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Egreetings soars early after IPO, finishes flat

The online greeting card company surges in the early hours of its initial public stock offering but closes almost even with its offering price.

Egreetings Networks surged in the early hours of its initial public stock offering today but later gave back nearly all the gains.

Yesterday, the San Francisco-based company sold 6 million shares for $10 each, the middle of the company's estimated range of $8 to $12. In early trading today, the shares climbed to 16.25 but later slipped back to close at 10.56. Volume exceeded 11 million shares.

Egreetings' Web site allows visitors to send electronic greeting cards that including graphics, cartoons and music to others via email. Visitors also can buy and send gifts from the site.

For the nine months ending Sept. 30, 1999, Egreetings reported revenues of $1.5 million and a net loss of $22 million.

In a recent filing with the Securities and Exchange Commission, Egreetings said that in September its Web site was visited more than 9.6 million times and that more than 98 million Web pages were viewed. During the month, about 3.4 million digital greetings were sent from the site.

In its S-1 filing with the SEC, the company cited three studies that highlight some trends that should benefit the company.

International Data Corporation estimates that the daily number of email messages sent in the United States will grow from approximately 2.1 billion in 1998 to more than 9 billion in 2003. In addition, a Jupiter Communications survey found that sending electronic greetings was the sixth most popular online activity in 1998.

Meanwhile, Forrester Research estimates that online sales between business and consumers will increase from approximately $20 billion in 1999 to about $184 billion in 2004. Advertising spending is expected to reach $33 billion in 2004.

Strong competition in the industry could affect Egreetings' growth, however. Electronic-greeting card company Blue Mountain Arts, which was acquired by Excite@Home in October, leads the market in online traffic. Yahoo and Amazon have also initiated their own e-greeting services to attract new users.

Egreetings trades on the Nasdaq under the ticker symbol "EGRT"; Credit Suisse First Boston was the lead underwriter for the IPO.