SPECIAL REPORT: From Netscape To Google: The Hottest Companies Of The Past Decade
Launched in 1995, Netscape's became the first IPO from the Internet sector to double in value during its first day of trading.
Although the company had yet to book any significant profit, it offered investors access to a new mass medium: the Web.
Not long after, the 100% one-day gain became routine in the IPO market, as investors fell in love with a rosy vision of the nascent Internet age -- of a New Economy, even -- while overlooking the risks of betting on firms with little or no net income and only the briefest of track records.
The Net group's so-called story stocks rewrote the record book for the new- issues market. Eighteen of the U.S. IPO market's 20 biggest first-day gainers of all time took place between 1998 and 2000.
VA Linux Systems -- a firm operating in the hot area of Internet infrastructure and a potential competitor to another formerly hot stock,
At the time, investors shrugged off the fact that the company hadn't earned a penny.
Although VA Linux was expected to lose money for years, its valuation of 76 times its yearly revenue seemed "appropriate" relative to its peers, one analyst noted in the happy talk that characterized the era.
VA Linux's first day eclipsed the
Even MarketWatch holds a place in the IPO pantheon as the No. 7 opener of all time with a 474% jump over its
At the time of the MarketWatch offering, Wall Street put aside jitters tied to stock-market sell-offs in Asia and
With their newfound wealth, Internet firms made their mark beyond Wall Street as icons of a short-lived golden age that included lava lights, Gap khakis, logo-emblazoned fleece wear, in-office foosball tables and lucrative employee stock options.
Some of it was pretty whacky. Pets.com never really made much of a splash as a stock because its IPO came too late in the cycle, but its sock-puppet mascot served as a silly symbol of the excessive advertising spending of the newly rich dot-coms.
Netpliance.com, Webex.com and Autotrader touted their wares on the 2000 Super Bowl, the most expensive possible place to advertise.
By 2001, however, Pets.com shriveled as its stock sank 99%. Webvan at one point had a market cap of
MarketWatch was no exception. On
And good old Netscape was bought in
Not long after, AOL bought
Survivors of a paradigm shift
From the ruins of the dot-com bust, survivors emerged between 2001 and 2004.
Lawsuits and regulatory actions punished bankers for contributing to the IPO bubble by doling out shares of hot IPOs to their favorite clients, and for publishing sunny research reports to help boost their firms' investment-banking coffers.
Retail investors stayed away, in relative terms, from the stock market. The remaining investors no longer wanted story stocks -- they wanted solid names with established records.
The IPO market responded with defensive deals from bulletproof companies that had survived the meltdowns following not only the dot-com bubble bust of 2000 but also the
Unproven Internet companies gave way to reinsurance providers and other financial firms such as
IPOs could make it out the door if the companies had shown net income and a willingness to cut offer terms in the face of a bear market.
Excitement started building again behind financial-marketplace stocks such as the
By 2004, the stock market was well into a recovery when
Fashioning itself more a
Although its Dutch-auction-style IPO drew resistance from bankers,
The Wall Street gauge of those prospects? For one, a fresh
Nearly as hot as
Although the energy sector is now navigating a market correction, leading lights of the oil, gas and electric businesses have been ablaze as oil prices have set new records.
With a market cap now handily exceeding
Stars of the alternative-energy game have also shined particularly brightly on Wall Street lately, with SunPower (SPWR) and
And, in the IPO market, tech- and Internet-flavored firms are once again playing a starring role, although it should be noted that the most popular offerings have more revenue and net income to show than did their counterparts in the bubble years.
IPO standouts of late have included
And, today, as a 10-year-old MarketWatch looks toward the coming 10 years, it seems safe to forecast that hot stocks will come and go, and booms will turn to busts (and, ideally, vice-versa). But the marks set by the market debutantes of the 1997-2000 era will likely stand for at another decade, if not for the next century.
(END) Dow Jones Newswires
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