Will eBay's IPO sputter or soar?

As online auctioneer eBay gears up to float out its public offering next week, the company may have more to worry about than volatile markets.

Investor interest in the company is only tepid, despite the fact that--unlike the large majority of Internet companies--it is churning out profits. eBay, which has yet to name its target price from its initial range of between 14 and 16 a share, is expected to launch its IPO next Thursday.

"I'm more concerned with their business plan than pleased with it," said one portfolio manager who has reviewed eBay's prospectus. "Even though they are earnings positive and have a distinct model, some of the same services [it provides] will [soon] be provided by the portal companies like Yahoo. The extension of this type of business model is not that far away."

The portfolio manager said eBay will need to team up with portals going forward in order to drive traffic to its site.

Earlier this week, Yahoo announced that it had teamed up with online auctioneer Onsale. Under the terms of that agreement, Yahoo takes advantage of Onsale's back-end technology while Onsale benefits from Yahoo's brand name.

eBay, however, is not without its alliances. The company earlier this month announced a deal with America Online in which it paid $12 million for a prime spot on the site for the next three years.

Other concerns are eBay's ability to deliver customer satisfaction. The company recently disclosed in its regulatory filing that it had been contacted by a state attorney general's office regarding complaints about its service. The complaints alleged that eBay did not adequately inform customers it merely provides a forum for online person-to-person auctions and does not guarantee the completion or price of transactions conducted in that forum.

"In the online environment, you can't afford to have the customer have an unpleasant experience," said the portfolio manager, who noted that his firm had not yet decided whether it would invest in eBay.

But Ken Fleming, a research analyst with Renaissance Capital's IPO Fund, said eBay's willingness to go public next week despite the markets' volatility "speaks volumes" about how the company perceives the strength of its offering.

Other companies primed to go public in recent months, most notably push technology pioneer PointCast, have been more skittish. September has generated 11 IPO filings to date, whereas 30 filings were generated last month and 47 in July.

Fleming noted, however, that, due to the roller-coaster ride the markets have taken of late, he does not expect eBay to perform like Broadcast.com, which more than doubled its share price on its first day of trading.