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Internet IPOs hit slump
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April 9, 1997: 2:32 p.m. ET
Only one IPO so far this year compared to five in 1996
From Correspondent Carmine Gallo
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NEW YORK (CNNfn) - The massive selloff in tech stocks is raining on the Internet IPO parade.
Only one Internet-related firm has gone public so far this year, raising $26 million, according to Securities Data Co. At this time last year, five firms had gone public, raising nearly $200 million.
When the Internet search firm Yahoo reported a quarterly profit in January, analysts and investors were caught by surprise, since they hadn't expected the company to post a profit for at least another year.
Yahoo's favorable report "renewed investors' confidence in some of these Internet stocks," said Ryan Jacob, an analyst at IPO Value Monitor. "Valuations went up a bit and people were starting to think, 'Hey, wait a minute. Maybe these companies can make money. And it's not three to five years out.'"
That sparked a wave of optimism among several other Internet firms planning to go public. But that was before the tech selloff.
Auto-By-Tel, an online network of automobile dealers, was set to go public early this month. The 157-point drop in the Dow Jones Industrial Average on March 31 convinced executives to put that plan on hold.
Internet bookseller Amazon.com is another hot Web site that plans to go public this month.
Both firms are eager to tap into the public's appetite for stocks and to raise much-needed cash.
"I think there are some real capital needs there," said Dan Rosenbaum, president of 3Ships Communications. "Doing content, especially complicated Web sites, is really expensive, and there's a real need for money back there."
Amazon.com and Auto-By-Tel are part of the first big wave of Internet retailers planning to go public. But depending on how the market environment shapes up in the near future, the competition could become intense. 
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