Updated from 11:30 a.m. EST
much-anticipated IPO, delayed by a patent-infringement suit, won't price until next week, a source close to the deal said.
The IPO was first scheduled to price Wednesday, and following the initial postponement, underwriters had hoped to do the deal Thursday. "If they decide not to push it through today, somebody in the chain convinced them not to, probably the lawyers," said Mark Baum, CEO of IPO.com, earlier.
"The underwriters want to get this done because it's a significant IPO in terms of the category it's in," Baum said. "There are a lot of reasons why this is a good story. To let
today's pricing derail would mean there was some lack of confidence."
PayPal, which couldn't immediately be reached for comment, originally planned to sell 5.4 million shares Wednesday at between $12 and $14, for proceeds of up to $76 million. Shares were set to trade under the symbol PYPL on
Pricing is unlikely to happen Friday, said the source, because underwriters open them the next day and wouldn't want to wait out the weekend.
PayPal provides an Internet payment service that combines email with a credit card network and is popular with users of
. In the suit, filed Monday, New York-based CertCo alleges infringement of a patent for the electronic transfer of payments, the core of PayPal's business. The suit seeks a jury trial, unspecified damages and legal fees from PayPal.
In the suit, CertCo, which validates electronic signatures and holds more than a dozen patents, said it has made "significant investment in research and development technology" related to electronic payment transactions.
"The timing of the suit seems kind of interesting," says Baum. "But this late in the game, it's hard to imagine this would undermine the company's business. It tends to be on patent infringement that there's usually a payment of some kind. It very rarely seems to put companies out of business," he said.
, investors are edgy about the quality of information available on the companies in which they invest.
"When you step back, this is something that, maybe had it come in the pre-Enron, pre-
world, would have been resolved more quickly than it will be resolved now," said Baum.
Despite the unpopularity of Internet stocks over the past year, the IPO had been seen as one of the most promising in months. PayPal has recorded solid customer growth since its October 1999 launch, with close to 12.8 million users today. It recorded fourth-quarter revenue of $40.4 million, up 34% from the prior quarter and 357% from the previous year. The company recorded a loss for the quarter of $18.5 million, but that had narrowed 43% from the third quarter.
Excluding charges for stock-based compensation and amortization of goodwill and other intangibles, PayPal earned $3.2 million in the fourth quarter. Meanwhile, these charges are expected to decrease significantly over the next four years, while revenue is likely to continue growing, according to IPO.com.