The successful bidders for Google shares won't be the only ones watching eagerly to see how much the IPO excites the stock market. Dozens of dot-com companies are hoping that Google's initial public offering marks a reawakening of all things Internet.
In the months since Google announced it would sell stock to the public, more than 150 companies have said they plan IPOs, despite the rocky economy and slumping stock market. Others, with names like Kelkoo SA and Advertising.com Inc., are opting to sell themselves to bigger companies offering huge wads of cash.
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Gambling on Google: Dot-coms hope Google's IPO will spark new interest in tech. This chart tracks IPOs launched before and after Google's announcement.
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Like a flashback to 1999, a Boston man recently pocketed $2.75 million for selling rights to a Web address -- www.creditcards.com -- to a company called Click Success LP. IPO shares in Internet software pioneer Salesforce.com Inc. soared 56 percent on the first day of trading.
Although Google and Salesforce.com report healthy profit, the list of money-losing technology companies hoping to ride Google's coattails is quite long. PlanetOut Inc., a Web service for gays; ZipRealty Inc., an online real estate service; WebSideStory Inc., a site traffic analyst; and SmartBargains Inc., an Internet liquidator, are among the nearly two dozen Internet businesses that have never had a profitable year but nevertheless have filed with the Securities and Exchange Commission to sell shares to the public.
"It's buyer beware," said Sal Morrealle, an analyst for the brokerage firm Cantor Fitzgerald LP in Los Angeles.
Peter S. Fader, a professor at the Wharton School of the University of Pennsylvania, said some companies treat their IPOs more like a marketing opportunity than a capital-raising exercise. Buying these stocks "is no different than betting on what the temperature is going to be in Tuscaloosa tomorrow," he said.
The flood of activity comes partly from venture capitalists stirring again, including those trying to recoup a portion of the billions of dollars they lost when the Internet bubble burst in 2000, analysts say. Many used their remaining money to nurse Web survivors during the past four years, when investors largely shunned Internet stocks, and now they are pushing to take those companies public. They're making plenty of new bets, too. Venture funds spent $10.6 billion in new investments in the first six months of this year, up from $8.9 billion over the same period last year.
Investors are "picking up the rubble of the dot-bomb and putting some good pieces back together," said Crawford Del Prete, senior vice president for research at IDC, a technology research firm.
Some venture investors have been able to cash out as bigger companies line up to buy the smaller companies they had backed.
Just in the past few weeks, South Korea's top Web site operator, Daum Communications Corp., said it would fork over $95 million to acquire the American Web sites of Terra Lycos SA. Viacom Inc. vowed to pay $46 million for the part of Sportsline.com it did not already own. International Business Machines Corp. bought software maker Cyanea Systems Corp., and America Online Inc. bought anti-spam vendor Mailblocks Inc.
