Audiohighway.com IPO hits skids

Online broadcaster Audiohighway.com backs away from an IPO, the latest victim in a string of public offerings gone nowhere.

2 min read
High-tech initial public offerings continue to drop like flies.

Online broadcaster Audiohighway.com became the latest Internet company to back away from a planned IPO, citing weak market conditions, according to managing underwriter Paulson Investment.

"We're still looking to do something in the spring," said Trent Davis, vice president of syndicate for Paulson. "About 80 percent of the small Internet companies that priced under $10 are down. The big boys are doing well, but the little guys are struggling. The window of opportunity just wasn't there."

The company, which aggregates audio content, planned to offer 2 million units--including warrants in addition to common stock--at a price of $12 to $15 per unit. Audiohighway.com had hoped to raise about $27 million from the offering.

But analysts were skeptical of the planned IPO from the beginning, since unit offerings are typically reserved for the smallest--and least established--companies.

For many high-tech start-ups, the infusion of cash and publicity brought by an IPO is critical for its future. Dozens of Internet companies have gotten cold feet in recent weeks--ever since the Dow took a tumble in late August--not wanting to bet the farm during a down market.

Just this week, Sprint decided to delay taking its PCS wireless business public and Allaire also withdrew its IPO.

Earlier this month, community site TheGlobe.com and Web development software maker Vignette cut their IPO plans. Healtheon, NetGrocer, uBid and Computer Literacy also put the brakes on their ambitions for the public trough. Even investment bank Goldman Sachs, an underwriter for some of the most successful Internet offerings in the last year, backed away from its own IPO last month.

E-commerce software maker InterWorld is one company that is watching the market, and other company's decisions, closely.

"Healtheon, TheGlobe, and Vignette all decided not to go out. We've been looking at that very closely but we have yet to make a decision," InterWorld spokesman Chris Faust said.

Faust said the company, with help from underwriter Credit Suisse First Boston, will decide whether to send InterWorld into the public realm by Monday or Tuesday. "Right now we're in a wait-and-see mode," he said.

Financial analysts have characterized 1998 as a soft year for IPOs, except for a few stellar offerings from Internet companies such as Broadcast.com, GeoCities, and eBay. Many high-tech offerings are trading at or below their offer prices.