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B&N.com IPO rises
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May 25, 1999: 6:20 p.m. ET
But Barnes & Noble Web unit pales in comparison to other Internet debuts
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NEW YORK (CNNfn) - In its effort to catch up to the storied market valuations of its Internet-based peers, barnesandnoble.com Inc. rose 27 percent Tuesday as the Web-based book seller launched its initial public offering.
Compared with other Internet-related IPOs, however, Barnes & Noble Inc.'s Web unit wasn't exactly a blockbuster with investors.
The company, a joint venture of bricks-and-mortar bookseller Barnes & Noble (BKS) and the German publisher Bertelsmann AG, rallied after pricing a hefty 25 million shares at $18 apiece. Barnes & Noble and Bertelsmann each will retain a 41 percent stake in barnesandnoble.com.
The offering price was at the top end of the expected $16 to $18 range, and far above the original $11 to $13 per share. Goldman Sachs led the $450 million offering.
Shares of New York-based barnesandnoble.com (BNBN) rose 4-15/16 to close at 22-15/16 in Nasdaq composite trading.
Good, but not great
Though the 27-percent climb would be acceptable by normal standards, it's small potatoes compared with other Internet-related IPOs.
Last week, for example, online toy retailer eToys Inc. (ETYS) soared 325 percent in its public debut.
Even Brocade Communications Systems Inc. (BRCD) -- not exactly a household name -- jumped 138 percent Tuesday in its first day of trading.
Gail Bronson, an analyst at IPO Monitor, said poor timing is partly responsible for barnesandnoble.com's relatively lackluster IPO.
"The whole market is off today," she said. "People, including day traders, who would normally trade aggressively during a strong session, might be a little skittish. And if there's not a big catapult in price at the beginning of the day, that scares off day traders."
Bronson also noted that, unlike eToys and Amazon.com Inc. (AMZN) -- barnesandnoble.com's main rival -- the company wasn't the first to market in its category, usually one of the keys to a successful IPO.
In addition, investor demand for new publicly traded Internet stocks is rapidly being satisfied as more and more "dot-com" companies go public.
"We're starting to see a boatload of dot-com IPOs," Bronson said. "The market can only handle so many."
IPO as cash cow
Nonetheless, the IPO offers a cash windfall to barnesandnoble.com as it tries to parlay its Wall Street rally into competitiveness with online bookselling leader Amazon.com (AMZN).
Analysts said barnesandnoble.com's prospects are promising, even though the company is a relative latecomer.
"I think that [barnesandnoble.com], to be a winner in this, doesn't necessarily, in the near term, have to surpass Amazon.com in revenue," said IPO analyst Charles Kaplan of Equity Analytics. "What they need to do is stall Amazon.com."
"You can't pooh-pooh this too much," Bronson said. "They raised $450 million. That's not too shabby. That gives them room to become a more bona fide dot-com player."
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