03/30/19 ANOTHER NET IPO FRENZY--WITH A DIFFERENCE

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ANOTHER NET IPO FRENZY--WITH A DIFFERENCE

Spring is warming up fast for Internet IPOs. On the heels of successful offerings by VeriSign, DoubleClick, and CDnow, whose share prices have risen between 50% and 220% above their asking prices, bankers are scrambling to find candidates they can throw at investors hungry for Net stocks. ''We're in the strongest market for Internet IPOs since we took Yahoo! public two years ago,'' says Bradford C. Koenig, a managing director at Goldman, Sachs & Co.
That's a turnabout. Many Internet companies sat on the sidelines last year as stocks stumbled after the initial Web euphoria. No more than two companies a month have gone public since July, 1996, with Net IPOs dropping to 12 in 1997 from 21 the year before.
Now there's a new attitude. As anxieties over the Asian crisis ease and Net companies show staying power--highfliers Yahoo! Inc. and Lycos Inc. are turning a profit--investors have warmed to the group. The big thaw, though, comes from reports of lower than expected earnings from Intel Corp. and Compaq Computer Corp. The computer industry giants are suffering lower margins brought on by the explosion in sub-$1,000 PCs--a trend that's sure to bring more people to the Web. The news sent the stocks of search engine Yahoo! and Internet bookseller Amazon.com Inc. to all-time highs the week of Mar. 9. This month, there already have been nine high-tech IPOs, according to Securities Data Co.
Still, this isn't shaping up to be a repeat of the 1995 Net IPO frenzy, when any company with a promise went public. Startups now boast higher revenue, more Web traffic, and seasoned management teams. ISS Group Inc., for example, is an Atlanta provider of network-security monitoring software. With 1997 revenues of $13.5 million and a $3.9 million loss, it's slated to go public on Mar. 23 at 14 to 16 a share. Compare that with the $127,400 in annual sales CyberCash Inc. had when it went public in 1996.
READY TO GO. Others are lining up to go. Verio Inc., an Englewood (Colo.) Internet service provider with 1997 revenues of $77.9 million, has filed, and so has Exodus Communications Inc., a Santa Clara (Calif.) provider of network management services with sales of $7.5 million through September, 1997. Other likely candidates, say analysts and bankers, are Vignette and NetObjects, which help companies publish Web sites. And GeoCities, the seventh-most-visited Web site, which lets Netizens post their home pages for free, is expected later this year. ''The IPO track is certainly what we have in mind,'' says Peter Mills, a managing partner at CMG @Ventures LP, a GeoCities investor.
They had better hurry. Between investor whims and El Nino, who knows what summer holds.
By Heather Green in New York

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