The market for initial public offerings is back with a flood of hot offerings set to debut this week. Blue Martini Software and Interland, two companies that play in hot markets, could emerge from the pack.
Blue Martini, a customer relationship software vendor, is expected to price 7.5 million shares between $16 and $18. The company, expected to trade Thursday, raised its range from $11 and $13. Goldman Sachs is the lead underwriter.
So why will Blue Martini's IPO probably do well? Aside from a nifty name, Blue Martini plays in a hot space that isn't too crowded -- yet. The company's software targets customer "touch points", such as Web sites, mobile wireless devices and online trading exchanges, as well as traditional venues such as stores and call centres.
If Blue Martini's software sounds vaguely familiar that's because some big name companies also play in the same area. Blue Martini lists BroadVision, E.piphany and Vignette as competitors. Other likely foes include companies such as i2 Technologies and Oracle.
Blue Martini has 35 customers, including Levi Strauss, Harley Davidson and pure play dot-coms such as ibeauty.com. Levi and Deluxe accounted for 19 percent each of Blue Martini's 1999 sales, with Harley Davidson accounting for 10 percent.
For the quarter ending March 31, revenue of $10.7m nearly equaled the company's entire 1999 sales tally. The company did lose $11.6m for the March quarter, and sees losses on "a quarterly and annual basis for the next few years". Given the company's market, investors are likely to swap profits for growth.
Blue Martini said one of its big goals is to expand abroad. Currently nearly all of the company's sales are in the United States. The company said it is planning offices in the United Kingdom and elsewhere in Europe, Asia and Latin America.
Blue Martini also said its IPO funds would be used to expand sales and marketing, and boost consulting services, training and customer support functions, and software development.
Interland, scheduled to trade Tuesday, is another IPO that could do well this week. Interland provides Web and applications hosting to small to medium-sized businesses. The company is expected to price 5 million shares between $12 and $14 with Bear Stearns as the lead underwriter.
Although Interland plays in a crowded space, its competition has held up well on Wall Street. Primary competitors to Interland include Exodus, Interliant, Globix, Data Return, USInternetworking and Verio, which was recently acquired.
Interland, which offers hosting on the Microsoft NT and Red Hat Linux platforms, will count Bell Atlantic, now trading as Verizon, Microsoft and Network Solutions as shareholders concurrent with the IPO. The company said it will invest heavily in sales and marketing, network infrastructure and international expansion.
For the three months ending 31 March, Interland reported a loss of $10.7m on sales of $6.26m. Most of the company's revenue comes from hosting services, but that will change as application services sales grow. Although revenue has been growing rapidly each quarter, the company expects to "incur substantial losses for the foreseeable future".
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