Shares Soar For 2 Web Firms
Everyone loves a get-rich-quick story. You could have gotten rich on some of the Internet stocks if you had invested in one of the companies that soared in initial public offerings on Thursday. A third web-based firm enjoyed a respectable debut as investors shrugged the months-long slide in Internet stocks.
Another two companies that went public Thursday received a less enthusiastic response.
But investors warmly welcomed the holding company Internet Capital Group by bidding shares up more than 100 percent, from an offering price of $12 to $24.43.
Houston-based Mission Critical Software, a provider of network management software, was the other star performer. It rose 58 percent from its $16 offering price to $25.43.
Considered almost invincible early this year, online stocks appeared to have reached their peak in April, when the luster began to wear off for investors. The 40-stock Dow Jones Internet Index has shed more than 40 percent of its value since it hit an all-time high on April 13.
On Thursday, however, the index rose 4 percent, while both the technology heavy Nasdaq composite and Dow Jones industrial average posted gains.
"It was a great day for Internet Capital and a validation for the business of e-commerce and the role it's going to play in our economy over the next five to 10 years," said Walter Buckley, chairman and chief executive for the Wayne, Pa.-based company.
The company holds interests in 35 web-based companies. Proceeds from the stock sale will be used to increase those holdings and invest in new ventures, Buckley said.
Another Internet company, HomeStore.com, a Thousand Oaks, Calif.-based provider of online real estate listings, rose to $22.75 from its $20 offering price.
HomeStore had doubled its asking price Wednesday, despite the recent bashing of Internet IPOs, on advice from chief underwriter Morgan Stanley Dean Witter.
"We raised a significant amount of capital. We're going to use that to keep growing," said HomeStores chairman and chief executive Stuart Wolff.
The market was tougher on Interactive Pictures Corp., a multimedia company based in Oak Ridge, Tenn., slid initially from its $18 asking price to $17.75 before finishing at $19.
Cobalt Group opened at $9.87, below its $11 asking price. Shares closed at $8.31 for the Seattle-based company that designs and maintains web sites for more than 3,000 auto dealerships nationwide.
Internet Capital's success may have resulted more from investor uncertainty than resurging confidence in the web sector, said Brian G. Belski, chief investment strategist at George K. Baum & Co. Because the company invests in a wide range of Internet stocks, investors don't face the risk of trying to pick a winner themselves.
"It's almost like buying a basket or a mini-mutual fund. They're diversifying their risk," he said.
The mixed response to Thursday's five IPOs aso suggests that investors have become more sophisticated in choosing web stocks. That sophistication means the volatility is likely to continue in the near term as investors try to sort out winners from losers.