Avenue A, net.Genesis take flight

Internet advertising firm Avenue A and marketing software company net.Genesis both flew out of the gates in their initial public offerings Tuesday.

Avenue A Inc (Nasdaq: AVEA) rallied up 53 1/2, or 223 percent, to 77 1/2 after pricing its shares at $24 a piece.

The Internet advertising services company raised its range to $18-20 a share from $8-10.

The company should do well, considering it's in hyper-growth mode to compete with a handful of players such as DoubleClick (Nasdaq: DCLK), said Kenan Pollack, of IPO Central at Hoover's Online.

The laws of supply and demand will also ensure the company gets a big pop on its first day, Pollack said; if you look at all the top first-day gainers, almost all of them offered in the neighborhood of 5 million shares. Avenue A will is putting 5.25 million common shares up for grabs.

Avenue A offers proprietary ad management technology, user profiling and data analysis systems. David Menlow, an analyst for IPOfinancial.com, said Avenue A is on his hot list for the week.

For the year ended December 31, the company had a net loss of $11.9 million on revenue of $69.7 million, as opposed to a net loss of $3.6 million on revenue of $599,000 in 1998.

The company's revenue is concentrated in its two biggest clients; in 1999, Gateway, Microsoft and uBid accounted for about 43 percent of total revenue.

Avenue A warned that DoubleClick could claim its technologies present a patent infringement. A U.S. patent was issued to DoubleClick in September which may cover some of the technologies, processes or methods that Avenue A uses in its ad serving systems, the company said in its filings with the SEC. DoubleClick recently brought suit against L90, (Nasdaq: LNTY), claiming its advertising technologies infringed on this patent.

Another risk for Avenue A is the crowded Internet advertising field. CMGI (Nasdaq: CMGI) is a major force in the market and has added AdForce, AdKnowledge, Inc. and Flycast Communications to its network.

Avenue A's IPO is being underwritten by Morgan Stanley, Salomon Smith Barney and Thomas Weisel Partners.

Net.Genesis (Nasdaq: NTGX), stormed up 38 15/16, or 216 percent, to 56 15/16 Tuesday after pricing its 4.25-million share offering at $18 a share.

The company raised its estimated price range to $14 to $16 a share from an original range of $11 to $13 a share. The IPO is led by underwriters Chase H&Q and Deutsche Banc Alex Brown.

For the year ended December 31, net.Genesis had a net loss of $16 million on revenue of $6.5 million, compared to a much narrower loss of $5.7 million on revenue of $1.5 million in 1998.

The company is likely to do well, as it is also "drilling marketing info down to the individual level," said Menlow, who compared the offering to Avenue A. Revenue growth showed a 228 percent gain in the last nine months over last year's total revenue, Menlow added.

Net.Gensis also said it faces stiff competition. Vignette (Nasdaq: VIGN), a company with which net.Genesis has a strategic technology relationship, recently agreed to buy DataSage, a company that offers software that collects real-time information on online customer interactions. With the acquisition, Vignette will improve its ability to provide real-time reporting and analysis of customer behavior. These additional capabilities may make its products more appealing than net.Analysis, net.Gensis' main product.

Similarly, Accrue (Nasdaq: ACRU) recently bought Marketwave and NeoVista Software, giving it a wider range of products and capabilities.