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Cars online join IPO race
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March 21, 1999: 5:50 p.m. ET
Two e-dealerships lead offering slate, while techs muster for non-Net debuts
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NEW YORK (CNNfn) - Investors hungry for Internet stock offerings will be able to kick the virtual tires of two separate online car marketers, but it remains to be seen whether continued demand for Web plays will put much gas in the tank for the broader IPO market.
Autobytel.com and Autoweb.com will fight over the driver's seat when both come to market. Each company is in the business of selling cars over the Internet, forwarding user requests to allied dealers in the same general geographical area.
With such a seemingly narrow distinction between them, small differences will be telling as the companies compete for investor attention.
Autoweb operates as more of an information clearinghouse, earning revenue by introducing sellers to buyers and facilitating transactions. The company focuses on used vehicles and automotive products, encouraging private sellers to make their wares available through the Web site. Buyers can make use of a comprehensive range of financing and insurance services, thanks to an exclusive arrangement with State Farm.
Revenue has increased exponentially, climbing to $13 million in 1998 from $3.4 million in the year before. However, operating losses have widened at a similar pace, climbing to $11 million in 1998 from $2.9 million.
The company has not yet set its offering size, but hopes to raise $57.5 million from going public, money which it plans to use for advertising and general corporate purposes. Its proposed ticker symbol is "AWEB."
On the other hand, Autobytel puts a larger focus on new car sales, which it facilitates through its network of more than 1,200 participating dealerships. The company also allows users to request automotive accessories and used vehicles.
In 1998, the company lost $19.3 million on revenue of $23.8 million, showing margins narrowing from 1997's loss of $17.4 million on $15.3 million income.
Like Autoweb, Autobytel plans to use proceeds from its offering for general purposes. Chief underwriter BT Alex. Brown is set to sell 3.5 million shares at between $16 and $18 apiece under the ticker symbol "ABTL."
The week's third Internet play, online service provider OneMain.com, specializes in bringing Internet access to small-town and rural markets, an audience so far undersaturated by Internet companies.
This allows OneMain to stay somewhat apart from the increasingly competitive metropolitan Internet market, helping it carve out $29 million in revenue for 1997.
Beyond an expected opening sometime this week and a hoped-for $125 million offering size, underwriter BT Alex. Brown has so far announced very little about OneMain's debut.
Virtual or bust?
Last week underlined the debut market's narrowing focus. Of the four companies that made it to the offering block, three -- Flashnet Communications (FLAS), Multex.com (MLTX) and iVillage (IVIL) - were pure Internet plays, while the fourth, Cheap Tickets (CTIX), has a significant online presence.
All four companies rocketed out of the starting gate, with iVillage scoring the sixth-biggest opening-day gain ever with its 234-percent debut surge.
However, three other IPOs in the pipeline never made it to the market, as underwriters pulled the plug on one, sporting-good and automotive retailer G.I. Joe's, and delayed two others. Significantly, none of the three had anything to do with the Internet.
One of the two delayed offerings, biotech firm Careside, is ramping up its 2.8 million shares to meet the market some time this week. The second offering, coal miner Consol Energy, is large but lacking in Internet glamour, and is now set for some time in March.
Techs want to play
Several high-tech companies still consider the IPO climate favorable enough to make it worth trying their hand at beating the Internet sector in the offering game.
Global long-distance telephone provider Destia Communications is probably the most familiar to everyday investors. The company has carved out a sizable niche for itself in the extremely competitive telecom market, providing 350,000 customer accounts with a full range of traditional communications services.
The number of shares and initial pricing range of Destia's $65 million "DEST" offering have yet to be determined, but lead underwriter Morgan Stanley, together with co-managers CS First Boston and Lehman Brothers, offers the company a sterling pedigree.
MKS Instruments stands to benefit from recent buzz about the semiconductor-equipment sector when it hits the sales block. The company makes gas-analysis instruments and components, a vital part of the chip manufacturing process.
Although MKS competes in a highly balkanized market, relatively few of its direct competitors are publicly traded, a factor that might help lead investors to its offering of 6 million "MKSI" shares priced between $15 and $17.
Also set to price sometime this week are Transistor Devices, which makes power supplies for computers and other electronic systems, and health-care computer consultant Nichols TXEN. Transistor Devices plans to offer 2.15 million shares at $15, using ticker symbol "TDV," while Nichols will price an offering of similar size between $12 and $14 under the ticker "NTXN."
Outside the computing world entirely, Proformance Research Organization will offer investors a breath of fresh air and, if all goes well, a glimpse of blue skies when it prices a million "PROO" shares at $5. The Denver-based company provides golf instruction at both amateur and certification levels, as well as marketing official golf merchandise and operating several schools and learning centers.
-- by staff writer Robert Scott Martin
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