IQ News: DoubleClick IPO: Is Web Still a Wall St. Darling?





With one of the most-watched initial public offerings in the interactive industry now slated to break next week, DoubleClick, New York., may have the force with it–market forces, that is.
A generally positive disposition among industry analysts has almost completely eclipsed initial pessimism surrounding DoubleClick’s December IPO filing. As the company today begins its requisite “road show” pitch to institutional investors, other closely held firms no doubt will be following the offering as a bellwether of Wall Street’s willingness to fund Internet expansion.
“I think [the IPO] will be very well-received,” predicted Ryan Jacob, director of research for IPO Value Monitor, a New York-based market research firm. DoubleClick seeks to raise net proceeds of $29.5 million, assuming the stock opens at $13, to fund global expansion efforts and hiring.
After a sluggish start, Internet companies that have gone public over the past two years have shown impressive success on Wall Street: Amazon.com, Yahoo, Excite and Lycos have all seen their stock value jump by more than 400 percent in 1997, according to Manish Shah, publisher of IPO Maven, a New Jersey-based research investment firm for institutional investors. On Jan. 30, Verisign, the Mountain View, Calif.-based company that specializes in encryption software for Internet transactions, went public at a share price of $14; by early last week it had ballooned to over $36. A successful kickoff by DoubleClick could mean a surge in IPOs by Internet advertising specialists and other interactive companies.
“All the Internet-based branded properties, the ones that are most well-known, have done very well,” said Shah.
DoubleClick’s filing did point to some possible rough spots. As with most Web reps, most of its contracts are short-term, and the firm is heavily reliant upon sales from a handful of sites in its network. Digital Equipment Corp.’s AltaVista search engine alone made up some 43 percent of DoubleClick’s $30.6 million in revenue in 1997. That contract was recently extended through 1999 and will survive for at least the next six months should new Digital owner, Houston-based Compaq, wish to cut ties with DoubleClick.
DoubleClick doesn’t expect to turn a profit until at least 1999, if not later, according to its filings.