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Net spawns new IPO wave
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April 18, 1999: 8:08 p.m. ET
Several Web sites and consultants set to launch stock offerings this week
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NEW YORK (CNNfn) - The Internet is returning to the IPO market with a vengeance this week, with seven of 10 companies in the pipeline coming from the trendy online sector.
Four Web solutions providers and two Web site operators are scheduled to join Internet service provider Log On America, which repeatedly has pushed its debut back over the last few weeks.
Keeping Net investors singing
Both Web sites are geared toward the music industry, a staple on the entertainment-saturated Internet.
The first, Musicmaker.com, takes advantage of digital compression formats to allow customers to mix and match from a catalog of 150,000 songs, which the company then burns onto a customized CD. Or the customer may download songs directly over the Internet.
Demand for the company's product has proved limited so far, bringing in only $74,000 in revenue for all of 1998, while massive technological start-up costs have led to a $4.6 million operating loss over the same period.
However, growing consumer and corporate interest in digital music distribution should only serve to boost demand for Musicmaker.com's music downloads. IBM (IBM) and Sony (SNE) announced a collaboration last week to build digital music solutions, and major record labels are likely to jump on the bandwagon sooner or later.
As for the sticky issue of copyright control, Musicmaker.com stressed that all of its products are protected against illicit duplication, and that all use of proprietary musical content is licensed from the record labels themselves. The company plans to use part of the proceeds from its stock offering to pay licensing advances to some of the 85 record labels it currently represents.
Lead underwriter Ferris, Baker Watts plans to take the company public under ticker symbol "HITS," pricing 3 million shares between $7 and $9.
The second music-oriented Web site on tap this week is Launch Media, which provides music news, reviews and advertising to a readership of approximately 850,000 Web surfers and 275,000 CD-ROM subscribers.
The company aggressively promotes "new music" from breaking or "alternative" artists, wooing the attractive teen-age demographic in particular.
Launch Media hits Wall Street's charts sometime this week with a launch of 3.4 million shares, priced between $12 and $14, under ticker symbol "LAUN."
The rest of the Nets
Elsewhere online, Internet consulting firm iXL Enterprises is floating 5.2 million "IIXL" shares priced at $10 to $12. The company provides a wide array of Internet advice and solutions to several Fortune 1000 companies among others, enticing big-name Wall Street underwriters including Merrill Lynch and BB Robertson Stephens to give the deal their seal of approval.
Fellow debutante Proxicom is a direct competitor, selling Internet solutions. With annual revenue of $42.4 million, Proxicom is half the size of iXL, but lead underwriter BT Alex. Brown is betting on the smaller firm's distinctive methodology and support structure to keep the deal competitive. The company will price 4 million shares under ticker symbol "PXCM" at a starting level of $10 to $12.
Net Perceptions is also in the business of selling Internet expertise, but unlike either iXL or Proxicom, this third would-be IPO has specialized its focus to electronic commerce. According to forecasts, the e-commerce market will soar to over $400 billion in the next three years as more and more retailers start taking orders online, and Net Perceptions expects to surf that explosive growth.
Among the company's major clients are such familiar Wall Street names as Barnes & Noble 's (BKS) online unit barnesandnoble.com, CDNow (CDNW), Egghead.com (EGGS) and Ticketmaster Online (TMCS).
Net Perceptions' initial launch will consist of 3.65 million shares, underwritten by BankBoston Robertson Stephens and pricing between $10 and $12. The company has decided to trade under ticker symbol "NETP."
Mpath Interactive is the last and most distinctively "Webby" of the week's seven scheduled Internet IPOs. Unlike online retailers, which resemble traditional merchants, or content providers, which resemble traditional media, Mpath is a "community provider," which means it offers users a forum for self-expression and socialization.
As such, the company most closely resembles Internet competitors Xoom.com (XMCM) and Geocities (GCTY), as well as Lycos (LCOS) unit Tripod.
As with Net Perceptions and iXL, BankBoston Robertson Stephens is also an underwriter of this deal. Mpath expects to raise $46.8 million on the auction block when it goes public, selling 3.9 million "MPTH" shares between $10 and $12.
Is the world offline shrinking?
Beyond the tempest of Internet offerings in the pipeline, investors have only a limited selection of deals to choose from.
The first, third-ranked art auction house Butterfield & Butterfield, is a holdover from last week. Although the name does not yet carry the seductive ring of online auctioneers eBay (EBAY)or uBid (UBID) for investors, the company is hoping its expanded Internet auction capabilities will change that soon.
Otherwise, Italian restaurateur Buca may add spice to the IPO market for traders weary of Web sites. The company operates 20 Buca di Beppo theme restaurants modeled after "the decor and ambiance of postwar Italian/American restaurants," and plans to go public with 2.5 million shares at a starting level of $10.50 to $12.50. Its proposed ticker symbol is, of course, "BUCA."
Finally, closeout home retailer Tuesday Morning is gearing up to price 5.515 million shares -- the biggest offering of the week -- at $15 to $17. The company has grown dramatically over its quarter-decade of life, and now operates 354 stores that bring in $396 million annually.
Unique among the companies in the pipeline this week, Tuesday Morning is profitable, earning $13 million last year. The company plans to use proceeds from its float to redeem some of its corporate debt and redeem all outstanding internal preferred stock. Its ticker symbol will be "TUES." 
-- by staff writer Robert Scott Martin
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