Inktomi, GeoCities near IPOs
The Internet companies are closing in on their first steps into the public realm, in a sign that the Internet IPO market remains hot.
Underwriters say they expect to set a price for Inktomi after the markets close today, meaning the software maker could begin public trading as early as tomorrow. Meanwhile, sources say that GeoCities is preparing to file documents with the Securities and Exchange Commission, perhaps later this month, to get its IPO ball rolling.
Other Net companies, such as Pointcast, are planning to go public this summer.
The moves are signs that the Internet IPO market remains hot despite last week's cancellation of a secondary stock offering by CDnow, which many market-watchers saw as a sign of Net stocks cooling down.
The Inktomi offering will float out 2.26 million shares of the company's common stock, of which 2 million are being sold by Inktomi and 260,000 are being sold by selling stockholders. The company will not receive any of the proceeds from the shares being sold by the selling stockholders.
If the company is priced at the high end of its expected range of between $12 and $14 per share, Inktomi's IPO could generate $28 million, excluding charges associated with the offering. The company plans to trade on the Nasdaq under the ticker symbol "INKT."
The underwriters include Goldman Sachs, BT Alex Brown, and Hambrecht & Quist.
After the offering, Inktomi will have 20.5 million shares outstanding, giving the company a market value of up to $287.4 million, based on an offering price of $14 a share.
Inktomi announced last month that it will provide the underlying search engine to power Yahoo's Internet directory, as well as that of Web-based online service Snap. (Snap is owned by CNET: The Computer Network, which publishes NEWS.COM.)
Other Inktomi partners include NTT, Sun Microsystems, Digital Equipment, Digex, Microsoft, and America Online.
At the end of the six-month period ending in March, the software maker reported revenue of $5.9 million, compared with revenue of $2.3 million for the same period a year earlier.
Although Inktomi has managed to sign deals with some big names, it faces tough competition in the market for network cache solutions, the company said in its filing with the SEC. Among the competitors named in the filing were CacheFlow, Cisco Systems, Microsoft, Netscape Communications, Network Appliance, Novell, and Spyglass, as well as freeware caching solution companies CERN, Harvest, and Squid.
Competition also is intense in GeoCities' turf, the online community space.
Nevertheless, sources close to the company said GeoCities has hired investment bankers in its effort to file for a public offering during the next week or two.
The company's chairman, David Bohnett, has maintained that a public offering has long been the goal of the venture-backed company. He told CNET NEWS.COM as early as December 1996 that Wall Street was the company's eventual destination.
"We brought in an experienced CFO for a public offering," he said at the time. "It is a natural progression here."
But these days, Bohnett is more mum on the company's progress toward its stated goal. Yesterday, he would not comment on the possibility of a public offering, nor on the reason for the company's recently imposed quiet period.
At a news conference at the Grand Hyatt hotel in New York City last week, Bohnett bowed out of his speech, joking that the company was about to go for its fourth round of financing, said Jason Calacanis, editor and publisher of Silicon Alley Reporter and a conference attendee.
Peter Mills, a partner at CMG@Ventures, which is GeoCities' largest shareholder, said the venture capital firm always thinks in terms of an IPO for its companies because it wants them to be able to "stand on their own merits."
"We have always been on an IPO track, since our first investment back in January '96," he added. "But it is just a question in our minds of the right time to do it. There are a lot of factors involved."
He explained that GeoCities needs to meet a critical mass in terms of sales and "homesteaders," or customers. It also must assemble the right executive team and have favorable market conditions in order to consider a public offering.
GeoCities recently rounded out its top staff when it named media mogul Thomas R. Evans--previously president and publisher of U.S. News & World Report and Fast Company, as well as president of the Atlantic Monthly--its chief executive officer. Other recent hires include Stephen Hansen, formerly senior vice president and chief financial officer of Universal Studios, who was named the company's chief financial officer late last year. The company also has added a vice president of marketing and business development.
"They have an all-star cast with Tom at the helm. [The company is] rounding into shape," said Mills, who pointed out that, as for its product, GeoCities is nearing its 2 million "homesteader" benchmark. "I really like the way the company is looking right now." GeoCities is backed by Intel, Softbank, Yahoo, Chase Capital Partners, Flatiron Partners, InnoCal, and CMG@Ventures.