Gator mutation Claria files for IPO
Internet stock offerings may be heating up, but Claria may be hindered by its controversial adware.
Claria, whose advertising platform (or adware) has come under legal fire from multiple Web site operators, filed an S-1 document with the SEC, seeking to raise an unspecified sum through an initial public offering. According to its filing, the company said it had a net income of about $35 million on revenue of $90 million in 2003.
Claria said it will continue to benefit from the growth of the online advertising business. But it also faces numerous risks, including new state laws and lawsuits that allege its pop-up ads violate the trademarks and copyrights of third-party site publishers.
"A recently enacted statute in Utah will, upon coming into effect on May 3, 2004, prohibit us from providing our products and services in that state," according to the document.
The filing comes as the online ad industry is rebounding. Sales from Web ads surged 38 percent in the fourth quarter to $2.2 billion from the comparable period a year earlier, coming after years of declines. Analysts expect the market to rise by 10 percent or more for the full year in 2004, registering more than $8 billion in sales.
Illustrating the surge, Yahoo reported first-quarter profit that more than doubled and announced a stock split, before its shares reached a three-year high.
In recent weeks, antispam company BrightMail and comparison-shopping service Shopping.com have filed S-1 documents to go public.
Founded in 1998, Claria distributes e-wallet software that helps millions of people automatically fill in Web forms and passwords. The Redwood City, Calif., firm also makes adware called GAIN (Gator Advertising and Information Network), to accompany the free e-wallet service and other popular third-party applications like Kazaa. GAIN is used to track Web surfing behavior across the Internet and deliver targeted pop-up ads to users.
Claria said that it has 43 million people active on its ad network. The company has eight offices in the United States and Europe.
Claria is fighting many battles in court over its practices.
For example, a European court recently issued a preliminary injunction against Claria that prohibits the company's pop-up and pop-under ads from appearing over German rental car Web site Hertz Autovermietung without the agency's permission.
Bankers handling the prospective sale include Deutsche Bank Securities, Piper Jaffray, and Thomas Weisel Partners.