By Stephen Phillips A quartet of promising e-commerce and internet software firms rode the resurgent net IPO investor market to stellar valuations on Wednesday and Thursday after launching initial public offerings of shares on Nasdaq. Kana Communications Inc, Egain Communications Corp, E.Piphany Inc and Broadbase Software Inc are seen as well placed to scoop rich […]
By Stephen Phillips
A quartet of promising e-commerce and internet software firms rode the resurgent net IPO investor market to stellar valuations on Wednesday and Thursday after launching initial public offerings of shares on Nasdaq. Kana Communications Inc, Egain Communications Corp, E.Piphany Inc and Broadbase Software Inc are seen as well placed to scoop rich pickings in their respective online market niches. All three are currently loss-making in line with most net firms stuck in spending mode to secure future business share.
Two of the four stocks were placed in the Nasdaq top-twelve of most actively-traded stocks over the two days showing how net firms have once again captured investor imagination amid unsteady US interest rates and following recent wariness.
But John Fitzgibbon, seasoned IPO analyst at tech stock watcher, Redherring.Com, counseled against basing too much on Wednesday’s valuations. It’s not a question of one company being better than another. It doesn’t matter what they do – it’s just an investment feeding frenzy (at the moment), Fitzgibbon told ComputerWire.
The day’s most spectacular performer was Kana Communications, a maker of software for business users to manage customer email, which trebled its share price. Palo Alto, California-based Kana’s share price put on 243% from its opening rate of $15 to close at $51.50 .The firm reaped $49.5m from its offering of 3.3 million shares representing a 12% stake. Industry watcher, Garner Group, estimates that firms will receive 25% of customer inquiries via email and other web-based forms by 2001 but says that most have not seriously begun to address this growth. Kana Director, David Beirne, from top technology recruiter, Benchmark Capital is seen as one of firm’s top assets as it vies for premium programming talent. Kana posted total revenues of $3.6m and a net loss of $9.9m for the six months ended June 30. It boasts a client roster including eBay, the Gap Inc and Northwest Airlines in its second operational year.
Kana’s successful debut had all eyes on email services rival Egain Communications Corp, which floated on Nasdaq yesterday. Sunnyvale, California-based Egain threw off an otherwise sluggish market by peaking at a share price of $34.50 before ending the day at $23. The firm offered five million shares at $12 generating $60m to advance its quest to claim a cut of an e- commerce market it values at $500bn by 2001. If 1% of that is devoted to servicing customers, you could end up with a $5bn market just for customer service, bullish vice president Bob Apollo told the Reuters news agency yesterday.
The firm has smaller revenue figures than Kana, ringing in at around $1m. But it attributes this to a different revenue model under which it draws a greater proportion of revenue than Kana from leasing applications to clients over the web on an outsourced basis rather than up-front license fees. The firm made a loss of $11.3m last year.
Another impressive market debut on Wednesday was E.Piphany, a provider of software tools to enable businesses to customize their relationship with customers in e-commerce and traditional sales channels. San Mateo, California-based E.Piphany saw its share price appreciate in value by 182% from $16 to $45.2. The firm raked in $66.4m from its issue of 4.15 million shares.
E.Piphany faces strong competition from the likes of Brio Technology Business Objects SA, Oracle Corp, Siebel systems Corp and PeopleSoft. But it has already chalked up deals with the e- business wings of Hilton Hotels, DirecTV and Hewlett-Packard, among others, to mark out its stake in a competitive market place. For the six months to June 30 E.Piphany reported a net loss of around $9.3m.
Broadbase Software also staged an impressive entrance, Wednesday. The maker of internet customer management and analysis software saw its $14 offer price appreciate by 86% to around $26 at close of trading on Wednesday. Menlo Park, California-based Broadbase raised $56m from the 4 million share float, which accounted for 23% of its outstanding stock.
