Buy.com, Palm Inc. IPOs to Highlight 1st Quarter

California companies will again take center stage in the initial public offering market in 2000, with first-time stock sales by an online superstore and a maker of hand-held computers expected to be among the best performers.

Perhaps the first quarter’s most anticipated initial public offering will be 3Com Corp.’s spinoff of Palm Inc., the Santa Clara maker of the Palm Pilot. An IPO from Buy.com Inc., the Aliso Viejo online retailer, will also be watched closely, analysts said.

While pricing dates can always change because of market conditions and other factors, California IPOs to watch for in the coming weeks include Lightspan, a San Diego maker of educational software; Extensity Inc., an Emeryville-based provider of work-force-related software; Vicinity, a Palo Alto provider of Internet marketing services; L90, a Santa Monica provider of online advertising; and Carpinteria-based ValueClick, another Web ad firm.

But the IPO star from Southern California early this year could well be Buy.com, analysts say. This Orange County Internet superstore sells everything from computer hardware and software to books, videos and DVDs. With its slogan “The Lowest Prices on Earth,” the company pioneered the idea of trying to make money solely from selling advertising on its Web site while selling products at or below cost--in other words, virtual loss leaders--to lure traffic there.

The company expects to raise as much as $168 million in its offering through lead underwriter Merrill Lynch & Co. It will trade under the ticker symbol BUYX on Nasdaq. The company plans to sell 14 million shares at $10 to $12 each during the week of Jan. 17.

Since its formation in 1997, the company has sold to more than 1.3 million customers, nearly 400,000 of whom were added in this year’s third quarter. By comparison, online retail king Amazon.com Inc. has nearly 11 million customers.

It’s the, uh, making money part of Buy.com’s business plan that has proved to be tricky: The company posted an $80.5-million loss for the first nine months of this year, although revenue surged to $397.6 million from $63.8 million in the year-earlier period.

“These guys cover everything and they get a lot of publicity,” said Tom Taulli, analyst with Internet.com, a data firm in Westport, Conn. “They are trailblazers in the Internet retail space.”

Some analysts were concerned about news last week that one of Buy.com’s publicly traded online retail competitors, Value America Inc., said it will post weak results for the fourth quarter and slash nearly half of its work force of 300.

Value America, based in Charlottesville, Va., was an IPO darling just eight months ago, but has been plagued by management shake-ups and shipping problems. The company, which sold a wide mix of products when it went public, said last week it will narrow its focus to computers and related products. The company’s stock closed at $5.06 on Friday, down 93% from its April peak.

“I do think this highlights the competitive disadvantages of companies in this space and the importance of brand recognition,” said Steve Lacey, managing editor of IPO Reporter in New York.

Japanese investment giant Softbank Corp. owns a major stake in Buy.com, as does company founder Scott Blum, who resigned earlier this year to set up a venture capital fund. The new chief at Buy.com is Gregory Hawkins, a former executive with computer distributor Ingram Micro Inc.

Palm’s offering could fare even better than Buy.com’s, some analysts said.

“It will be huge,” Lacey declared.

Palm is the leading global provider of hand-held computing devices--including the Palm III, the Palm IV and the latest version, the Palm VII, which offers access to the Web. The company has about 68% of the hand-held-computing market.

Its $100-million deal, expected in late February, is being led by Goldman, Sachs & Co. Palm, which expects to trade under the symbol PALM, has not yet filed an expected per-share price range or share amount.

The company’s revenue has risen from $1 million in fiscal 1995 to $564 million in fiscal 1999, ended May 29. How’s this for a tech IPO: It’s profitable, with $29.6 million in net income for fiscal 1999, compared with $4.1 million for fiscal 1998.

“Palm will be on fire,” Internet.com’s Taulli said. “I’ve got a Palm VII and that’s all you need to know. I can’t live without it.”

But it’s not just the Palm Pilot that has analysts so enthused. They also point to Palm’s wireless operating system, which it is licensing to various companies, most recently Nokia Corp. and Sony Corp. More than 20 companies are developing products, such as city guides and global positioning systems, based on the system.

The other California deals to watch early in the year include:

* ValueClick Inc. (VCLK), which works with online advertisers. The company has software that tracks CPC, or “cost-per-click,” technology, in which an advertiser pays only when an Internet user clicks on its banner ad. ValueClick has filed to sell 5 million shares at $9 to $11 each. The company expects to raise about $50 million next week through investment banker Volpe Brown Whelan & Co.

* A $57-million IPO from ImproveNet Inc. (IMPV) of Redwood City, an Internet source for home-improvement information and services. Led by investment bank Credit Suisse First Boston, this will be among the first in a wave of expected offerings from furniture- and home-related sites, and many investors will be watching closely to see how it fares. The company, which expects to go public in February, has yet to file a share-price forecast.

