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Linux IPOs will be a tough act to follow

Initial public offerings by Internet companies are expected to reclaim center stage, following the roaring success of this week's Linux-related offerings.

Initial public offerings by Internet companies are expected to reclaim center stage, following the roaring success of this week's Linux-related offerings.

Egreetings Network, OnDisplay and Optio Software are among the 17 deals expected to debut next week. Although analysts say these IPOs are expected to do well, the performances of this week will be hard to beat. VA Linux, a maker of Linux-based servers, set an IPO record when it soared nearly 700 percent yesterday in its first day of trading.

A day earlier, shares of Linux Web site developer Andover.Net surged 250 percent in its debut.

Nonetheless, next week will have a number of deals that may please investors.

"Seventeen deals are a pretty good swan song for 1999," said Jeff Hirschkorn, senior analyst with IPO.com.

Egreetings is expected attract investors' attention because of the growth in email and the roster of the company's investors. Gibson Greetings will hold a 19.8 percent stake after the IPO, NBC subsidiary NBC-EGRT will have a 7.2 percent stake, and Paul Allen's Vulcan Ventures will have a 3.7 percent stake.

"This deal will rock in the aftermarket," predicted Hirschkorn. "It'll be one of the last moon shots of the year."

Egreetings plans to raise up to $60 million, based on the high-end of its $8 to $10 range and the 6 million shares it will sell. The company is expected to price Wednesday and begin trading Thursday under the ticker "EGRT." Credit Suisse First Boston is the lead underwriter.

"With this deal, we'll probably see an increase in their range," Hirschkorn said.

Egreetings generated $1.5 million in revenues for the nine-month period ending Sept. 30, up from $182,000 during the same period in 1998. Its losses widened to $22 million during the period, compared with $5.2 million the previous year.

An expected increase in the use of email should bode well for the company. Research firm International Data Corp. estimates that the amount of email sent in the United States is expected to rise to 9.2 billion messages a day by 2003, up from a daily usage of 2.1 billion in 1998.

Egreetings, however, has to deal with some large competitors: Blue Mountain Arts, which was recently acquired by Excite@Home for about $780 million, and AmericanGreetings.com, which in August filed plans to go public.

Among other tech companies launching IPOs, OnDisplay hopes to Tune in to CNET News.com TV's IPO Forecast raise up to $45.5 million based on the high end of its $11 to $13 pricing range and the 3.5 million shares it plans to sell.

The company, which will trade under the ticker "ONDS," is expected to price Wednesday and begin trading Thursday. Robertson Stephens is the lead underwriter.

OnDisplay offers software applications that allow companies to create portals and online stores.

"This company is probably going to be viewed as one of the up and coming companies using XML technology," said Paul Bard, an analyst with Renaissance Capital's IPO Fund. "OnDisplay has three new products that are based on XML, which is a growing technology. It allows you to tag items and grab things like text files and graphics. This is one of the things that will sell this deal."

He added that e-commerce companies and businesses that want to distribute information over the Internet will increasingly use XML. OnDisplay counts business-to-business company PurchasePro as a customer, as well as business-to-consumer company Travelocity.

"I think it will be a hot deal," Bard said. "It certainly won't be a VA Linux, but, at the same time, it will be one of the stronger IPOs next week."

OnDisplay generated $6.6 million in revenues during the nine-month period ending Sept. 30, up from $2.2 million a year ago. The company's loss widened to $9.3 million for the period, compared with a loss of $5.8 million a year earlier.

Optio Software, which also plans to go public next week, assists companies with their e-commerce operations. Notably, it is profitable.

During the nine months that ended Oct. 31, Optio posted profits of $1.3 million on revenues of $23.2 million. Last year, the company generated $575,000 in profits on revenues of $13 million.

"They're in a market that's growing and they're profitable; that's why I like them," Hirschkorn said. "They get most of their revenues from licensing fees, but in October they had an equal split in licenses and services."

Optio expects to raise up to $50 million, based on the high-end of its $8 to $10 range and 5 million shares it plans to sell. The company is expected to price Wednesday and begin trading Thursday under the ticker "OPTO." Merrill Lynch is the lead underwriter.