Re:Digital Faces Tough Market for Spinoff of Altavista
CobraBoy (tbyars@earthlink.net)
Tue, 3 Sep 1996 11:14:50 -0700
:September 3, 1996
:
:Market Place: Digital Faces Tough Market for Spinoff of Altavista
:
:By LAURENCE ZUCKERMAN
:
:Dear Investor:
:
:Digital Equipment Corp. cordially invites you to finance its latest
:marketing
:campaign. In exchange, you will get to share some of the company's
:future
:losses.
:
:Sound like a promising invitation? That appears to be the pitch
:underlying
:Digital Equipment's decision to spin off Altavista Internet
:Software Inc., the
:division best known by Internet aficionados for software that uses
:key words
:to search for information on the World Wide Web.
:
:Last week Digital registered with the Securities and Exchange
:Commission to
:raise as much as $50 million by selling up to 20 percent of
:Altavista in an
:initial public offering. Digital and its lead underwriter on the
:deal, Lehman
:Brothers, have yet to disclose how many shares Altavista plans to
:issue and at
:what price.
:
:But given the performance so far of the four other Internet search
:companies
:that have gone public this year, it will not be easy for Altavista
:to command
:a premium, analysts say.
:
:"They are going to have a hard time generating excitement for
:Altavista,
:because anybody who bought into the other Internet search companies
:doesn't
:have a very good taste in their mouth," said Ryan Jacob, director
:of research
:at IPO Value Monitor, which researches initial offerings for
:institutional
:investors.
:
:All four of the new Internet search companies -- Yahoo Inc., Lycos
:Inc.,
:Infoseek Corp. and Excite Inc. -- are trading far below the peaks
:they reached
:on their first days of trading, and, with the exception of Yahoo,
:at a
:fraction of their offering prices.
:
:For example, Excite, which went public on April 3 at $17 a share
:and traded
:as high as $21.25 its first day, closed Friday at $5.75, up 25
:cents. Yahoo,
:which has traded as high as $43 a share since going public in
:April, closed
:Friday at $19.625, down 12.5 cents in Nasdaq trading.
What to me is amazing about this is that anyone would spend $20.00 a
share for a search engine.
And as I understand it AltaVista was done by a couple of guys. If I
had wrote it and they were taking it public for $50 million it would
leave more than a bitter taste in my mouth....
Tim
--
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"I beg your pardon!" said the Mouse, frowning, but very
politely: "Did you speak?" "Not I!" said the Lory hastily.
...Alice's Adventures in Wonderland by Lewis Carrol
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tbyars@earthlink.net