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THE DAY AHEAD: IPO shocker! Sanity returns

The market for Internet IPOs finally starts making sense and folks can't stop yapping about what's wrong with it. Enough already. The Internet IPO market is much more logical and likeable now.

Just a few months ago any lame company with a .com suffix could go public and soar. Boring, very boring.

The IPO market: More fun now?

The IPO market is much more interesting now because investors are being selective just like they should have been all along.

Courtesy of an Internet IPO glut, the conventional wisdom that any Internet offering will soar has been turned on its head.

Now when Poorexcuseforabusiness.com files for an initial public offering, investors shoot it down and the offering becomes "broken." For a recent examples look at Comps.com (Nasdaq: CDOT), ZipLink (Nasdaq: ZIPL) and Juno Online (Nasdaq: JWEB).

That's how things are supposed to work. The market should always shoot down the also-rans. You can't buy every .com.

Juno Online flops with its IPO. Maybe that's because Juno is a free-email service that missed its first chance at an IPO and now wants to be an Internet service provider. Ziplink tanked. Edgar Online? It flopped too. Maybe investors figured out they can get the same info Edgar Online offers at a charge for free.

Investors' reactions to the aforementioned IPOs show they are using a little common sense. There's nothing wrong with that.

Wall Street marveled at the ridiculous run-ups of theglobe.com (Nasdaq: TGLO) and other questionable entities and then accepted those run-ups as normal.

We know this rational stuff is tough to swallow for a lot of IPO watchers, not to mention the press. The new dynamics have many investors worrying about the "disappointing" offerings of DLJ Direct (NYSE: DIR) and Barnesandnoble.com (Nasdaq: BNBN).

How disappointing were they really? Barnesandnoble.com launches an IPO with a whopping 25 million shares and only runs up a bit. DLJDirect gains a mere 50 percent after offering 16 million shares. The media sniffs, "Well that's not an Internet-like showing."

Maybe not, but it is the very rational laws of supply and demand. Most Internet offerings are about 5 million shares. Barnesandnoble.com and DLJDirect and their hefty share offerings raised $450 million and $320 million, respectively. Some failure.

And the IPO market is far from dead. Investors still love a good story and a market leader. On the same day Juno, ZipLink and Edgar Online stumbled, StarMedia (Nasdaq: STRM), the Latin American version of Yahoo!, did just fine in its debut. It's a leader. Pay a premium.

These rational reactions actually restore some faith in the investors that are showing they won't chase anyold.com.

A peak at Renaissance Capital's worst IPOs for 1999 list reveals the following names: iTurf (Nasdaq: TURF), Onemain.com (Nasdaq: ONEM) and Fashionmall.com (Nasdaq: FASH). Does that trio deserve your hard-earned cash? Didn't think so.

That's common sense. Nice to see it in the IPO market.