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THE DAY AHEAD: IXL braves choppy IPO waters

After two days of shaky markets, a couple of Internet companies are testing the initial public offering waters. Dozens of lesser-known .coms in the IPO pipeline will be cheering them on.

Leading the IPO parade today is iXL Enterprises Inc. (Nasdaq: IIXL), which priced its 6 million share offering Wednesday night at $12, the top of its range. Merrill Lynch is the lead underwriter.



IXL: An IPO hit in the making?



Another company testing the IPO waters is Onlinetradinginc.com Corp. (Nasdaq: LINE), which priced its offering at $7 a share. The offering is underwritten by Werbel-Roth Securities.

So why are these two offerings worth noting?

Both are relative no-names. Neither IPO is greatly anticipated like last week's offering of Barnesandnoble.com Inc. (Nasdaq: BNBN). Both IPOs are just a warm-up for Wit Capital Group Inc.'s offering, scheduled to price tonight.

We know the IPO pipeline is getting backed up. If these two offerings break that will mean .com blood was spilled in two consecutive weeks. That's not a good sign for those Internet companies with IPO dreams.

Dalton Chandler, an analyst at Needham & Co., noted at an Informed Investors conference Wednesday in New York Wednesday that the supply of Internet IPOs is about to surpass demand. According to Chandler, the deals with big underwriters and venture capitalists backing them will get done. Other fledgling .coms will be left out.

Bottom line: Go with the big IPO names or go home.

We know the IPO window is closing. IXL and onlinetradinginc.com will give an indicator of whether the door is already shut for others.

Despite the hubbub surrounding E-Trade (Nasdaq: EGRP), DLJDirect (NYSE: DIR) and others, onlinetradinginc.com is a most-likely-to-flop candidate. The company has an unknown underwriter, a ridiculously long name and seems to be a blatant attempt to cash in on the online trading and .com crazes.

The company, which has been around since 1995, touts itself as an online broker for active investors. Gee that's original. So does Ameritrade Holdings Corp. (Nasdaq: AMTD), E-Trade, DLJDirect, Datek and a host of others. More importantly, onlinetradinginc.com breaks Chandler's sponsorship rule. The company doesn't have a lot of backing.

IXL, however, could be a surprise hit based on the sponsorship rule. Merrill Lynch, Donaldson, Lufkin & Jenrette, BancBoston Robertson Stephens and Nationsbanc Montgomery Securities are underwriters for the IXL.

That's not too shabby.

IXL offers Internet services and counts General Electric, Chase Manhattan, Merrill Lynch, Time Warner and Delta Airlines among its largest customers.

In other words, IXL looks like a real business and employs 1,475 workers. The losses are worth noting though. IXL had pro forma 1998 revenue of $87 million and a loss of $71 million. For the quarter ending March 31, revenue was $33 million with a loss of $23.8 million.