Internet domain names head for big IPOsAaron Pressman
Back in June, I explored the exploding value of Internet businesses built on easily remembered domain names like chocolate.com. Since then, things have only heated up more with Business.com selling for $345 million in July and now at least three domain name firms have filed to go public.
The three have very different business models. Creditcards.com basically operates a single web site that helps consumers comparison shop for credit cards. The deal, led by underwriter Credit Suisse, would value the company at over $400 million. For the first nine months of 2007, revenue was up almost 50% to $45 million. But net income dropped to only $2 million from $15 million last year thanks to higher interest costs from a leveraged recap that benefited early investors. IPO proceeds should take care of some of that. The company is looking to price soon and will trade under the symbol “CCRD.”
NameMedia, which just filed last week, owns a few more names — 750,000 to be exact. Many are up for sale — sales brought in about half of revenues the past few years. Many are also plastered with ads to bring in pay-per-click revenue. Then the company says its developing a few great names into full-scale businesses, including Photography.com and Gardens.com. Revenue jumped 39% to $58 million in the first nine months of the year but, stop me if you’ve heard this one before, net income fell off a cliff to $160,000 because of higher interest costs. IPO proceeds will help again. I’m not sure how excited investors should be about a company that’s eating its seed corn so to speak to fund half of revenues — the far more profitable half, too, I’d bet. There’s no valuation details yet and this deal probably won’t price for a few months. The ticker is set to be “NAME.”
Finally, Internet Brands runs a hybrid model. They own basic names in 45 general categories like cars (see Ford-Trucks.com or Autos.com), travel (see Trekearth.com or cruisemates.com) and home improvement (no great seeming names here — mortgage101.com sounds like where wall Street CEOs should have hung out a few years ago). The IPO, run by Thomas Weisel, will value the company at almost $500 million and shares will trade under “INET.” Revenue was actually down a few hundred thousand dollars to $65 million for the first nine months of 2007 and the company produced a net loss of $2 million as operating costs shot up 21%. The company blamed declining auto advertising, which seems unlikely to pick up soon. And isn’t the housing thing getting worse? this doesn’t look like much of a bargain.