Why You Can Trust CNET TheGlobe.com plans IPO
The "friendly" online community Web site declared its intentions to go public in documents filed with the SEC.
The Internet company, with more than 1.7 million paying members, will offer shares worth up to $50 million and has proposed the "TGLO" ticker symbol for trading on the Nasdaq Composite Index.
Founded by Todd Krizelman and Stephan Paternot in May 1995, TheGlobe.com has about 80 full-time employees and maintains offices in New York and San Francisco. TheGlobe.com member subscriptions cost $4.95 or $9.95 a monthly, depending on the level of service.
It reported a net loss of $3.9 million for the second calendar quarter ended June 30, compared with a $435,000 loss for the same quarter a year ago, according to SEC documents. Quarterly revenue rose to $780,000 compared with $121,000 a year ago.
In addition, the company stated it had accumulated a deficit of $10.2 million as of June 30. Advertising revenues accounted for 77 percent of the company's fiscal 1997 net revenues and 89 percent of revenues for the six months ended June 30.
TheGlobe.com is facing intense competition from other online communities and portal sites that offer home page building, free email, chat, and other services. The company is chasing online giant America Online, as well as community players GeoCities and Tripod, a subsidiary of Lycos.
In an effort to expand its name recognition, TheGlobe.com launched an aggressive $8 million advertising blitz that included online and traditional television, radio, and print ads that appeared through the month of May.
The company said it intends to introduce Globe-shops, an e-commerce solution later this year, aimed at the small to midsized business and home-office market that would allow members to establish easy-to-build online storefronts.
Encouraged by the incredible valuation of some top-tier Internet stocks such as Yahoo and Amazon.com, Internet companies have been anxious to go public.
As reported, Webcast company Broadcast.com shot off the charts last week when shares in the company went from the $18 a share offering price to close at $62.75 on the first day of trading.
Several companies that hope to replicate Broadcast.com's success are slated to go public in the next month. They include GeoCities, classified ad site eBay, Internet auctioneer uBid, and CitySearch, a national online city guide. Cyberian Outpost and Hiway Technologies also are planning IPOs in the coming weeks.
"GeoCities is scheduled to price in August and a lot of people think they could do just as well, if not better, than Broadcast.com," said Ken Fleming, an analyst with Renaissance Capital's IPO Fund. "I think there's strong demand for Internet companies that can get a lot of eyeballs."
Michael Egan, former owner of Alamo-Rent-A-Car, made a $20 million investment in TheGlobe.com. Other investors include David Horowitz, a founder of MTV Networks; Bob Halperin, former CEO of Raychem; and David Duffield, CEO of PeopleSoft.
Investment banking firm Bear Sterns will be the lead managing underwriter and Volpe Brown Whelan will serve as comanager for the IPO.