Direct Hit files for IPO

The company that powers Internet search engines files with the Securities and Exchange Commission to raise as much as $57.5 million in an initial public offering.

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Direct Hit Technologies has filed with the Securities and Exchange Commission to raise as much as $57.5 million in an initial public offering, in a further sign of growing competition in the Internet search engine market.

Direct Hit, which ranks search results by popularity, is one of several upstart companies stepping forward to challenge search leader Inktomi with refined search offerings. Others include Google.com, which recently enjoyed a spectacular first round of venture financing, and Yep.com, produced by WebsideStory and based on information gleaned from their HitBox tracker tool.

Direct Hit powers search engines for Web portals such Lycos and HotBot. Working together with major search engines, the Direct Hit system tracks which Web pages surfers use after running searches for particular words or phrases, and how long they spend on each site.

The company reported a net loss of $1.8 million during the three months ending in September on revenue of $413,000. That compares with a net loss of $304,000 on $7,000 of revenue in the same period last year. The company had an accumulated deficit of $3.7 million as of Sept. 30.

Company representatives said they would use proceeds of the stock sale for general corporate purposes, which could include capital expenditures, product development, sales and marketing expansion. Some of the profit may be used to acquire other businesses, though the company said it has no specific plans.

A subsequent filing will likely list a price for its shares and set a total number of shares to be sold to the public.

The company, which began operations in 1998, was co-founded by Michael Cassidy, 36, and his partner, 29-year-old Gary Culliss.

FleetBoston Robertson Stephens will act as the lead underwriter for the Wellesley, Mass.-based company. Other underwriters include Thomas Weisel Partners LLC, Soundview Technology Group and Wit Capital Corporation.