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Monday, February 8, 1999

"You can be social minded without being a socialist." -- Charles E. Wilson

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Putting the "I" in IPO

Bill Hambrecht would like to level the IPO playing field for individual investors by helping them get their hands on shares in initial public offerings. His investment banking firm, W.R. Hambrecht + Co., plans to take companies public by auctioning shares over the Internet in a new service called OpenIPO (www.openipo.com). The first IPO it plans to offer is 1 million shares -- a 22% stake -- in Ravenswood Winery, a highly regarded premium winemaker based in Sonoma, California, which will trade on Nasdaq under the symbol "RVWD." W.R. Hambrecht has estimated a price range of $10.50 to $13.50 a share. The auction opens this morning at 9 a.m. Eastern and will close on March 22 at the earliest.

This is no eBay (Nasdaq: EBAY) auction but a "Dutch auction," in which all bids are private and unseen by others. The way this works is that investors can participate by making a bid for what they believe the company is worth, whether it's within, above or below the estimated pricing range. Participants can enter multiple bids of at least 100 shares each provided that the total doesn't exceed 10% of the initial offering. Bids can be changed or withdrawn before their acceptance after the close of the auction. At the close of the auction, W.R. Hambrecht will set an offering price, based on the bids received, at which all shares can be sold. All shares will be sold at the same price, and those bidding below the set offering price won't get to buy any shares.

OpenIPO could indeed benefit individual investors, who are often shut out of IPOs as investment banks, including one Hambrecht & Quist (NYSE: HQ) Bill Hambrecht co-founded some 30 years ago, cater to institutional investors and other preferred clients. (Hambrecht left H&Q about a year ago.) Selling IPOs over the Internet could also help small companies by matching them with small investors. Plus, W.R. Hambrecht is only charging companies fees of 3% to 5%, versus the 6% to 7% levied by traditional investment banks. Of course, the as-yet-untested concept could also prove to be risky for individual investors, especially those not Foolish enough to do their own research.

News to Go

Microsoft (Nasdaq: MSFT) is about to announce a major reorganization that would divide up the software giant's business into four segments based on the customers they serve: consumer, enterprise, developers, and knowledge workers (small-business customers and office workers who use the Microsoft Office suite of applications). The company is currently organized by product lines. Separately, the company reportedly will also announce an alliance with British Telecommunications (NYSE: BTY) to develop and market wireless Internet services for corporate customers overseas. In November, Microsoft formed a joint venture with Qualcomm (Nasdaq: QCOM) to do the same here in the U.S.

Internet networking company Cisco Systems (Nasdaq: CSCO) is linking up with wireless communications giant Motorola (NYSE: MOT) to develop wireless networks for the Internet. The companies plan to cross-license technology and develop complementary products and to jointly invest up to $1 billion over four to five years to deliver a "wireless Internet."

Wireless phone company Nextel Communications (Nasdaq: NXTL) has teamed up with Motorola (NYSE: MOT), Netscape Communications (Nasdaq: NSCP), and software company Unwired Planet to offer Internet access and other wireless data services to its customers. Nextel will use Motorola phones, software developed by Unwired Planet, and a wireless Internet portal based on Netscape's Netcenter website.

A privately held start-up, Free-PC.com, plans to give away free Compaq (NYSE: CPQ) computers costing under $1,000 to people who agree to share personal data about themselves and be exposed to Internet advertising, The Wall Street Journal reported. Participants must agree to use the computer at least 10 hours a month and allow the machine to download advertising that's displayed in a strip on the right side of the screen. Barry Diller's USA Networks (Nasdaq: USAI) has agreed to supply $10 million of the firm's $30 million in initial funding and will be a prominent advertiser.

AMR Corp.'s (NYSE: AMR) American Airlines was forced to cancel flights this weekend, including about 11% of flights yesterday, after pilots didn't show up for work in a dispute over the company's purchase of Reno Air (Nasdaq: RENO). On Saturday, the nation's second-largest airline axed about 90 flights, or roughly 4% of the ones scheduled.

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Yi-Hsin Chang (TMF Puck), Writer
Jennifer Silber (TMF Amused), Editor