JFax.com Hopes Message Gets Through to Buyers

The Internet has opened up new avenues for communication, and JFax.com is trying to parlay them into new avenues for profit.

The Los Angeles company provides messaging and communications services via the Internet to more than 30,000 subscribers. JFax.com’s revenue-producing services allow customers to send faxes and voicemail messages to individuals or groups via e-mail. They also can dial a toll-free number to access their e-mail via a touch-tone phone, or turn an e-mail in-box into a single repository for incoming e-mails, faxes and voicemail messages.

In addition, JFax.com allows customers to receive faxes and voicemail messages via e-mail for free.

The company hopes to raise as much as $85 million in an initial public offering led by Donaldson Lufkin & Jenrette that is tentatively scheduled for this week. BancBoston Robertson Stephens, CIBC World Markets and DLJdirect will assist with the offering.

As one of the first companies to offer integrated Internet messaging services, JFax.com appears well-placed to cash in on a growing trend. International Data Corp. forecasts the number of such messaging mailboxes will hit 12.9 million in the U.S. in the next three years, generating about $20 apiece in revenue per month.

Like most Internet start-ups, JFax.com’s losses outpace its revenue. Last year, it lost $11.9 million on $3.5 million in revenue, according to its most recent filing with the Securities and Exchange Commission.

But that might not be JFax.com’s biggest problem, according to analysts. The real threat to the company could be competitors offering an increasing number of services for free.

For instance, EFax.com, a public company in Menlo Park, Calif., and CallWave, a private firm in Santa Barbara, offer free fax-to-e-mail services. San Mateo, Calif.-based start-up Onebox.com raised $20 million in venture capital last month to create a free universal in-box that combines voicemail, fax, e-mail and paging and can be accessed via the Web or telephone.

If JFax.com must offer more free services to keep up with or stay ahead of its competition, that could hurt the company’s prospects, said Tom Taulli, a market analyst who focuses on high-tech IPOs.

“The free model is really winning out right now,” Taulli said. Even if JFax.com can keep its paying customers, it may soon be dwarfed by rivals who sign up half a million nonpaying customers.

But JFax.com could be attractive to an Internet portal or telecommunications company trying to round out its service offerings, he said.

Gail Bronson, a senior analyst for IPO Monitor in Palo Alto, is somewhat more optimistic about JFax.com’s prospects. She said the fact that the company attracted so many paying subscribers when other services are available for free proves its offerings are in demand.

“They’re doing something right,” she said.

JFax.com plans to sell 7.5 million shares for $9 to $11 apiece. The stock will trade on Nasdaq under the symbol JFAX.

Internet and other high-tech companies dominate this week’s IPO schedule, with San Diego-based MP3.com Inc.; Redwood City, Calif.-based InsWeb Corp.; and San Jose-based Gadzoox Networks Inc. attracting attention.

Internet stocks have rebounded in recent weeks. Bloomberg’s U.S. Internet index has risen about 36% since mid-June, and some recent initial stock sales have surged following first-day performances that were tepid by Net standards.

Santa Monica-based Stamps.com Inc., for instance, which is testing an Internet-based stamp-printing services, has quadrupled from its June 24 offer price, even though it rose just 24% in its first day of trading.

Among this week’s non-Net IPOs, Europe’s Roche is expected to offer a 17% stake in its San Francisco-based Genentech unit, in a deal that could raise as much as $2 billion.

*

Bloomberg News was used in compiling this report.

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