Up 25%: Internet.com’s IPO Index Shows Real Story

The popular concept is that Internet IPOs are dead not on, but before
arrival, and that ebay (NASDAQ:EBAY), which jumped nearly 200% yesterday in
its debut, was a one-off shooting star in the dark void of new issues.
Obviously, those who believe that haven’t done their homework. The stats
tell the real story–Internet.com’s IPO Index, which tracks this year’s
Internet IPOs, gained 24% since September 17. The group trades 54% better
than IPO price.

ebay’s spectacular splash helped fuel the year to date tally but we don’t
count it in the past week since it wasn’t public until September 24. EBAY
opened north of $50 and closed slightly under (see Market Close,
Sept. 24
for more on that.)

Web hosting and network provider Exodus (NASDAQ:EXDS) found believers after
being the down and out prophet of the bunch, in our previous Internet.com
IPO Index roundup last Friday. EXDS popped more than 10 points since then,
fueled partly by a “buy” rating from Hambrecht & Quist.

The IPO performance snapshot:

Clinton’s video pushed Broadcast.com (NASDAQ:BCST) to prime time at #2 with
a 42% rise on the week, to $50.50 per share as the Internet broadcaster
supplied its own and other Web sites with a video feed to the tune of
millions. While not quite ready for primetime and with quality lacking
compared to TV, Broadcast.com’s rolling tape didn’t go unnoticed.
Broadcast.com’s key in our view may be maintaining presence, while the
broadcasters with 50 years of content and well-established operations jump
into the licensing rights game for all mediums, not TV, radio or Internet.
Package deals are coming and Murdoch can’t be far behind.

August’s wunderkind IPO, GeoCities (NASDAQ:GCTY), regained some of its
composure after the IPO flippers and nano-traders (my term for the new
cowboys that buy stocks on caffeine notions and trade them without ever
knowing a toot about any company they trade) sold out and moved on. The
real believers are left. GCTY trades at just over half its all-time high
for its brief life in the public uproar. Even so GCTY maintained a 61% gain
from IPO price.

It’s Inktomi (NASDAQ:INKT) and Broadcom (NASDAQ:BRCM), the
bandwidth-in-a-box or chip-solutions firms that top all IPOs in the index.
Triple-digit upside in percentages and they’ve been out for a few months
now. These two have beat the Street on their own terms so far against an
ISDEX, The Internet Stock Index, that’s off 40% from its high this year.

ISS Group (NASDAQ:ISSX), which makes Internet security software, was the
only stock in the Internet.com IPO Index to show a drop since September 17,
off slightly.

Since its IPO, Cyberian Outpost (NASDAQ:COOL), CDnow (NASDAQ:CDNW), and
24/7 Media (NASDAQ:TFSM) have proven the dogs of the bunch.

COOL trades at less than half its IPO price, CDNW barely trades at over
half its IPO price, as investors grow wary of one-topic retail (music or
software by itself) and bet on another new coinage, “conglom-a-shopping,”
the kind that Amazon is building.

24/7 Media may be beaten but not out, however, ad networks seem to have a
long way to go, with just 15% to 30% of all ad inventory on large Web sites
sold and even smaller percentages on other sites.

Again, though, we see a merging of advertising, marketing, commerce and
content.

Solutions providers for two or more, especially ads and marketing, may fare
better than one. Ditto for DoubleClick (NASDAQ:DCLK).

Pure blind general purpose come one, come all banners are a dying breed.
Targeted marketing-ads-sales are the new three amigos of the Web. Said
another way, driving down the freeway and seeing a billboard for a
restaurant may not cause you to go there. But on the Web, driving down the
Internet from site to site–if a site knows you and knows your
preferences–it can pop a banner or marketing pitch to you that says, “I
know you’re hungry since you usually have lunch about now, should I order
your standard Tuesday lunch and have it delivered from Cybermeals per the
usual process, charged again to your CyberCash account?”

Now that’s Web advertising the likes of which we haven’t seen yet and
something Wall Street would probably go ballistic over.