Web portal AltaVista next week is expected to price its initial public offering, but analysts are wondering whether current market conditions will result in a lackluster performance.
The IPO may come as early as Monday, according to an AltaVista spokesman. The company is sticking with the $18 to $20 offering price indicated in an amended Securities and Exchange Commission filing in February. The filing also noted that the company plans to float 14.8 million shares in hopes of netting $258.5 million.
But the IPO couldn't come at a less opportune time for AltaVista or parent company CMGI, according to analysts. Technology stocks, especially Internet stocks, have plummeted in the past couple of weeks. The market's nosedive and the glut of companies looking to go public have therefore tempered the appetite for IPOs.
"It would've been better a month ago," said Richard Peterson, an IPO analyst with Thomson Financial Securities Data.
At the close of trading yesterday, the tech-heavy Nasdaq composite index lost 25 percent of its value since reaching its high in March. The index's plunge was the second-largest point loss and the sixth-largest percentage loss in Nasdaq history.
Analysts are unsure whether the tight market conditions will welcome another Web portal with open arms. Investors already have put most of their money into established portal leaders, such as Yahoo and America Online. This has left behind other portals, such as Lycos, Disney's Go.com and NBC's Internet division, which are viewed less favorably as Internet content investments.
"It's not certain that a public offering will increase the awareness level of AltaVista to the point that it will grab additional market share and thereby dramatically increase revenue," said David Menlow, president of IPO Financial Network.
"The line has been drawn pretty clearly in the sand to who goes to what," he added. "The market has spoken, and there's Yahoo, and there's AOL."
The IPO, if successful, will be significant given AltaVista's long and winding pursuit for a spinoff. The company tried unsuccessfully to go public under its former parent company, Digital Equipment Corp. In June 1997, Digital scrapped the IPO, blaming poor market conditions and a restructuring of the company.
Soon after, fate changed AltaVista's course again when Compaq Computer acquired Digital in February 1998. Nearly a year later the computer giant decided it would spin off the search directory into a wholly owned subsidiary and an eventual IPO.
Instead, Compaq opted to sell a controlling stake of AltaVista to CMGI in June 1999. With AltaVista under its belt, CMGI hoped it could turn the neglected search directory into a full-fledged portal to take on leader Yahoo. The Internet venture company also saw AltaVista as a way to channel an audience and boost growth among the myriad companies under its investment umbrella.
Shortly after the acquisition, CMGI refurbished AltaVista's image and launched an aggressive ad blitz worth more than $100 million. The celebrity-studded TV campaign featured icons such as Pamela Anderson and chess master Garry Kasparov.
AltaVista ranks as the 13th-most-visited site, with 12.3 million unique visitors per month, according to Web audience measurement company MediaMetrix.