March 17, 2000 12:10 PM PST
Netpliance raises $144 million in IPO
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Netpliance joined a small but growing list of publicly traded companies focused on "Internet appliances," devices designed specifically for accessing the Web or email. The stock, which trades under the symbol NPLI, went up to $26.13 before slipping back to $20.69, or a gain of about 15 percent, in afternoon trading.
The company sold 8 million shares at $18 per share to raise $144 million, as the company seeks to make a play for consumers in a largely untested market. The shares had been expected to be priced in the $13 to $15 range earlier this week, a figure that was revised on Wednesday to $15 to $17.
Netpliance, incorporated barely over a year ago, offers the i-opener, a stand-alone device currently priced at $99 (plus $21 for monthly service) for easy Internet access. Many companies have been experimenting with such ideas for years, with few successes to show for it. The PC, analysts say, will continue to dominate as the main tool for viewing content on the Web, despite complaints about the complexity and cost of the all-purpose computer.
Many of the big-name high-tech companies--Intel, Microsoft, Compaq and Gateway, to name a few--are keen on the market Netpliance wants to play in and are designing devices of their own. Overall, the market for these kinds of devices, including TV set-top boxes, handheld computers and gaming consoles, is set to grow from 11 million units shipped in 1999 to 89 million units in 2004, according to market research firm International Data Corp. The market will grow from revenue of $2.4 billion last year to $17.8 billion in 2004.
Netpliance, in its filings with the Securities and Exchange Commission, acknowledged that these companies, as well as online services such as America Online and Earthlink, could be serious competitors.
In its prospectus, the company said it will be able to compete effectively because, "Most of the companies that are producing Internet appliances, screenphones and inexpensive or free PCs do not offer Internet access, tailored content portals or applications." The company maintains that by offering both the content service and the hardware, it is better able to capture data that can later be used to target e-commerce and advertising pitches to consumers.
Most of the companies that have gone public so far--Wink, Worldgate, OpenTV, Liberate Technologies and TiVo--have been focused on providing software infrastructure for interactive TV services. Be, which went public last year, is also focused mainly on providing software for information appliances, including stand-alone units such as the one Netpliance has developed.
Whatever the strategy, all have seen significant gains in their stock prices within the past year based on optimism that information appliances will soon become a widespread phenomenon.