Its Aug. 20 IPO was fairly pedestrian, but less than four weeks later the stock of Web search portal LookSmart is behaving like a Wall Street star.
Shares of LOOK (LOOK) closed on the first day of trading at $17.31, only 44% above the $12 offer price for 9 million shares. That performance was slightly below the 45% average first-day gain for all Internet IPOs in August.
Last Thursday the stock closed at $40.50 before easing back to $37.94 at Fridays close, a 310% gain over the offer price. It was trading Monday afternoon at $37.25 per share.
LookSmart’s altitude climb was relatively steady until last week, when LOOK shares rose $13.75 on Wednesday and Thursday alone.
The catalyst was a Sept. 2 Media Metrix report showing the company’s site had surged from the No. 10 most-visited Web property in July to No. 7 by mid-August, putting it ahead of AltaVista, Go2Net and other heavy hitters. According to Media Metrix, LookSmart averaged 1.5 million unique daily visitors during the week of Aug. 16, up from 1.4 million in the previous week.
That’s extremely impressive traffic growth, and it should further accelerate the company’s revenue growth. After generating $8.8 million in sales last year, LookSmart reported $17 million in revenue for the first two quarters of 1999. Annual revenue of $40 million is a distinct possibility for this year.
Still, before LookSmart is coronated as the next Yahoo!, investors should keep in mind that the company’s losses also are mounting, increasing from $12.9 million last year to $19.3 million in the first half of 1999. Through June 30, accumulated debt was $42.6 million.
Andreessen’s Un-Effecting Exit
There was a time when Marc Andreessen’s departure would have had a dramatic impact on the stock of the leading Internet company for which he formulated strategy.
Of course, that time was three years ago, and the Internet company was browser pioneer Netscape Communications.
Andreessen’s resignation from America Online — which he joined as chief technology officer in February after AOL’s $4.2 billion purchase of Netscape — had no effect on AOL shares, which nudged up 6 cents to $96.31 on Friday, the day the announcement was made.
But the fact is that no realistic person could have expected the 28-year-old Andreessen to last long at AOL. Based in Virginia, AOL has a vastly different culture than Netscape, whose origins began in the early 90s at the University of Illinois National Center for Supercomputer Applications, where Andreessen and another student wrote the code for Mosaic, the first Web browser.
Even as CTO, Andreessen’s influence at AOL was insignificant relative to his position at Netscape, where he was the boy genius and Internet visionary. Now he is merely the latest in a string of former Netscape executives to leave AOL, including former CEO James Barksdale.
The loss of these executives to AOL is negligible, since the company bought Netscape for its browser market share, brand name and enterprise and e-commerce software.
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