Car Sellers on Info Highway Gear Up for Public Offerings

It’s the race of the Internet auto sellers.

Next month, two major California-based companies that operate Web sites where people can purchase new and used vehicles are planning to sell stock to the public through an initial public offering, or IPO.

The market for new issues is strengthening, with six companies raising $534 million through IPOs last week, bringing January’s nationwide total to about $900 million.

Still, this is the weakest start to a new year for IPOs since early 1991, according to Securities Data, the New Jersey-based data tracker.

Autobytel.com Inc., an Irvine-based operator of a Web site for buying vehicles, and Autoweb. com, a Santa Clara-based seller of cars and car-related research and products on the Internet, have filed plans with the Securities and Exchange Commission to go public in March.

Both deals are highly anticipated, considering the recent mania for Internet-related stocks--especially IPOs--and will be closely watched by investors and Wall Street types. Autobytel.com is expected to raise about $72 million and Autoweb.com about $57.5 million.

“These two could well turn out to be the Hertz and Avis of this business,” said Gail Bronson, analyst with IPO Monitor, a Calabasas-based data service. “It will all come down to who puts the most pizazz into their marketing to the general public.”

Autobytel.com is reviving its IPO plans after canceling an offering filed in early 1997. This time, the firm expects to sell 4.5 million shares, a 25% stake, for an estimated $16 each, giving the company a market value of about $286 million.

Before adding “.com” to its name last year, the company was known as Auto-by-Tel Corp. In its original IPO plan, the firm estimated it would raise as much as $44 million by selling 4 million shares for $9.50 to $11.00 each. It cited “unfavorable stock market conditions” in postponing the deal.

Since then, Internet-related IPOs have become the hottest thing on Wall Street, and Autobytel.com hopes to cash in on the interest among individual investors.

“Certainly a ‘.com’ in this market is a hand-held trip to higher opening prices. The deal is going to do extraordinarily well” at first, said David Menlow, president of IPO Financial Network, a data tracker in Millburn, N.J.

“As to whether or not the deal is solid enough,” he added, “well, they are the leader in their field.”

Still, Menlow said he has doubts about whether people will want to buy cars they haven’t seen and questioned whether they will be repeat buyers.

“Do people really want to buy cars on the Internet? I don’t think so. They want to kick the tires,” he said.

However, according to a recent survey by J.D. Power & Associates, 16% of new vehicle buyers used the Internet to at least assist with their purchases in 1997, and that number is expected to increase 50% by 2000.

Most important, said analysts, the company has seasoned management in Chairman Michael J. Fuchs, former chairman of Time Warner’s HBO and Warner Music subsidiaries.

“Fuchs was a programming genius. So to have such exceptional creative and management talent is a big plus,” Bronson said.

Autobytel.com operates a Web site that lets consumers get free information on cars and light trucks as well as shop for vehicles from their homes. The 107-employee firm takes in revenue from auto dealerships that are part of its referral service.

Since April 1997, when the company shelved its IPO plans, Autobytel.com’s network has more than doubled to 2,718 paying dealers from 1,206 in 1997, according to regulatory filings.

Still, the company posted a loss of $15.5 million in the nine months ended Sept. 30, 1998, compared with a loss of $12.7 million in the year-earlier period. The company had revenue of $16.5 million in the first nine months of 1998, compared with $10.7 million in the 1997 period.

BT Alex. Brown will be the lead underwriter for Autobytel.com, which plans to have its shares trade on Nasdaq under the symbol ABTL.

Competitor Autoweb.com plans to sell its shares through lead banker CS First Boston Corp. Terms have not yet been disclosed, so it’s unclear what percentage of the company will be sold.

The company, founded in 1994, provides a place to buy cars and also offers research and automobile-related products such as insurance, financing and extended warranty protection. It has 81 employees.

The company reported revenue of about $13 million last year, compared with $3.4 million in 1997. It posted an $11.5-million loss in 1998, compared with a $12.9-million loss the previous year, according to its Jan. 25 SEC filing.

The company’s chief executive, Dean DeBiase, who came on board in December, has a long track record of running companies. But some analysts questioned whether bringing in a “shotgun CEO” just before a company goes public is the best long-term strategy.

“It can appear to investors that it’s been done just to dress the IPO up and get them over the threshold, rather than any type of long-term strategy,” Bronson said.

Meanwhile, the roster of recently completed IPOs includes several California firms, including Nvidia Corp., a Sunnyvale developer of 3-D graphics technology, which went public at $12 a share and rose 64.1% in the first day of trading.

Last Thursday, Tut Systems, a Pleasant Hill developer of high-speed data-access products, sold 2.5 million shares at $18 each, raising $45 million in its IPO rather than the $37.5 million originally expected. Its shares ended the week at $57.50.

Among pending financings, Del Monte Foods Co., the San Francisco-based giant, revived its IPO plan that was shelved last year. The deal, estimated at $247 million, is expected to be priced this week through lead underwriter Morgan Stanley Dean Witter. Del Monte will trade on the New York Stock Exchange under the symbol DLM.

Also, Javelin Systems Inc. has filed to sell 2.5 million shares of common stock in a secondary offering through underwriter Van Kasper & Co.

Formed in 1994, Javelin went public in 1996. The Irvine firm makes and designs point-of-sale computers and other systems that enable restaurants and retailers to capture sales information from each location and transfer it to the enterprise’s headquarters.

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Debora Vrana covers investment banking and the securities industry for The Times. She can be reached by e-mail at debora.vrana@latimes.com.