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IPO market awaits the fall
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August 24, 1998: 9:15 a.m. ET
Internet IPOs dominate post-Labor Day market, but investors seen as finicky
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NEW YORK (CNNfn) - With the IPO market seemingly on vacation until the broader markets shape up, expect this week to be fairly quiet.
Going forward, however, particularly after Labor Day, a number of Internet IPOs should explode onto the scene. And in contrast to earlier this year, when most dot-com companies could command high multiples, investors are becoming finicky with these deals.
Recent Net newcomers such as Cyberian Outpost (COOL), 24/7 (TFSM), Entrust Technologies (ENTU) and Digital River (DRIV) are either trading below their IPOs or barely holding on to gains.
Here's a rundown of the upcoming Internet offerings. Whether all these deals make it to market, however, is as unpredictable as whether any of these companies will ever make a profit.
Computer Literacy, an online seller of technical resources such as technology books, research reports and training manuals, is expected to go public this fall.
As technology becomes more widespread and sophisticated, the company expects the need for such information to grow. Sales have climbed to over $4.9 million, representing a compound average quarterly growth rate of about 175 percent since its launch in early 1996. Its customers have surged to over 29,000, with repeat purchases accounting for 50 percent of sales.
But one has to wonder whether the high-tech reference book business is such a hot area. IDG Books Worldwide relies on technology-related books for more than half its sales, yet its sales growth is slowing down. IDG Books (IDGB) also went public in late July and its stock is down 1.5 percent.
Another caveat in the online business: Brand names are key, and with the likes of Amazon.com (AMZN) dominating the book business, fending off competition or building up brand recognition likely will eat into profits for some time.
For those in search of profits . . . or a job
With a name like HeadHunter.NET, branding and quick access is built in. Just searching for "headhunter" on traditional search engines will lead you to the site of this upcoming IPO.
As its name implies, the company matches jobs and job seekers, and so far it's been rather successful. By mid-year, 31,000 resumes were posted on the site, while the month of June saw an average of 375,000 page views, making HeadHunter.NET the most highly trafficked employment site in the second quarter, according to Relevant Knowledge.
Currently, the company has more than 200,000 job listings, which are never more than 45 days old, and resume postings are never more than 90 days old. Its ease-of-use and catchy name may give this company an edge against its competitors, and online recruiting is expected to grow from $48 million last year to $460 million in 2002. The one concern is that the company is highly dependent on online advertising dollars.
Going once, going twice . . .
Also going public is a company that champions the online auction format, which supposedly is the ultimate Web shopping experience and, some say, is addictive.
Given the successful performance of last year's IPO of OnSale (ONSL), which pioneered online auctioning three years ago, it's no wonder uBid has decided to go public while the concept is hot.
uBid offers close-outs and refurbished products to consumers and small- to medium-sized businesses. But it may be that uBid is still in the early stages of ramping up its business. Consider this: In the first six months this year, uBid auctioned over 39,000 units, but that pales in comparison with OnSale, which managed to auction over 200,000 in a little over six months after it launched its first sale in May of 1995. And, having been first to market, OnSale has a significant lead on its fledgling competitors.
If Cyberian Outpost is any indicator, this deal may be a hard sell. Cyberian, an online provider of computer hardware, software and related products, is down 15 percent since its IPO at the end of July.
Sticking with the online auction theme, eBay appears to have a better shot at wooing investors. The upcoming IPO, with an expected offering of 3.5 million shares between $14 and $16, is an anomaly compared with public Internet companies in that it already has posted profits.
Others looking for online profits
Healtheon, a provider of Internet-based transactions and information services to the healthcare industry, is also a soon-to-be IPO. Key to this offering and worth an extensive look is its link to a reputable and high-profile technology trailblazer: Jim Clark, who founded Netscape (NSCP) and Silicon Graphics (SGI), is the man behind this venture.
TheGlobe.com, which claims to be one of the leading online community sites, also is gearing up for a fall debut.
Like GeoCities, TheGlobe.com is a destination that lets users personalize their own sites, add their own content and interact with other members.
But the company is much smaller, with only 1.7 million members versus GeoCities' 2.1 million; it also had only 6.1 million unique users in this June while GeoCities attracted 14.8 million unique users in a recent month.
And whereas GeoCities posted sales of more than $5 million for the first six months this year, TheGlobe.com had only $1.1 million in the same period. Unlike GeoCities (GCTY) prior to its offering, however, TheGlobe.com is not under investigation by the Federal Trade Commission.
Lastly, EarthWeb is a leading provider of Web-based services to the information technology community around the world. Content includes a wide range of technical materials, including resource directories, tutorials and a reference library. Essentially, EarthWeb acts as an intermediary for IT professionals, advertisers and vendors who want to share information and transact business.
The company had sales of $974 million for the first six months of this year. Interestingly, J.P. Morgan, not the typical Internet underwriter, is leading this deal. Also on the prospectus, as the "e-manager," is online investment banking firm Wit Capital. 
-- from staff writer Bambi Francisco
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