newcomer; the company has been around since 1992. But the
financial statements submitted to the SEC cover only 1997 and 1998, and
they paint a picture of a modest regional ISP with only nine full-time
employees. Revenue grew from a meager $352,000 in 1997 to a still-meager
$760,000 last year. (Perhaps LOA should stand for Log On Anybody).
Compare this to two of the public ISPs with small market
capitalizations: OneMain.com, which had $56.7 million in revenue and
more than 600 employees last year, and FlashNet, which had $26.9 million
in revenues last year and about 250 employees.
Worse, despite the pending IPO cash, the company is poorly positioned
for a marketing blitz. Right now there are only two marketing and sales
employees, and no distribution channel in place. And the company intends
to allocate only $2 million from its IPO for a promotional campaign –
hardly the war chest necessary to compete for customers against national
ISPs such as AT&T WorldNet and MCI Worldcom.
LOA says it will use $5.5 million from the IPO to upgrade its network,
and another $4.95 million for acquisitions. That’s a plan, but with no
real revenue history and a tiny staff, that’s all LOA has to offer right
now, a plan.
LOA’s Nasdaq ticker symbol will be LOAX. Underwriter is Dirks & Company.
