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Market Savvy | SAVVY CONFIDENTIAL / A Briefing for
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Right Start to Withdraw IPO of Its Internet Venture

May 20, 2000|DEBORA VRANA | TIMES STAFF WRITER

Blaming volatile stock market conditions, Right Start Inc., a Westlake Village-based retailer of children's products, said Friday that it is withdrawing a planned first-time stock sale by its fast-growing Internet venture, Rightstart.com.

The $60-million offering by the online retailer is one of many planned initial public offerings pulled or delayed in recent weeks. Others include AmericanGreetings.com, Total Sports and, also on Friday, Internet services out-sourcer Intira Corp.

Some companies, such as Santa Monica-based Cooking.com, are postponing IPOs and raising money elsewhere. Cooking.com this week said it raised $40 million in a fourth round of venture capital funding.

The reasoning behind the pulled IPOs isn't hard to understand: Some companies that have tried offerings in recent weeks have been brutalized, as buyers have failed to materialize to bid the shares up after the offerings.

On Friday, Coolsavings.com, a marketing firm that uses a piggy bank sporting dark sunglasses in its ads, decided to sell 3.3 million shares at $7 each on Nasdaq--only to see the stock (ticker symbol: CSAV) plummet $1.47 to $5.53.

On Thursday, video chip maker Nogatech (NGTC) sold 3.5 million shares at $12 each, also on Nasdaq. The price plunged to $9.41, then dropped to $7.63 Friday--a 36% loss to the IPO buyers.

The only big hit recently has been New Focus (NUFO), which makes fiber-optics components. It soared Thursday from an offering price of $20 to close at $51 on Nasdaq. On Friday it eased to $49.

Next week's big IPO hit may be another optical networker, ONI Systems Corp., which Thursday raised the top of its expected selling range to $23 from $16, as New Focus soared.

Rightstart.com had filed its IPO plans Jan. 18 through lead underwriter Deutsche Banc Alex. Brown.

Backers of the company said Friday they would continue to support it. "Everyone's really happy with the company. They have real revenues. It's just the timing is bad," said Jamie Montgomery, chief of Digital Coast Partners, a Santa Monica investment firm that helped Rightstart.com raise its venture money.

Rightstart.com is a leading online specialty retailer for infants and children through age 12 and has recently expanded to include a Teachers' Store on its site for parents and educators.

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