Why You Can Trust CNET @Home IPO seen as hot money
The high-speed cable Net access company plans to set its initial public offering price Thursday, perhaps at more than $10 a share.
The company previously has filed a price range of $7 to $9 a share for the IPO, but sources said it could go higher. An @Home spokesman would not comment, noting that the company is in the "quiet period" mandated by the Securities and Exchange Commission.
@Home, which provides Net access via cable systems, would have a market value of about $1 billion under the planned IPO price range, a lofty sum for a two-year-old money-losing company, according to many analysts. The proposed stock offering has come to symbolize the hype and promise of high-speed Net access.
The company reported revenues of $1.8 million for the six-month period ending June 30. Meanwhile, it posted a loss of $22.8 million for the period, up from $8.3 million a year ago.
At its planned price, the IPO would raise upwards of $75 million. Its owners include cable TV giants Tele-Communications Incorporated, Comcast, and Cox Communications.
The road show now under way to pitch @Home to investors is going well, people familiar with the IPO said. "It looks like a hot deal," said Walter Price, principal of RCM Capital Management, an institutional investor. "I've heard 10 million shares on the West Coast alone have been subscribed."
Price speculated the deal would become "hot money," meaning that investors expect share prices to rise sharply on the first day of trading. He said that "people are expecting to see the stock rise 30 percent to 40 percent on its first day." This implies that early buyers could turn a profit by selling the shares when the price peaks.
Others, such as the cable TV operators, are in the company for the long haul. The underwriters are looking to place the shares with long-term investors, according to Price.
Underwriters in the deal include Morgan Stanley, Merrill Lynch, Alex. Brown, and Hambrecht & Quist.
@Home's filing comes amid a recent spurt of successful high-tech public offerings by Amazon.com, Rambus, and Great Plains Software. High-tech IPOs also are planned by Network Solutions, Concentric Network, and CMP Media.
One beneficiary of the renewed IPO fever has been high-tech venture capitalist Kleiner Perkins Caufield & Byers. The company helped finance @Home, Amazon.com, and Concentric.