US Web IPO hopes to capitalize on Internet popularity
US Web Corp. on Tuesday filed an initial public offering in the hopes of parlaying the rising popularity of Internet stocks into some much-needed capital.
Officials said US Web expects to raise $63 million for future acquisition costs, working capital and general purposes, according to the company's filing with the Securities and Exchange Commission.
The firm, based in Santa Clara, Calif., provides intranet, extranet and Web-site services for corporations.
"Obviously it's a good time for Internet companies to go public because the Internet stocks have been white hot," said Ryan Jacob, an analyst at IPO Value Monitor. "People's expectations are much higher for these companies now and more investors are believing in them."
US Web plans to be listed on the NASDAQ exchange under the ticker symbol USWB.
The company has not made a profit since its founding in December 1995, but Jacob said that wouldn't have much impact on the IPO.
"When Yahoo! posted its first profit in January, that proved Internet companies were for real and could eventually become profitable," he said. "That got the ball rolling."
In its second quarter, US Web reported an operating loss of $10.1 million on sales of $4.3 million. It lost $8.3 million on sales of $2.8 million in the year-ago period. As of July 1997, US Web had an accumulated deficit of $35.1 million and company officials expect substantial operating losses through 1998.
In the past two years, US Web has snatched up eight competitors and affiliates, and it plans to purchase five more. It has 50 affiliates and offices in 28 states providing a full range of Internet services for clients such as Charles Schwab, Microsoft Corp. and Silicon Graphics Inc.
The lead underwriters are Hambrecht & Quist, Donaldson Lufkin & Jenrette, Wessels, Arnold & Henderson and First Albany.