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Tech Industry

Computer Literacy shares double

The online seller of technical books finally goes public to a receptive Wall Street.

    The stock price of technical bookseller Computer Literacy continued to climb today, up closing at 21.063, up 1.125, after nearly doubling on Friday, it's first day of trading.

    Computer Literacy's on-again, off-again offering--first filed July 17, pulled last month after September's bear market, then reactivated just a week ago--follows this month's successful new offerings from EarthWeb and theGlobe.com.

    Computer Literacy provides an online listing of more than 300,000 technical books, product manuals, and research reports from more than 8,000 publishers. Customers order online and receive books through the mail. More than half of Computer Literacy's revenue for the three months ended July 31 came from online sales, with most of the rest generated by the company's four retail stores.

    Friday's offering at 10 was above the 7 to 9 range that lead underwriter NationsBanc Montgomery Securities had anticipated last week. The stock opened at 23, climbed as high as $24.50 before closing just under 20.

    A total of 3 million shares--or 28 percent of the company--were issued, and Friday's volume was 10.8 million shares. More than 4.4 million shares changed hands in the first hour of trading. The sale raised $30 million for Computer Literacy and gave the company a market capitalization of about $106.4 million.

    Internet darlings such as Amazon.com and Yahoo have surged in recent weeks. Cook said they have benefited from the Federal Reserve's lowering interest rates, which helped companies with high price/earnings ratios, such as Internet firms. Several better-than-expected earnings reports also boosted the online shares, as did a flood of cash from investors who look for rising stocks.

    Computer Literacy reported revenue of $4.8 million for the three months ended July 31, up from $2.6 million in the same period a year ago. The company's loss grew to $2 million from $625,000 in the same period.

    "I don't think [Computer Literacy]will exhibit the types of growth rates that Amazon.com has had," said Steven Tuen, director of research at IPO Value Monitor. "They're still fairly small and not very well known.''

    Retail investors who trade stocks online and thus are familiar with the Internet likely are helping to create the strong demand for companies such as Computer Literacy, said Henry Blodget, an analyst with CIBC Oppenheimer Corp.

    "I don't think it's the institutions that are chasing these stocks,'' he said. ``No one knows how these companies will really do fundamentally.''

    The company's number of online customers grew to more than 44,000 as of July 31 from about 1,600 as of Jan. 31, 1997, the company said in its filing with the Securities and Exchange Commission.

    The company intends to use about $6.1 million of the proceeds from the stock offering for capital expenditures, and the rest for working capital and general corporate purposes, including expanding its direct sales and marketing operations and systems.

    Piper Jaffray and Needham & Company assisted Nationsbanc Montgomery in the offerings.

    The suddenly hot IPO market has rekindled plans by InfoSpace, uBid, and community site Xoom to go public. Search technology firm Inktomi and Net ad company DoubleClick have filed for secondary offerings.

    Bloomberg contributed to this report.