Xpedior makes modest gain in debut

Larry Dignan

Jan. 2, 2002 4:43 p.m. PT

2 min read

Xpedior (Nasdaq: XPDR), an Internet services company, moved up 8 11/16, or 45 percent, to 27 11/16 after pricing its initial public offering at $19 a share, above its revised range of $16 to $18 a share.

The company offered 8,535,000 shares with an original price range of $14 to $16. Donaldson, Lufkin & Jenrette is the lead underwriter.

Internet services companies such as Xpedior have been in high demand on Wall Street. Competitors such as Agency.com (Nasdaq: ACOM), Proxicom (Nasdaq: PXCM), Razorfish (Nasdaq: RAZF), USWeb/CKS (Nasdaq: USWB), Viant (Nasdaq: VIAN), iXL (Nasdaq: IIXL) and Modem Media.Poppe Tyson (Nasdaq: MMPT) have all had impressive stock runs.

Xpedior is the first half of a Net services IPO doubleheader. C-Bridge (Nasdaq: CBIS), another Net services company, is expected to trade on Friday.

All of these services companies are chasing a market that's expected to balloon from from $7.8 billion in 1998 to $78.5 billion in 2003, according to International Data Corporation.

Xpedior also appears to be more mature than some of its counterparts in terms of revenue. Xpedior reported pro forma sales of $102.7 million for the nine months ending Sept. 30 with a loss from continuing operations of $3.3 million. It turned a profit on an operating basis.

The company, which focuses on Global 2000 companies, is a spin-off from Metamor Worldwide (Nasdaq: MMWW). Prior Xpedior's IPO, Metamor owned 99.6 percent of the company. After this offering, Metamor will own approximately 83 percent, or 80 percent if the underwriters exercise their over-allotment option in full. Metamor plans to distribute the remainder of Xpedior to shareholders in 2000.

Risks include ability to retain employees, stiff competition and seasonality related to corporate budgets.

Xpedior also has to manage its growth. In regulatory filings, it said headcount jumped from 166 at the end of 1997 to 695 at the end of 1998 and 945 on Sept. 30. Xpedior is also defendant in a law suit filed by Expedia, Inc., (Nasdaq: EXPE) that alleges the Xpedior trademark infringes on the Expedia trademarks.