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IPO UPDATE: Netsolve outpaces ShopNow and FTD.com

Netsolve, ShopNow, and FTD.com all headed north in their debuts Tuesday, but the gains were minimal for two of the three.

Netsolve, which was up 130 percent at one point, closed up 6 to 19, or 46 percent. ShopNow showed decent early gains, but closed up just 11/16 to 12 11/16, or 6 percent. FTD.com gained 5/8 to 8, or 8 percent.

Netsolve (Nasdaq: NTSL) was the obvious IPO choice in early trading Wednesday. The company, which priced at $13 a share, is something of a white tiger among technology debuts, with a profit in its last quarter. Shopnow.com (Nasdaq: SPNW) also priced 7.25 million shares at $12 each for trading Wednesday.

Netsolve priced its $3.7 million shares at $13 each, the top of its $11-$13 range. Lead underwriter for the offering is BancBoston Robertson Stephens.

The Austin, Texas-based company provide services to manage networks and network security. NetSolve offers remote network management and security services that allow companies to outsource, or "out-task," activities of their wide area networks (WANs) or local area networks (LANs). Given the success of Foundry (Nasdaq: FDRY) on Tuesday, any company that combines the words profit, network and infrastructure could soar.

Netsolve turned a profit in the last quarter, returning net income of $1.9 million on revenue of $9 million for the quarter ending June 30.

The company's continuing profitability depends on its relationships with resellers such as AT&T, its largest customer, and network equipment manufacturers such as Cisco, according to filings with the Securities and Exchange Commission. Sales to AT&T accounted for 59 percent of Netsolve's revenue in the fiscal year ended March 31, 1999 and 69 percent of revenue in the three months ended June 30, 1999.

  • ShopNow.com had shakier fundamentals. The company reported a net loss and just shut down its main source of revenue. ShopNow.com priced 7.25 million shares at $12 each, the top of its $10-$12 range. The size of the offering for the Seattle-based Internet shopping service was increased from 7 million shares. Dain Rauscher is the deal's lead underwriter.

    The company had net loss of $26.2 million on $11.6 million in revenue for the 6 months ended June 30, 1999. As of June 30, 1999, ShopNow had an accumulated deficit of $55.6 million.

    ShopNow is a risky investment considering the company shut off the source of 62 percent of revenue for the first six months of 1999. The operation of BuySoftware.com, which also brought in over 60 percent of revenue for fiscal 1998 through retail of computer products, was ceased in June 1999.

    The company gives an example of its acquisition incompetence with CyberTrust as another reason investors should be wary. In June 1998 ShopNow acquired e-Warehouse and CyberTrust for $5.4 million, intending to use their payment processing technologies for e-commerce and direct marketing services, the company said in its filings with the Securities and Exchange Committee. However, they have now determined the technology is useless to them.

  • FTD.com priced its 4.5 million shares at $8 last night, below its already lowered price range of $10 to $12. The lead underwriter is Bear Stearns with an assist from Thomas Weisel Partners LLC and Volpe Brown Whelan & Co.

    FTD.com's (Nasdaq: EFTD) challenge is to distinquish itself from 1-800-Flowers.com (Nasdaq: FLWS), one of this year's broken IPOs.

    The much-anticipated offering of Calico shares has been postponed, but is expected to price tonight for trading Thursday, according to underwriter Goldman Sachs.