Demand for Internet IPOs Still Runs High
Internet initial public offerings appear to be hotter than ever, as two such deals were aggressively priced Thursday and two other high-profile dot-coms detailed IPO plans of their own.
IVillage Inc., which runs Web sites with news and information for women, raised $87.6 million in an initial public stock sale. The New York-based company sold 3.65 million shares, a 16% stake, at $24 each, the top of the range set before the sale. Strong demand for the shares led the company to increase the price range 77% earlier in the week.
Cheap Tickets Inc., a Honolulu-based retailer of discount tickets for air travel and that has a major online presence, sold 3.5 million shares at $15, raising $52.5 million. That compares with its expected IPO price range of $11 to $13 range.
The company, which will trade under the ticker symbol CTIX, makes its money by selling the seats that airlines themselves don’t sell.
A higher pricing means the company gets to keep more of the proceeds, and that the initial investors and investment bankers underwriting the offering receive less of a pop from any first-day gain.
Based on the higher price and strong investor demand, IVillage shares could climb when trading begins today under the ticker symbol IVIL. After Goldman Sachs increased the initial share price of PcOrder.com Inc. by 67% last month, those shares soared 171% in the first trading day. Goldman also handled IVillage.
“They [IVillage] cater well to a wonderfully large demographic that is prone to spending,” said Drew Cupps, a portfolio manager with the Strong Enterprise Fund, which invests heavily in technology. “What more do you want as an advertiser?”
The sale comes about a week after it was reported that IVillage’s former chief financial officer, Joanne O’Rourke Hindman, accused the company of recognizing revenue prematurely, according to the New York Times.
IVillage runs a network of 14 Web sites that focus on topics such as food, relationships and health, and that include chat rooms and message boards. The company said it had 65 million page views and 2.7 million distinct users in December. About 82% of users are women, the company said in a filing with the U.S. Securities and Exchange Commission.
IVillage lost $43.7 million on sales of $15 million in 1998, and lost $21.3 million on revenue of $6 million the previous year.
Priceline.com, an Internet travel company that allows consumers to name their price for plane tickets, disclosed plans to sell 10 million shares in an IPO that would raise $80 million.
In its amended SEC filing, the Stamford, Conn.-based company said it expects the shares to start selling at between $7 and $9. The company has applied to trade on the Nasdaq market.
With “Star Trek” actor William Shatner as its pitchman, Priceline.com has become familiar to consumers since it launched its service last April.
The company says it has sold more than 100,000 airline tickets by allowing customers to name the price they want to pay, then searching for a major airline willing to release seats on flights for which it has unsold space. No match, no ticket. The company offers similar services for hotel rooms, mortgages and cars.
Travel industry analysts predicted strong demand for the company’s stock.
“It’s probably the most advertised Web site on radio that I’ve ever seen in my life,” said Tom Parsons, editor and publisher of Bestfares.com magazine.
The company reported a net loss of $114.4 million for 1998, or what would have amounted to $1.41 per share had it been public.
In another closely watched deal, Barnes & Noble Inc., the No. 1 U.S. bookstore chain, and German media giant Bertelsmann registered for an offering of 15% to 20% of their online joint venture, Barnesandnoble.com. In its filing, Barnesandnoble.com said it will offer shares valued at up to $200 million.
Each company owns half of the online bookseller. Barnes & Noble postponed IPO plans for its online unit when Bertelsmann agreed in October to buy a 50% stake for $200 million.
“Barnesandnoble.com could be the biggest IPO for 1999 . . . and maybe for the end of the millennium,” said David Menlow of IPO Financial Network.
Barnes & Noble shares rose $5.50 to close at $34.38 on the New York Stock Exchange.
