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Return of the Internet IPO
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July 13, 1998: 2:50 p.m. ET
Broadcast.com hopes to revive IPO market's romance with the Web
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NEW YORK (CNNfn) - Last week's heart-stopping seesaw performance in the Internet sector was enough to keep online companies in the IPO spotlight for some time, with enthusiasm filling six out of the seven best-performing offerings of the year with 'Net-related stocks.
One of the secrets of success for the typical Internet IPO is high demand and low supply. Since most Internet stocks are closely held by employees and other start-up insiders, only a small percentage of existing shares is traded on the public market, driving scarcity and lifting prices.
Internet offering de jour
Barring a broader market fallout or another serious bout of Asian economic jitters, Broadcast.com (proposed ticker symbol: BCST) is almost certain to get some mileage out of the continuing Internet zeal.
Broadcast.com offers audio and video programming, including sports, talk and music radio, television, business events - all for free and on demand via the Internet.
Formerly known as Audio Net, the company shed its music-only image by changing its name to Broadcast.com back in May, underscoring the importance of brand recognition in the race to capture an online audience.
"If they're out there now, people are starting to bookmark the sites, " said Ken Fleming, IPO analyst at Renaissance Capital, an IPO and mutual fund research firm. "They want to be a major destination on the Web."
Still other analysts worry that Broadcast.com may be trounced when larger media companies extend their franchises onto the Web.
Fleming's upbeat assessment of Broadcast.com is based mostly on the grounds of "hot stock by Internet-association" and not so much on the company's fundamentals or prospects - and even he stopped short of holding out hope of an Inktomi-style (INKT) performance.
However, if online sports broadcaster Sportsline.com is a reasonable gauge, Broadcast.com's stock should be well received. Sportsline.com (SPLN) is up 300 percent this year, and at its current capitalization-to-revenues ratio is trading well above Broadcast.com's prospective price.
Broadcast.com is set to float 2.5 million shares at $11-$13, giving it a market capitalization of about $215 million on an accumulated deficit of $12 million and estimated 1998 revenues of $13.5 million.
Hologram company could shine
America Bank Note Holographics (proposed ticker symbol: ABNH) is set to price 13.6 million shares at $12 a piece.
The company makes holograms primarily for security applications like counterfeiting protection for credit and other transaction cards. Customers include VISA, IBM, (IBM) Intel (INTC) and Merck (MRK) as well as United States and Chinese government agencies.
According to the company's prospectus, the security business accounts for more than 60 percent of the holography industry, in which ABNH is believed to be the dominant worldwide player.
Game company launches initial play
Interactive Magic (proposed ticker symbol: IMGK) is expected to float 2.8 million shares at $8-$10 this week. Known primarily to online game junkies, the company's initial release "Warbirds" was named "Online Game of the Year" for the past two years by PC Games magazine.
While there's certainly a market for game playing over the Internet, it's comparatively pint-sized, with total industry revenues of $127 million in the U.S. last year -- about one quarter's worth of profits at Lucent Technologies. As for Interactive Magic, the company has yet to post an operating profit.
Cost-U-Less targets islands
Are warehouse clubs back? Maybe so, after several years of decreasing membership and sales, the industry appears to be turning around. That's good news for Cost-U-Less, which is set to go public this week at $8.50-$9.50 a share.
Despite a competitive retail warehouse climate - dominated by the likes of Sam's Club and BJ's WholeSale Club -- Cost-U-Less (proposed ticker symbol: CULS) has a unique strategy which it calls "the island store concept." The company has targeted 30 U.S. islands in the Pacific and Caribbean as virgin warehouse markets and is poised to take advantage of these territories.
Audiophile offering cues up
Tweeter Home Entertainment Group (proposed ticker symbol: TWTR), a New England-based specialty retailer of audio and video consumer electronic products, is going public after expanding into the Georgia market.
With declared revenue of $200 million last year, up from $80 million in 1996, Tweeter hopes to price 2.2 million shares at $15-$17. 
-- by staff writer Bambi Francisco
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