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Christmas Gift Guide
Tech Industry

Floral e-tailers thirsty for sunshine

With 1-800-Flowers.com's public offering wilting in the shadow of a dreary Internet stock market, analysts say the forecast for Ftd.com's upcoming IPO looks cloudy at best.

With 1-800-Flowers.com's public offering wilting in the shadow of a dreary Internet stock market, analysts say the forecast for Ftd.com's upcoming IPO looks cloudy at best.

Since 1-800-Flowers.com set its public offering price Monday at $21 per share, the stock has dipped below its offering price. In afternoon trading today, the stock was down 1 point to 17.1875.

The 1-800-Flowers.com and Ftd.com IPOs come at a time when many Internet stocks have been withering on the vine. E-commerce leader Amazon.com's shares have fallen to about 40 percent of their April high. eBay has dropped to about a third of its April high.

Needham analyst Dalton Chandler pointed to several causes for the current sell-off in Internet stocks, including flat Internet traffic levels, a glut of Web-related IPOs, and concern about interest rates. Nonetheless, Chandler expects the holiday shopping season to prompt a recovery for Net stocks in the fourth quarter.

"Until then, I don't see anything on the horizon that's going to turn this thing around," Chandler said.

Financial analyst Vernon Keenan of Keenan Vision said recent troubles are a bad omen for FTD.com, 1-800-Flowers.com's competitor in the online flower business. FTD.com is slated to set its public offering price today and expects to raise some $82.5 million through selling 5.5 million shares.

To be sure, 1-800-Flowers.com did raise roughly $126 million through its IPO, so it's hard to dub it a failure. But for institutional investors left holding overvalued stock, the IPO was anything but a success.

Alan Mak, financial analyst at Argus Research, argued that because only part of 1-800-Flowers.com's revenue comes from its Internet sales, investors felt the company didn't deserve the valuation that Internet companies such as Amazon.com and eBay have received.

"That one just was a flopper, to put it simply," Mak said.

Ftd.com is also not purely an Internet company, deriving a large portion of its revenues from non-Internet sales, a fact that Mak said could affect its IPO.

"Given the market conditions, I think we'll see a similar result," he said.

That could have broad consequences for Internet public offerings, Keenan said. "We could see a total pullback in IPOs happening within a week," he said.