In one of this year's biggest Internet takeovers, Yahoo paid $579 million in cash for Kelkoo, a comparison-shopping Web site based in Paris. And America Online plunked down $435 million to buy Baltimore-based Advertising.com, which had filed for a stock offering.
The IPO market also started the year strong, though it has cooled markedly in the past few weeks. So far this year, 146 U.S. companies have sold initial shares to the public, more than the total for all of 2003, according to Thomson Financial. Although 200 more have registered to sell shares, at least 11 companies recently pulled back from those plans, citing the lousy stock market. The tech-heavy Nasdaq composite index is off 10 percent for the year.
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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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Most of the companies that have launched IPOs this year are small but sturdy companies created before the market crash in 2001. "These are companies with good revenue curves and profitability as a general rule," said David Menlow, president of IPO Financial Network, which analyzes public offerings.
But, he said, "that doesn't mean that a couple of deals cannot ride on the coattails."
WPT Enterprises Inc., a reality TV company that produces sports-style coverage of poker games, sold its first shares to the public last week even though it is just two years old, has 10 employees and lost almost $500,000 last year. Company officials declined to comment.
Another money-losing company aiming to go public is Odimo Inc., an online jewelry vendor run by a married couple whose previous job was producing infomercials for psychic hotlines.
Andrew Miller, the Boston entrepreneur whose company, Deal Jam LLC, recently sold the Creditcards.com name to Click Success, is hoping the Odimo IPO comes off. That's because in 2000 he sold the Web address www.diamond.comto Sunrise, Fla.-based Odimo for some cash and shares of the company.
"They were six days from an IPO when we sold the name to them," Miller said. Odimo pulled the earlier offering when the market went south; Miller has been sitting on his shares ever since.
Odimo sells high-end watches, handbags and diamonds from its Web sites, including Diamond.com, Ashford.com and WorldofWatches.com. Industry analysts estimate the market for luxury goods sold online is $2 billion a year. Still, Odimo lost $11.6 million in 2003 on sales of $41.7 million.
That is not the only item in Odimo's regulatory filings to raise eyebrows. Among the risks Odimo disclosed was that it may "inadvertently sell counterfeit or stolen goods" because it acquires most of its watches and luxury goods through the gray market, rather than from manufacturers or authorized distributors. Handbag designer Prada SA sued the company in March, accusing it of selling counterfeit wares.
