The unstable market for Internet stocks is not only hammering the Washington region's established Net companies, but also dangling a club over two new Maryland dot coms that are planning to go public.
Powerize.com of Linthicum and Americasdoctor.com of Owings Mills filed the first drafts of their IPO documents a few weeks ago, when demand for Internet stocks was just starting to soften.
Now the market has turned to mush. At the very least victims of bad timing, the two Internet infants may have to wait for the Net stock situation to stabilize before they can complete their offerings.
But the damage could develop into more than a mere delay. With the downturn in the market, investors have become increasingly selective about which Net stocks to buy. All they want are the "killer apps" -- companies that have created a new application for the Web, an Internet original nobody else can match.
As BancBoston Robertson Stephens Internet analyst Keith Benjamin pointed out in his weekly market comment on Friday, "the highest valuations have been paid to those companies attacking the biggest market opportunities with the widest leadership positions."
Neither of the pending local Internet IPOs seems to meet that standard. Americasdoctor.com dispenses medical information that already is as easy to find on the Web as a CVS store on a street corner. Powerize.com's commodity is business information, another niche awash in competition.
Powerize.com, which lost $3.2 million last year on revenue of $330,000, plans to sell 2.875 million shares at between $10 and $12 a share. Americasdoctor.com registered 7.25 million shares with a target price of $8 to $10. Originally on America Online, Americasdoctor.com took in only $62,000 in 1998, but in the first half of this year it generated $546,000 in revenue while losing $12.8 million.
Americasdoctor.com is an Internet intern in a medical complex already served by a pair of much-admired practitioners.
The Marcus Welby of the medical space is Intellihealth.com, a joint venture of Johns Hopkins University and Aetna US Healthcare.
The online equivalent of George Clooney's studly Dr. Ross is Drkoop.com, which hired the esteemed former surgeon general to create instant name recognition. Drkoop.com went public in June at $9 a share, and even after last week's relapse it is selling for almost twice its IPO price.
Americasdoctor.com claims two medical site breakthroughs -- affiliations with local hospitals (80 around the country so far) and a chance for a quick online chat with a doctor. State your symptoms in 255 characters or less, and you get a doctor's response that is, of necessity, equally terse. Diagnosis it is not, the on-screen disclaimer emphasizes. Practicing medicine without seeing patients is not permitted by medical watchdogs, nor can the site send you to a particular doctor.
But Americasdoctor.com can link patients to local hospitals that in turn can refer them to physicians. Hospitals pay to be co-sponsors of the site, showing up on the screens of callers from their area and incorporating Americasdoctor.com as adjunct to their own Web sites.
The site can be searched by subject matter, and it yields crisp, plain-English statements on many common conditions -- though not as many as Drkoop.com or Intellihealth handle. There's also an index to medical journal articles, if you're an HTML hypochondriac.
A couple of visitors to the site recently found it can be an all-too-authentic medical experience, like showing up at the pediatrician's office without an appointment. After waiting and waiting, one colleague never did get to ask her question.
I tested the water with a toenail fungus question and found that the search engine on Americasdoctor.com had never heard of the ailment. Only after I determined from Drkoop.com that the medical term for the condition is onychomycosis did Americasdoctor.com recognize the subject. Then it yielded only medical journal articles.
Drkoop.com came up with an entry on nail fungus faster than you can recite "This little piggy . . ." The cause and treatment were detailed, the standard oral medication specified and the symptoms displayed in living, infected color.
The online duty doc at Americasdoctor.com gave a response that was adequate but no more enlightening than the search engine's. Treatments included an unnamed oral drug, the doctor said, or the diseased nail could be "ablated." That term was defined upon request, and there quickly followed a polite but implicitly impatient message about whether I had found what I needed.
Another colleague asked a more ominous question about the prognosis for a child born premature with a specific complication. After a delay, during which the doctor said he was researching the question, the reply came: "The mortality rate for that diagnosis is 10 to 20 percent. Is there something else I can help you with today?"
My diagnosis: Online consultation is cool, but if you want to know whether the problem with your toe is nail fungus, ask Drkoop.com to show you the pictures.
I had an even stronger feeling that there were better sources of information on the Web after visiting Powerize.com, which is scheduled to have a new, improved version of its business and investment information Web site up this fall.
On this topic, I confess to being a spoiled, money-is-no-object, professional power user -- not the audience Powerize.com professes to serve. It targets serious individual investors, small companies that can't afford the Fort Knox of data banks and people at bigger firms who don't regularly pan for corporate nuggets.
My first choice for data on companies I write about is Bloomberg News. Pumping down a high-speed data line, Bloomberg can instantly provide the price of every stock ever traded, on any day. It pops up day-by-day corporate chronologies -- every news story, press releases, Securities and Exchange Commission filings and analyst recommendations. Add news wires, stock tickers, analytical tools and menu after menu of other corporate data, and you'll understand why Mike Bloomberg is a megamillionaire.
I also depend on Disclosure, which can find needles in the haystack of documents filed with the SEC; on Lexis-Nexis, the Lexus of online libraries; and on Dow Jones News Retrieval, as much a Wall Street institution as the Dow Jones industrial average.
Those services cater to professionals for whom knowledge is power or profit and paying top dollar for data is just a cost of doing business. The e-traders have their own cybermavens: Marketwatch.com and Smartmoney.com, which are free; TheStreet.com, which costs $100 a year; Hoovers Online at $110 annually; and a host of others.
Powerize.com wants to weave its way between those two markets. Instead of corporate licenses and subscriptions, it sells much of its information on a pay-per-view basis. You can get a one-paragraph description of a company free, but a Nelson's corporate profile will cost you $1.95. An analyst's report? That'll be $3.95.
None of this information is created by Powerize.com, which is what's called an "aggregater." It collects stuff from thousands of sources -- research services, data providers, industry magazines.
Though it may be the only way to get Internet access to some of its data, Powerize.com is no killer ap, nor is Americasdoctor.com. Both could mature into viable businesses, but the market has not shown much interest in other recent IPOs of mid-Atlantic Internet companies pursuing similar middle-market, me-too strategies.
Since their IPOs early this spring, investors have suffered big losses on CareerBuilder Inc., one of several online employment agencies; Value America, which has yet to distinguish itself from other online merchants; CAIS Internet, yet another high-speed-access company; and OneMain.com, an Internet service targeting small towns.
The proliferation of such second tier Internet IPOs is a symptom of this stage of the Net boom, analysts say. It has been easy for entrepreneurs with unproven concepts to raise capital, but now there are too many of them. Failure and consolidation are inevitable. When the final act of the Internet drama begins, the bit players will be bought up or bite the dust.