Regular readers of the Fool know that we generally recommend avoiding IPOs until the dust settles. Rather than speculate on the short-term volatility of a relatively unknown company, it's often better to watch from the sidelines as others get caught up in the frenzied hype surrounding the next can't-miss stock. If both the story and the numbers are truly compelling, wait for a modicum of sanity to reign in trading before jumping in with both feet. This dictum applies to all, be it the much-anticipated offering of Google or yesterday's standout, Blue Nile
The online jeweler was brought to the market yesterday by lead underwriter Merrill Lynch
The release of 3.74 million shares to the public raised more than $76 million. Two million shares were issued by the company, with the rest being sold by existing stockholders. Most were venture capitalists, such as Paul Allen of Microsoft
Blue Nile's website is user-friendly and interactive. It gives shoppers the option to design and preview their own unique jewelry creations. More than 50,000 couples have purchased engagement rings from the company, which specializes in diamonds and boasts a certified inventory that is 30,000 strong.
Blue Nile really shines after the purchase as well, by arranging financing through MBNA
Blue Nile is not a fly-by-night dot-com without a penny of earnings. The company has been profitable since 2002 and earned $27 million last year on $128.9 million in revenues. There was continued strength in the first quarter this year, with sales and earnings climbing 43% and 12%, respectively.
Competition for the new company will be fierce, however, not only from traditional bricks-and-mortar chains, such as Zale
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Diamonds may well be a girl's best friend, but Fool contributor Nathan Slaughter can't fully appreciate them while still paying for an engagement ring. He owns none of the companies mentioned.
