Conference nyoss1::market_investing

1010.0. "Open Market Inc. (OMKT)" by CPEEDY::KENNEDY (Steve Kennedy) Fri May 24 1996 20:00

    Open Market Inc. (OMKT on Nasdaq) started trading yesterday (5/23), so
    I thought I'd start a note for it.  
    
    IPO of $18; trading opened @ $40 
    5/23 close	$38 7/8
    5/24 close	$36 1/2
    
    Appended are this week's Boston Globe stories (2) related to the IPO:
    
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    As IPO nears, Open Market gets analysts' backing

    By Steve Bailey & Steven Syre, Globe Staff, 05/22/96 

    Can a stock market already stuffed with young Internet companies long
    on promise and short on profits welcome yet another version of the Next
    Big Thing? 

    This is a $100 million question for Open Market Inc. founders Shikhar
    Ghosh and David Gifford, who will become the latest of the instantly
    rich techies when their 2-year-old Cambridge software company goes
    public within the week. 

    Analysts who follow initial public offerings give the Open Market deal
    their highest ratings and suggest it is virtually a sure thing in the
    near term. 

    ``We like the deal,'' said David Menlow of IPO Financial Reporter in
    Springfield, N.J., which forecasts an immediate Open Market advance of
    $5 a share, the highest after-market gain it ever predicts. 

    Like most hot Internet IPOs, the valuations for Open Market are going
    to seem absurd. At $14 a share, the midpoint of the original price
    range, Open Market's market capitalization would amount to nearly $400
    million. Expect that figure to go considerably higher as soon as the
    shares begin trading. 

    Even a $400 million valuation on Open Market would be equal to 40 times
    sales, based on an annualized figure for the company's $2.6 million in
    first-quarter revenues. There are no earnings to measure so far. 

    ``You have to believe that this is it, it's going to be wonderful,''
    said analyst Kathleen Smith of Renaissance Capital Corp., an investment
    management and research firm in Greenwich, Conn. But Renaissance also
    gives Open Market its highest rating and identifies it as a ``hot''
    offering. 

    Founders Ghosh, 38, and Gifford, 41, will each hold an equity stake
    worth $50.4 million if the stock is valued at $14 a share. 

    New chief executive Gary Eichhorn, 41, who joined Open Market from
    Hewlett-Packard Co. just five months ago, came on board with a $1
    million signing bonus and 1,275,000 stock options, which can be
    exercised over time at 25 cents per share. If Open Market shares went
    public at $14 and never budged, Eichhorn's option package would still
    be worth about $17.5 million. 

    So much for the hype and money. Here's what Open Market delivers: an
    Internet product people want and no one else can compete with so far. 

    The company also has experienced managers; a business relationship with
    such blue-chip clients as Time Inc. New Media; such corporate backers
    as Tribune Co. and Advance Publications Inc.; and an IPO book run by
    Goldman, Sachs & Co. 

    Open Market software dramatically advances the ability to conduct
    secure commerce on the Internet. Its corporate clients can attract
    customers to World Wide Web sites and then process transactions over
    the Internet. 

    Other, much larger companies like Microsoft Corp. and Netscape
    Communications Corp. will probably turn their interest to that Internet
    market later. And a handful of such small companies as Cybercash and
    Sterling Commerce offer narrow products related to Internet
    transactions. But so far, Open Market is clearly alone in its class. 

    ``This is the kind of stock people are looking for because no one has
    figured out how to do electronic commerce securely,'' said Smith, the
    Renaissance analyst. 

    Her one caveat: Open Market is still a company with only two years
    under its belt, and most of its product line is becoming widely
    available for the first time now. 

    ``Just remember how young this company is,'' she said. 

    [2nd half of article - unrelated subject - removed ]
    
    This story ran on page 33 of the Boston Globe on 05/22/96. 

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    Open Market IPO soars 120% in one day: But most average investors shut
    out; firm's software for commerce touted

    By Jon Auerbach, Globe Staff, 05/24/96 

    Lucky shareholders of Open Market Corp. more than doubled their money
    on the first day of public trading, as the stock soared more than 120
    percent. 

    But chances are you're not one of those lucky shareholders. 

    Call it just another example of what's become a modern-day truism: The
    average investor is rarely invited to the biggest IPO parties. 

    Still, Open Market, a hotly watched Cambridge software company, had
    what can only be described as a stellar coming out yesterday. When
    trading began on the Nasdaq market around midday, the stock opened at
    40, 22 points higher than its IPO price. In other words: 122 percent,
    just like that. 

    The stock finished the day at 39, on volume of 5.3 million shares,
    making it the single largest stock jump of the day. 

    The runup gives Open Market a market valuation of more than $1 billion.
    That figure is all the more astounding considering the company had
    first quarter revenues of just $2.6 million, and reported a $13 million
    loss last year. 

    ``Any stock that comes to market and has a favorable Internet buzz
    around it does well,'' said Bill Bluestein, an analyst at Forrester
    Research Inc. of Cambridge, explaining the recent hype surrounding tech
    stocks. 

    Open Market makes software used for conducting electronic commerce on
    the Internet. Big companies such as Time Inc. use the company's Secure
    WebServer software package. Open Market's financial backers include
    Tribune Co. and Advance Publications. 

    What sets Open Market apart from many other high-tech IPOs in the past
    few months is that it has a product that is acknowledged as one of the
    hottest in the business. ``They have some real technologies and
    applications, unlike Yahoo,'' said Bluestein, referring to the
    California-based Internet search engine maker that recently launched a
    soaring IPO. 

    Still, analysts say Open Market will continue to face serious threats
    from higher-profile companies such as Netscape Communications Corp. and
    Microsoft Corp., both scrambling to catch up. 

    Yesterday's 4 million shares, about 15 percent of the company, sold at
    the initial price of $18 per share, making company executives and
    insiders rich in a matter of hours. Open Market founders Shikhar Ghosh
    and David Gifford each have 3.6 million shares, meaning both now hold
    about $143 million in stocks. 

    Yesterday's $18 shares, however, were reserved mainly for big
    institutional investors and Open Market employees and their families. 

    This story ran on page 42 of the Boston Globe on 05/24/96. 

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I'm sure my ex-vp, Gary Eichhorn, now Open Market CEO, is laughing all the 
way to the bank. His options are worth around $50M.