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IPO PREVIEW: Charter, UPS, Expedia headline big IPO week

If you thought this week's IPO calendar was hot with the likes of Webvan Group (Nasdaq: WBVN) and Cobalt Networks (Nasdaq: COBT) just wait until you get a load of next week.

There are so many offerings -- at least four of them expected to be huge -- that the market could conceivably choke. There are at least 19 tech offerings on deck for the week of November 8, including the largest IPO in American history.

The whoppers among next week's offerings are Charter Communications, Paul Allen's cable company, Expedia, the spin off of Microsoft's online travel business, United Parcel Service, a back-door e-commerce stock, and FreeMarkets, a business-to-business auction company similar to VerticalNet (Nasdaq: VERT).

These four behemoths could bump off some less flashy offerings from the calendar next week, said Tom Taulli, analyst at Internet.com.

"The amount to be raised next week is $10 billion. That will test the markets to some degree, even though its highly liquid right now," Taulli said. And Taulli said he "wouldn't be surprised if the price ranges for all the major offerings were increased."

Here's the line-up of next week's big offerings:

Charter Communications (Proposed ticker: CHTR), the fourth largest cable TV operator in the U.S., plans to price 170 million shares between $17 and $19 each for trading November 8.

Goldman Sachs is the lead underwriter, and Bear Stearns and Morgan Stanley are co-managers.

"This deal is highly anticipated," emphasized Peony Kao, who covers the IPO for Renaissance Capitol, "especially since Paul Allen was on the cover of Forbes."

"It's been very acquisitive and it is very large," Kao said. The company will reach 9.7 million homes, and see a subscriber base of 6.2 million. Aside from the company's reach, access to Paul Allen's other entities, such as Wink Communications (Nasdaq: WINK) and Worldgate is the company's strong point.

Following the offering, Allen, co-founder of Microsoft, will control approximately 95 percent of the voting power of Charter. Allen has also pumped more than $2 billion into Charter. In fact the company, risks access to Allen's money as one of its risks to the Charter's future.

Charter's revenue growth is hard to figure out since the company is a "roll-up," Kao said. The pro-form figure for the fiscal year 1998 show the company at $2.7 billion in revenue. Charter also had revenue of $1.4 billion, and a loss of $266,000, for the six months ended June 30.

Expedia Inc. (Proposed ticker: EXPE), Microsoft Corp.'s (Nasdaq: MSFT) online travel service site, will debut 5.2 million shares between $10 and $12 each, making for an initial public offering valued around $75 million.

"It's going to be the number one travel site according to traffic," Kao said, looking at Media Metrix statistics that put it ahead of Preview Travel (Nasdaq: PTVL) and Cheap Tickets (Nasdaq: CTIX) with 4 million unique users. Competition in this space is extremely tight though, following the merger of Preview Travel and Sabre Holdings' Travelocity site.

Goldman Sachs and Morgan Stanley Dean Witter will co-manage the offering, expected to debut November 11.

Though Expedia will become a separate company, Microsoft Corp. (Nasdaq: MSFT) will remain as its majority owner and Expedia will continue to provide travel services on the Microsoft Network. Microsoft has said it doesn't intend to put more money into Expedia though, Kao said.

Expedia, which reported a loss of $29.5 million on sales of $13.8 million in fiscal 1998, provides online travel services for leisure and small business travelers. With more than 7 million registered users in August, Expedia will be stiff competition for Priceline.com Inc. (Nasdaq: PCLN) among others.

FreeMarkets (Proposed ticker: FMKT) is another Goldman Sachs offering that looks promising. The company, which runs business-to-business auctions for commodities plans to offer 3.5 million shares between $14 and $16 each.

Auctions for commodities is a hot space based on industry research and government statistics showing that manufacturers worldwide purchase approximately $5 trillion each year of "direct materials." Similar companies include Commerce One (Nasdaq: CMRC).

"It's in a very big market," said Taulli, who compared it with Ariba (Nasdaq: ARBA) which "skyrocketed" in its IPO>

"Buyers of direct materials often pay prices that are too high," the company said in its regulatory filings. FreeMarkets' business plan should eliminate the complexity in the purchase process by allowing bidding.

For the nine months ended June 30, FreeMarkets had revenue of $13 million and a loss of $13.5 million. In 1998, FreeMarkets posted a slight profit, but said it doesn't expect to return to profitability any time soon.

United Parcel Services (Proposed ticker: UPS) could outshine next week's IPO roster. The company is offering a whopping 109.4 million shares with an expected price range of $36 to $42 a share. Morgan Stanley Dean Witter is the lead underwriter with an assist from Goldman Sachs and a host of other firms.

the nine months ending June 30, UPS reported revenue of $19.6 billion and net income of $222 million including charges. For 1998, UPS reported sales of $24.8 billion and net income of $1.7 billion.

When completed UPS' IPO will be the largest in U.S. history.

And e-commerce hype could make the stock hot. Zona Research estimated that UPS delivered 55 percent of the goods purchased over the Internet in 1998. The company also said it has aggressive plans to be the back-end system for a host of e-tailers.

At the end of the day UPS is the only way we're seeing anything on our door from the Internet ," said William Schaff, fund manager for the Information Technology 100 Fund. "It will be everybody's safe proxy for e-commerce."