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THE DAY AHEAD: StarMedia should shine in IPO tripleheader

It's not easy for Internet initial public offerings to make a lasting impression on investors these days. And things could get really difficult today as three giant Internet offerings go public.

Get ready for the IPOs of StarMedia, Juno Online and DLJDirect. Which one will steal the show?

Of the three, StarMedia Networks Inc. (proposed ticker: STRM) is the real show-stopper and should rise above the din. StarMedia priced its offering of 7 million shares at $15.



Best long term bet: Juno, StarMedia or DLJ Direct?



What makes StarMedia so special? It has an untapped market and isn't a "me-too" Internet company. Barnesandnoble.com has to say it's like Amazon.com. Theglobe.com had Geocities and on and on.

StarMedia, the leading network in Latin America, provides Spanish and Portuguese language e-mail, chat rooms, instant messaging and personal homepages.

"We believe that StarMedia is the most recognized Internet brand in Latin America," said the company in a regulatory filing.

And we all know brand is all that matters on the Net and StarMedia has it. StarMedia has all the tools to become a player the size of a Yahoo! (Nasdaq: YHOO).

The company tackled the Latin American market first, which is always a big plus on the Net. It also can tap into the growth of Latin America.

According to Nazca Saatchi & Saatchi, the number of Internet users in Latin America is expected to increase from 7 million users at the end of 1997 to 34 million users by the end of 2000.

With the IPO, StarMedia can grow its war chest, keep spending and grow its brand.

In true .com fashion, the company loses a lot ($45.8 million in 1998) and has light revenue figures ($5.3 million in 1998), but financials often follow the traffic. For March 1999, the company reported 60 million page views. That's roughly 2 million impressions a day. The company also has 425,000 registered e-mail users.

Advertising is the primary source of revenue for StarMedia, but the company will begin offering online access in the second half of 1999 and plans to dabble in e-commerce.

Despite the hefty losses and risks of an emerging market, heavyhitters such as NBC and eBay Inc. (Nasdaq: EBAY) have invested in StarMedia, which will use its strategic partners to expand its network.

Even if StarMedia doesn't become the America Online of Latin America, the company will at least be an attractive acquisition for a bunch of players ranging from Yahoo to any of its strategic investors.

Not too far behind on the IPO buzz-o-meter is Juno Online.

Juno Online Services Inc. (proposed ticker: JWEB) is offering 6.5 million shares priced at $13.

The company, which was known for offering free e-mail service way back in 1996, hopes to convert its free customers into paying ones.

Juno Online is becoming what the name implies -- an Internet Service Provider.

Given Juno's brand and financials, the IPO should have a respectable showing.

For the quarter ending March 31, Juno reported sales of $9.7 million and a net loss of $6.87 million. Of that sales figure, $5.8 million was from billable services, $2.3 was attributed to advertising and $1.6 million was direct product sales.

Not bad, but Juno will compete with numerous ISPs, HotMail and other free e-mail providers. Juno was first to market, but blew it. Now we have to see if Juno can convert freebies into exponential revenue growth.

Last on the IPO buzz-o-meter is DLJ Direct, the online unit of Donaldson, Lufkin & Jenrette. DLJ Direct, which priced at $20, will trade under "DIR" on the New York Stock Exchange.

DLJ Direct seems to be getting the press, but that doesn't guarantee a first day run-up. Notice how Brocade Communications' (Nasdaq: BRCD) IPO had a much larger run-up than the Barnesandnoble.com (Nasdaq: BNBN) offering. Brocade jumped 138 percent on its first day and Bn.com closed up a mere 27 percent.

Expect DLJ Direct to have a Bn.com-like offering. DLJ Direct is offering 16 million shares. Bn.com offered 25 million shares and that excess supply cut back on the big gains.

In addition, DLJ Direct is a tracking share, which could confuse investors. And DLJ Direct is trading on the NYSE, which is considerably less volatile than the Nasdaq.