Two new Net firms hit the public market Friday, and -- surprise! -- they both shot straight up.
Vignette and Web Trends, both Web-site software developers, each more than doubled in their first few minutes on the public markets.
After underwriter Morgan Stanley bumped up the offering price from US$14 to $19, Vignette shares (VIGN) opened at $41 and cruised as high as $52.75 before settling back to close at $42.69. The Austin, Texas, company sold 4 million shares and raised $76 million.
Bankers also boosted Web Trend's (WEBT) offering price, up to $13 from $11. Web Trends opened at $35, then dipped to close at $27.16. While the company enjoyed a big run-up, almost everyone who bought the stock on the open market lost out by day's end. The Portland, Oregon, company netted $45.5 million in the offering.
While the big run-ups reflect a bit of Net mania, analysts said there was at least a bit of method to investors' madness. Both companies publish backend software that businesses use to set up Net shops. Unlike real Internet companies that hope to make money from vague promises of electronic commerce, Vignette and Web Trends sell real, expensive software. They stand to reap big rewards every time a new "dot com" or real-world retailer comes online.
"Vignette is selling the picks and shovels to the e-commerce gold miners," said Steven Tuen, director of research at IPO Value Monitor. "No matter how the individual e-commerce players fare, Vignette will win."
While Vignette's "wins" haven't yet translated into profits -- it lost $26.2 million last year on revenues of $16.2 million -- Web Trends actually makes a bit of money. The company netted $219,000 in 1998 on revenues of $8 million.
