Quokka Plays the Net With ‘Sports Immersion’ Site

There is a fine line between pioneering an industry and being ahead of one’s time, and Quokka Sports Inc. is testing it.

San Francisco-based Quokka has invented a style of Internet-based sports entertainment that redefines the role of spectator. Instead of merely watching a contest unfold on television and reading stats as they flash onto the screen, fans logged on to Quokka (https://www.quokka.com) can mix video with maps, the position of a vehicle, environmental data, simulations and even an athlete’s vital signs.

The company plans to sell 5 million shares in an initial public offering this month.

Quokka doesn’t cover your typical football game or tennis match. Instead, the site focuses on sporting events like the Marathon des Sables (in which runners traverse 140 miles in the Sahara), the Whitbread Round the World Race (with nine yachts sailing around the globe) and the Great Trango Tower (in which three climbers scramble more than 6,000 feet up one of the tallest rock faces in the world).

“This is sports on steroids,” said Gail Bronson, senior analyst for IPO Monitor in Palo Alto.

Quokka doesn’t choose these sports because they’re extreme. Rather, their appeal is that they generate lots of specialized, easy-to-capture data that the company can turn into “digital media assets.”

Quokka Chief Executive Alan Ramadan, 41, got the idea when he served as chief technology officer for OneAustralia, the country’s entry in the 1995 America’s Cup regatta.

As he trailed the yacht in a separate boat bedecked with computers, he analyzed reams of data about the competitors and the racing conditions. Then he realized that data could be of interest to hard-core sports fans.

Ramadan founded Quokka in 1995 with John Bertrand, 52, a technology executive who won the America’s Cup for Australia in 1983, and Dick Williams, 55, a 22-year IBM veteran who serves as Quokka’s chairman.

The company is named after a rare Australian marsupial that looks like a rat but is actually a relative of the kangaroo.

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In addition to sailing, running and climbing, Quokka covers races involving motorcycles and cars. In February, the fledgling firm established a joint venture with NBC to develop interactive digital coverage of the Olympics through 2004.

To Bronson, Quokka’s approach to “sports immersion” makes the company the clear leader in a new genre of Internet entertainment. Its prospects look to get better as more Internet users gain access to broadband connections, which allow for faster downloading of data-rich material like video, sound and graphics, she said.

“This is a really nice, clean business opportunity,” Bronson said. “They have a pioneering business idea and have adopted cutting-edge technology. They can win the game.”

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Quokka’s backers--including Intel, MediaOne Interactive Services and venture-capital firms Media Technology Ventures and Accel Partners--are “like a who’s who of big money,” said Tom Taulli, a market analyst who focuses on high-tech IPOs.

But Taulli is troubled by Quokka’s finances.

It’s not that the company had an accumulated deficit of $23.9 million as of March 31 and doesn’t expect to make money until 2001, according to papers Quokka has filed with the Securities and Exchange Commission. After all, few Internet start-ups are profitable when they go public.

But Quokka’s revenue, which totaled $8.6 million last year, is highly volatile. For instance, the company took in $4.9 million in the first three months of 1998 but only $897,000 in the same period this year.

“When you can’t get predictability in the revenue stream, there could be a lot of surprises, and that could be a risky proposition for investors,” Taulli said.

In its SEC filing, the company said such volatility stems from the fact that some sporting events are more popular than others.

Because Quokka derives most of its revenue from companies that sponsor its coverage of events (a high-profile form of advertising), cash flows are much higher during quarters that contain popular events like Whitbread, which drew more than 1.8 million unique visitors to Quokka’s pages during its run in late 1997 and early 1998. Quokka also earns money from studio services (it designed the official Web site for the International Olympic Committee), regular advertising and electronic commerce.

Taulli is also concerned that more than $6 million of Quokka’s revenue has come in the form of products and services--such as Internet access, computer hardware and software, digital cameras and telecommunications equipment--instead of cash.

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Since Quokka’s profit potential is several years away, Taulli said he would not “invest in this company personally.”

Then again, Broadcast.com was as much of a bet on the future at the time it went public last year, and its shares have risen fourteenfold since then, he said.

“Knowing when it’s too early or too late is more of an art than a science,” Taulli said.

Quokka expects to raise more than $45 million by pricing its shares between $9 and $11, according to its SEC filing.

Lead manager Merrill Lynch & Co. will underwrite the deal, along with Lehman Bros. and BancBoston Robertson Stephens. After the IPO, Quokka’s shares will trade on Nasdaq under the symbol QKKA.

Closely watched offerings scheduled for this week include China.com Corp., a leading gateway to the Internet in China. Hong Kong-based China.com plans to sell 4.3 million shares at $14-$16 each, raising about $64 million, according to Bloomberg News.

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Times staff writer Karen Kaplan can be reached at karen.kaplan@latimes.com.