It won’t take long to review the Internet IPOs expected to debut this
week. There are only two on the schedule, both of which are
business-to-business e-commerce plays.
But despite targeting a hot niche and having a relatively clear playing
field, neither of these IPOs should make much of a stir in their ticker
debuts.
In fact, one of the companies, ImageX.com, announced Tuesday that it was
paring back the size and price of its IPO, from 4 million shares at
$8-$10 each to 3 million shares at $7 apiece. This effectively reduces
the offer amount from $36 million to $21 million, leaving the Bellevue,
Wash., company with $18.3 million in net proceeds. Lead underwriter is
Volpe Brown Whelan; Nasdaq ticker symbol is IMGX.
While ImageX.com is an Internet company, it targets the commercial
printing market and thus competes with large printing houses such as
R.R. Donnelley & Sons and Quebecor, retail-level chain Kinko’s and
thousands of local and regional printers.
Customers logging onto www.imagex.com can design printing catalogs,
marketing brochures, stationery and business cards using their own
company logos, and then enter buy orders online. The actual job is run
off by any one of about 30 printing companies owned by or affiliated
with ImageX.com.
If estimates are correct that the U.S. commercial printing industry generates $55 billion in sales, ImageX.com’s share of this market is
thin enough to give you a paper cut — revenue in 1998 was $968,000.
Sales have improved this year, reaching $3.3 million through June. (In
contrast, R.R. Donnelley’s revenue through June was $2.4 billion.)
ImageX.com’s losses, meanwhile, have been much heftier. The company had
a net loss of $8.6 million last year and is on track to top $11 million
in losses this year, having already racked up $5.6 million through Q2.
The big problem facing ImageX.com is that there are low barriers to
entry for any other company that wants to enable customers to design and
order printed material via the Internet. Once it becomes commonplace —
and it will, for it’s a perfect match of technology and customer needs — ImageX.com becomes just another small player.
The other business-to-business company expected to debut this week is
PurchasePro.com, a Las Vegas startup that provides an Internet-based
“e-marketplace” of communities in which businesses buy and sell products
(office supplies are big here) and services.
PurchasePro intends to offer 4 million shares in the $11-$13 price
range. Lead underwriter is Prudential Securities; Nasdaq ticker will be
PPRO.
In terms of revenue, the story here is similar to ImageX.com’s.
PurchasePro had $1.7 million sales in 1998, along with a net loss of
$6.8 million.
The company competes against vendors such as Ariba and Commerce One,
both of which enjoyed successful IPOs in recent months. Both of those
companies have more revenue than PurchasePro — Ariba (with $8.4 million
in ’98) particularly so. Throw market heavyweight Harbinger Corp. ($135
million in sales last year) into the mix, and PurchasePro.com looks like
a runner-up in this space.
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