Martha's IPO: It's a good thing
Despite a highly volatile stock market, media companies targeted at women are booming in their initial public offerings.
Martha Stewart Living Omnimedia provided the latest example. The company went public today, and its stock almost doubled, closing at 35.56 up 17.56. In a symbolic gesture, Stewart--who built an empire by providing homemaking tips--rang the opening bell on the floor of the New York Stock Exchange.
Stewart's IPO comes only days after Women.com went public--again during a time of stock-market turmoil. Women.com's shares still managed to double, however.
The run-up in share prices reflects Wall Street's realization that women are the largest growing segment on the Web, according to analysts and industry executives. Women also are catching up to men as online shoppers.
"You have more women going online, and as the Internet matures, you can find much more specialized content [directed at them]," said Ekaterina Walsh, a research analyst with Forrester, adding, "Women typically make the purchasing decisions in the household."
The women-focused Web sites face many hurdles, however. Competition is intense, and meeting Wall Street's expectations always is difficult once a company has to generate quarterly earnings reports. Another women's Web site, iVillage, had a successful IPO earlier this year, and its stock skyrocketed. But the shares have slumped since then, trading near a 52-week low.
"The challenge for these niche sites is to keep their advertisers," said Arthur Newman, Internet analyst at investment bank Schroders Group. The risk is that "advertisers will begin to choose larger, more general sites" instead.
Martha Stewart Living raised nearly $130 million based on the 7.2 million shares offered. The company's roots are in publishing and television, but its regulatory filings stress the importance of the Internet in its future plans, including "significant investments" in its online operation. It plans to bolster e-commerce and add more interactivity.
Silicon Valley venture capital firm Kleiner Perkins Caufield & Byers helped take Martha Stewart Living public, and it holds a 5-percent stake in the company. Kleiner Perkins partner John Doerr, the venture capitalist behind Sun Microsystems, Netscape, and Amazon.com, also holds a seat on Martha Stewart Living's board.
"This is a very interesting opportunity for investors," Stewart said today in an interview on CNBC. "We pioneered a new media category--lifestyle--and we intend to dominate this area." On paper, at least, Stewart, 58, is now worth more than $1 billion, thanks to the IPO.
Martha Stewart Living stockholders are not the only ones benefiting. Women.com's shares went public at 10 on Friday. The stock drifted downward from more than 20 today but still is trading in the mid to high teens. Women.com raised nearly $60 million from public and private sales of its stock. Hearst and Disney bought shares as the company went public.
Women.com, founded in 1992, attracts more than 4 million visitors each month. Its Web sites include information, community, and content aimed at women.
Analysts see big growth opportunities for Web sites aimed at women, because this is such a fast-growing market. Forrester Research estimates that 39.6 million women, or 29 percent of women in the United States, are online; and by 2003, roughly half of all women in the United States, or a projected 71.2 million, will have a connection to the Internet.
"Women.com has held up against its IPO price," said Kathleen Smith, portfolio manager with Renaissance Capital's IPO Fund. She added that Women.com's success might bolster investor confidence, which has been shaken lately by a number of IPOs that fell below their offer price the day after hitting the public markets.
Added Michael Perry, chief financial officer of Women.com: "This [IPO] is a significant milestone for Women.com Networks. When the company received its first funding five years ago, the idea of serving women online was viewed as a bit before its time.
"Last week's event is not only important for Women.com, but also reflects that women are a forceful segment of the Internet population and serving them is an important franchise," Perry said.
iVillage also announced today it had launched a shopping site with eight partners, including the Gap.com, Nordstrom, and Macys.com.
Another major competitor in the women's online market, Oxygen, also will be a strong presence in coming months. Oxygen offers a hub of women's sites--including Moms Online, Thrive, and Electra--which draw roughly 57 million page views per month and focus on personal finance, careers, health, and relationships. The company plans to spin-off a 24-hour cable channel by next year, putting into full swing Oxygen's strategy to build an interactive "converged" TV-Net content network.