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Tech Industry files for IPO

While other Internet companies postpone or withdraw their initial offerings, the online auto dealer prepares to go public. is hitting the road less traveled: The online auto dealer has filed for an initial public offering.

The Los Angeles-based company, one of the most well-funded private e-commerce firms, said today it filed the paperwork with the Securities and Exchange Commission.

Most Internet companies have been pulling or postponing their initial offerings because of the general downturn and volatility of the stock market.

Last week, American Greetings said it is withdrawing its IPO, and in late April only five of 16 scheduled IPOs actually began public trading.

CarsDirect will be a late arrival in an already crowded online auto sector. and went public last spring, hitting highs of about $40 per share.

The road may get even bumpier for online car dealers after online behemoth America Online yesterday formed a partnership with auto retailer AutoNation to let members buy trucks and cars through a new cobranded Web site.

But the rush to join the race is understandable: the online car industry is targeted to become one of the largest market opportunities in e-commerce. Forrester Research has estimated that the online market will grow to about $16.6 billion in 2004 from about $400 million in 2000. Nearly 40 percent of new car buyers shopped for cars online last year, according to J.D. Power & Associates, an automotive research and marketing firm.

In its filing today with the SEC, the company said it had a net loss of $72.3 million in 1999 on revenues of $15.2 million. The company also had a net loss of $43.1 million on revenues of $98.5 million for the first three months of this year. The figures in the filing are unaudited.

"We expect to continue to increase our sales and marketing, product development and administrative expenses, among other expenses, which could further increase our net losses," the company said in its filing. "These increased expenses will require us to generate significant additional revenues to achieve and maintain profitability."

In March, CarsDirect formed an alliance with Autoweb, cross-referencing products and services on their sites.

The company will trade under the "CRSD" symbol. Merrill Lynch will be the lead manager for the offering with Chase H&Q, Robertson Stephens and E*Offering acting as co-managers.