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THE DAY AHEAD: Will FTD.com smell better than 1-800-Flowers.com?

Tech Industry

FTD.com (Nasdaq: EFTD) has a tough mission today -- convince investors and Wall Street that the company is different from 1-800-Flowers.com (Nasdaq: FLWS), a competitor that has yet to break its IPO offering price.

And if FTD.com's pricing is any indication this IPO could smell more like manure than flowers. FTD.com priced its 4.5 million shares at $8 last night, below its already lowered price range of $10 to $12. The lead underwriter is Bear Stearns with an assist from Thomas Weisel Partners LLC and Volpe Brown Whelan & Co.



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The 1-800-Flowers.com IPO story is well known. The company had a big-time underwriter in Goldman Sachs, priced at a whopping $22 a share, and became one of the year's broken IPOs. In the aftermarket, 1-800-Flowers.com couldn't top its IPO price despite better-than-expected earnings, typical underwriter "buy" ratings, and the end of its quiet period.

The 1-800-Flowers.com reception in August was so bad that FTD.com shelved its IPO and cut the price range to $10 to $12 from $13 to $15. Now a little more than a month later, FTD.com hits the IPO market and has to convince us that it's different.

Good luck.

FTD.com just looks like a smaller version of 1-800-Flowers.com.

Here's a comparison:

Advantages for FTD.com: The company has a lower price in its debut and might get an aftermarket gains. That's good public relations. In addition, FTD.com is a little more .com than 1-800-Flowers.com. According to FTD.com's regulatory filings, 46 percent of sales came via the telephone and 54 percent through the Internet during the year ended June 30. For the three months ended June 30, Internet sales were 60 percent of the total.

1-800-Flowers.com is still a lot more 1-800 than .com. In 1-800-Flowers.com's latest quarter, 62.5 percent of sales derived from the telephone, 24.6 percent from the Net and the rest from retail.

Advantages for 1-800-Flowers.com: When you compare revenue, you might also cut 1-800-Flowers.com some slack on Internet sales. FTD.com reported sales of $49.6 million and a loss of $5.4 million for the year ending June 30. FTD.com sales for the fourth quarter were $18.4 million.

In the fourth quarter alone, 1-800-Flowers.com topped FTD.com's annual sales. It reported sales of $92.2 million and a loss of $3.4 million. For the year, 1-800-Flowers.com had sales of $296 million and a loss of $6.8 million.

1-800-Flowers.com had more sales and the first-mover advantage and flopped in the aftermarket. What's FTD.com going to do with the second-mover advantage?

FTD.com will also be controlled by a subsidiary of FTD Corp., which is a privately held concern that controls the FTD florist network, a greeting card unit and other divisions. The FTD subsidiary will hold 98.6 percent of the voting power for FTD.com. FTD Corp. had sales of $213 million for the year ending June 30.

In other areas, it looks like a draw between the floral combatants. Both want to expand products. Both plan to market, build the brand, utilize its network and offer superb customer service. The filings look a lot alike and that's bad news for the FTD.com IPO.

FTD.com and 1-800-Flowers.com will be viewed as brick-and-mortar hybrids not worthy of a .com valuation.

The bottom line for FTD.com and 1-800-Flowers.com is this: The growth of the Internet doesn't make you want to buy more flowers. You'll just transfer your orders from the phone to the Internet. Where's the growth?

Besides, no one wants to hear about e-tailing, content or niche plays right now. The market wants infrastructure. Foundry Networks (Nasdaq: FDRY), up 525 percent in its first day, is clearly a hit, Calico Commerce (Nasdaq: CLIC) will be a hit, but FTD.com IPO smells a lot like 1-800-Flowers.com.

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