“This will be an important barometer,” Lacey said. “It will be interesting to see if it’s another Martha Stewart.com.” Martha Stewart Omnimedia Inc. was a good thing--at least at first--nearly doubling in its October trading debut before cooling off lately.

* An $82.5-million IPO from Lightspan (LSPN), a developer of curriculum-based software that can be sold to schools and parents, also being led by CS First Boston. Lightspan expects to sell 7.5 million shares at $10 to $12 each during the week of Jan. 24.

* A $55-million deal from Vicinity (VCNT), an e-tail marketing service that helps big companies such as Home Depot drive Web traffic to their bricks-and-mortar stores. In the J.P. Morgan & Co.-led deal, Vicinity expects to sell 5 million shares at $10 to $12 each the week of Jan. 24.

* And a $36-million offering from Extensity (EXTN), whose software is designed to improve worker productivity. One product, for example, helps workers keep track of expenses. It expects to sell 4 million shares at $8 to $10 each in February. The deal, led by Deutsche Banc Alex. Brown Inc., could do well, Lacey said, noting keen interest in the business of workplace software.

Times wire services were used in compiling this report. Remember that initial public offerings are highly speculative and not suitable for all investors. Staff writer Debora Vrana covers investment banking and the securities industry for The Times. She can be reached at debora.vrana@latimes.com or at Business Section, Los Angeles Times, Times Mirror Square, Los Angeles, CA 90053.

(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)

Tracking the Deals: Upcoming California IPOs

A look at initial public stock offerings planned by California companies. For moe information on upcoming deals, contact the companies or the underwriters. Note: Most of the companies and underwriters have Web sites you can visit.

Company: B2stores.com

Ticker symbol: BTBC

City: Long Beach

Industry: Business e-commerce

Size, in millions: $35

Est. share price:$10

Underwriter: Gaines Berland

Est. week: 1/10

Company: Biomerica

Ticker symbol: BMRA

City: Newport Beach

Industry: Medical products

Size, in millions: NA

Est. share price: NA

Underwriter: EBI Securities

Est. week: 1/10

Company: L90

Ticker symbol: LNTY

City: Santa Monica

Industry: Online advertising

Size, in millions: 66

Est. share price: 10-12

Underwriter: SG Cowen

Est. week: 1/10

Company: OrganicNet

Ticker symbol: OGNT

City: San Francisco

Industry: Health software

Size, in millions: 28

Est. share price: 9-11

Underwriter: Needham & Co.

Est. week: 1/10

Company: ValueClick

Ticker symbol: VCLK

City: Carpinteria

Industry: Online advertising

Size, in millions: 50

Est. share price: 9-11

Underwriter: Volpe Brown

Est. week: 1/10

Company: Buy.com

Ticker symbol: BUYX

City: Aliso Viejo

Industry: Online retail

Size, in millions: 154

Est. share price: 10-12

Underwriter: Merrill Lynch

Est. week: 1/17

Company: Neoforma.com

Ticker symbol: NEOF

City: Santa Clara

Industry: Business services

Size, in millions: 63

Est. share price: 8-10

Underwriter: Merrill Lynch

Est. week: 1/17

Company: VantageMed

Ticker symbol: VMDC

City: Rancho Cordova

Industry: Health-care info

Size, in millions: 30

Est. share price: 9-11

Underwriter: Advest

Est. week: 1/17

Company: Vicinity

Ticker symbol: VCNT

City: Palo Alto

Industry: Online marketing

Size, in millions: 55

Est. share price: 10-12

Underwriter: J.P. Morgan

Est. week: 1/24

Company: Lightspan

Ticker symbol: LSPN

City: San Diego

Industry: Educational software

Size, in millions: 83

Est. share price: 10-12

Underwriter: CS First Boston

Est. week: 1/24

Company: Palm

Ticker symbol: PALM

City: Santa Clara

Industry: Hand-held computing

Size, in millions: 100

Est. share price: NA

Underwriter: Goldman Sachs

Est. week: NA

Company: ImproveNet

Ticker symbol: IMPV

City: Redwood City

Industry: Home improvement

Size, in millions: 57

Est. share price: NA

Underwriter: CS First Boston

Est. week: NA

Company: Extensity

Ticker symbol: EXTN

City: Emeryville

Industry: Workplace software

Size, in millions: 36

Est. share price: 8-10

Underwriter: DB Alex. Brown

Est. week: NA

NA=not available

Source: IPO Financial Network (https://www.ipofinancial.com)