Investors Tune In?

The static is over. Seven months and two new underwriters later, NetRadio is finally slated to go public this week.

The static is over. Seven months and two new underwriters later, NetRadio is finally slated to go public this week.

The spin-off from music and software distributor Navarre originally filed to go public in early March with Everen Securities and Legg Mason Wood Walker as the underwriters. Everen was offering 3.33 million NetRadio shares in a price range of $11 to $13. In May, NetRadio was ready to hit the markets, but a merger between Wheat First Union and Everen Securities left NetRadio (proposed ticker: NETR) without a lead underwriter. Everen couldn't commit to getting the deal done with the merger on deck, a Navarre spokeswoman says.

Enter Gerard Klauer Mattison as the lead underwriter, with an assist from the Advest Group. NetRadio refiled in August, offering 4 million shares at $11 to $13 each. Not bad for one long-in-the-tooth offering.

Unfortunately, the passing of time doesn't make the NetRadio initial public offering (IPO) sound any better. NetRadio claims to be "a leading broadcaster of originally programmed audio entertainment," but its financials show a company that resembles a follower in online audio.

For 1998, NetRadio lost $3.97 million, but revenue was a mere $255,000. What's more alarming is the growth. For the last nine months of 1997, NetRadio's revenue was $163,000. For the first six months of 1999, NetRadio's sales picked up to $406,000. But the company lost $5.2 million in the same period.

The problem with delaying an IPO forever is that investors can track progress. In this case, the regulatory filings highlight slow growth. NetRadio cites Internet Profiles stats showing it had more than 1 million different users in August. That sounds impressive until you look at the March filing and see the company had 880,000 unique users in December 1998. In almost a year, it hasn't added 200,000 users.

NetRadio says its challenge is to grow brand and users. No kidding. It's a crowded field out there, and Yahoo!'s Broad-cast.com dominates. The company says it plans to leverage multiple revenue streams via e-commerce, audio and Web ads. News flash: Broadcast.com already has those revenue streams in a crowded field.

'"My advice to them would be to delay the offering again," says Francis Gaskins, editor of the Gas-kins IPO Desktop. "This is really a development stage company and should not go public."

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