Despite Net Stock Rally, Some IPO Sales Fall Short
New Internet-related stocks got a mixed reception Thursday, which probably won’t make the crush of companies in the new-stock pipeline feel much better about their prospects.
Pasadena-based GoTo.com, whose Internet search service lets advertisers bid for top billing in the search results displayed to Web users, raised $90 million in its initial public offering.
The company sold 6 million shares at $15 each. That was at the top of the $14-to-$15 range set by underwriter Donaldson, Lufkin & Jenrette Securities, which handled the transaction.
The sale of the 14% stake gave the company, which begins trading on Nasdaq today under the ticker symbol GOTO, a market value of $666 million.
In another deal, Boston-based Internet service provider Viant priced its IPO at $16 a share late in the day, also at the high end of its expected range.
Despite a rally in Net stocks in general Thursday, other new deals were troubled:
* E-mail provider Mail.com’s deal was priced at $7 a share. The company recently expected to sell shares for as much as $12 apiece.
* Student Advantage, which serves college students via a Web site, was priced at $8 a share, compared with the minimum $10 expected.
* Streamline.com, a Net service provider for suburban areas, was priced at $10 a share, down from an expected range of $11 to $13.
Viant, Mail.com, Student Advantage and Streamline.com begin trading today on Nasdaq under the symbols VIAN, MAIL, STAD and SLNE.
Also Thursday, National Discount Brokers revived its plans for a secondary stock offering--a deal the online firm postponed Tuesday.
The pipeline for new stocks--many of them Net-related--is stuffed. More companies filed for initial stock sales in May than in any month since late 1997.
Eighty-seven companies submitted IPO filings with the Securities and Exchange Commission last month, the most since 117 in October 1997, according to New York-based CommScan. At least half the businesses are associated with the Internet.
But with many Net stocks having tumbled sharply in recent weeks, how many of May’s IPOs will ultimately go public remains in question.
“Companies might be thinking to themselves: ‘Hey, this window is closing. I better get out there,’ ” said Kian Ghazi, an analyst at New York-based Midtown Research.
May saw 25 Internet-related companies make their stock market debuts, the most in any month, according to Thomson Financial Services data. Many of May’s deals were filed with the SEC in April or earlier.
Net stocks have rallied during the last two trading sessions, but many of the stocks remain down 40% to 50% from their all-time highs reached earlier this year.
“Crowding in the field” eventually will make investors “less tolerant of deals that don’t have the perceived strength and originality that is necessary to make these deals work,” said David Menlow, head of research firm IPO Financial Network.
But Tom Taulli, an IPO analyst based in Calabasas, said the opportunity for Internet IPOs hasn’t ended yet.
“One thing about this market,” he said, “is just when you think it’s over, it starts up all over again.”
Taulli may have a point. On Thursday, K-Tel International--the music distributor that has enjoyed at least two Internet-related runs over the last year--rallied again.
The stock jumped $2.56 to close at $8.50, a 43% gain, after the firm said it signed deals to sell its products through three sites: Brandsforless.com, Looksmart.com and Prodigy Internet.
K-Tel, which is still losing money, briefly became a Net star twice last year on optimism about its Web site.
The shares rallied as high as $39.13 but collapsed in recent months, falling to $5.13 this week on Nasdaq.
