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To Give to Be, or Not

For investors with open eyes, there is no question.

Be serious.

The challenge in considering the prospective initial public offering of

Be Inc.,

the nine-year-old startup that intends to introduce a new software operating system, is deciding which risky element of its business is the biggest turnoff.

Is it that Be, based in leafy Menlo Park, Calif., didn't start recording revenues until 1997 and by 1998 had sales of all of $1.2 million?

Or is it that the company has churned through $55 million of its investors' money but has the chutzpah to ask the public for up to $57.5 million more?

Could the upcoming IPO possibly be risky because Be has decided to go up against the most ferocious competitor on the planet,


(MSFT) - Get Microsoft Corporation Report

? (In the delightfully understated language of Be's preliminary IPO filing late last week with the Securities and Exchange Commission: "The market for computer operating systems is intensely competitive. This market is dominated by one company, Microsoft Corporation, which has significantly greater brand recognition, market presence and financial, marketing and distribution resources than we do.")

Or perhaps it is that Be "will forego near-term revenue potential in (its) effort to increase market acceptance" of its operating system for digital media applications and Internet devices? Translation: Be's going to be giving away its product, or close to it. At the same time, it will embark on a catchy -- and costly -- "Be everywhere" marketing campaign.

Maybe the real trepidation should be that Be's own auditors have a fear of their own; They have "substantial doubt" as to Be's ability to continue as a going concern absent additional fundraising.

Or should potential investors worry that despite the impeccable Silicon Valley connections of Be's chief executive Jean-Louis F. Gassee and heavyweight investors like VC firm

New Enterprise Associates



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(INTC) - Get Intel Corporation Report

Be couldn't find a major investment bank to hawk its shares? Smaller and less influential

Volpe Brown Whelan

of San Francisco and New York-based


will lead the charge.

All these worries are silly, of course. For there's no reason to assume Be should have any more trouble raising public funds than the scores of young Internet companies coming to market. It simply is the flip side of a brand-new startup turning almost immediately to the public; It is a long-in-tooth startup going public because when folks are handing out cash it wouldn't be prudent not to hold out one's hands.

Indeed, even the prospect of facing Microsoft and a "going concern" warning doesn't appear to be an impediment these days.




the Redwood City, Calif., maker of Web-page-design software, confronted both obstacles before raising $72 million Friday at $12 per share, the middle of its price range. NetObjects, despite trading below its offering price Friday, even managed to close up 1 at 13 like the good Net stock that it is. Remember: Net's in the name.

Whether or not Be succeeds in its fundraising drive, the company, which has tiny revenue and high costs, is likely to remain on Silicon Valley's map. Be has 93 employees and has spent $19.4 million in R&D since the beginning of 1994, generating more buzz than bucks in the salons of Silcon Valley. Gassee, a former executive with Apple Computer, nearly sold his company to his former employer before Apple instead bought Steve Jobs's

Next Inc.,

thereby launching the rejuvenation of Jobs and Apple.

Be will have more on its mind than these boilerplate risks, however. Yes, Internet devices like handheld computers are going to be all the rage. But developments like

Sun Microsystems'

(SUNW) - Get Sunworks Inc. Report

Java software and the evangelical rise of the freely distributed Linux operating system are potentially as big a challenge as Microsoft's Windows CE.

Says one snarky ex-software entrepreneur who's loathe to publicly criticize Be: "I think if you had to pick the worst possible market in the world it would have to be operating systems."



When an analyst repeatedly "bangs the table" on a stock, it means he or she is so firmly convinced the shares should go up it's worth staking a reputation. When it comes to



, the San Jose, Calif.-based maker of audio- and video-conferencing equipment, John W. Todd's hands must be hurting.

Todd follows the obscure but emerging field of home networking for

C.E. Unterberg Towbin

in San Francisco and has been hyping Polycom's shares since March 17, when the stock sold for a hair under 14. Todd believes Polycom has some major announcements in store regarding videoconferencing over the Internet -- and that the company will make them this week at a networking industry trade show in Las Vegas.

Polycom's shares meandered up almost 2 last week as other Internet-oriented stocks stalled or sank. The stock closed at 25 7/8.

"Polycom is going to be one of the players in videoconferencing on the Internet," says Todd, who anticipates that among Polycom's announcements will be a broadening of its already disclosed relationship with


(RNWK) - Get RealNetworks Inc. Report

, the Seattle-based maker of "streaming" Webcasting software.

Polycom's stock quickly hit Todd's first price target of 26, so now he's calling for it to top 40 on the strengths of its new partnerships.

Another 50% appreciation in this stock likely would assuage the pain in this analyst's hands from all that table-banging.

Criticizing online

Among the printable responses to the

column here Friday suggesting that shares of

America Online


have further to fall because of the company's sky-high price-earnings ratio, was this wise admonition from Brian C. Oakes, the media analyst for

Lehman Brothers

in New York and an ardent AOL bull (whose investment-banking colleagues count AOL as a client): "Why should AOL only trade at a 100 P/E given 57% earnings growth, when the S&P 500 trades at a 35 P/E with only 7% earnings growth?" When challenged that surely AOL is riskier than the broad market, Oakes responded with a platitude about the negative media. And who says a 35 P/E for the S&P makes any sense? On the other hand, Oakes, a pal, said he likes this column's new photograph. So he can't be all bad.

Adam Lashinsky's column appears Mondays, Wednesdays and Fridays. In keeping with TSC's editorial policy, he doesn't own or short individual stocks. He also doesn't invest in hedge funds or other private investment partnerships. Lashinsky welcomes your feedback at