Buy.com Hopes for IPO, and Techs Hope for a Better Monday

The Internet retailer is in a quiet period, says a spokeswoman, while Internet stocks limp to the finish line.
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SAN FRANCISCO -- Buy.com, which sells consumer electronics, software, books and games over the Internet and guarantees low prices, recently launched its newly designed site, but it's been unresponsive lately to requests for interviews. That's because "we're in a quiet period," says company spokeswoman Jennifer Blanchfield, "in hopes of filing for an IPO." However, there have been no filings with the SEC just yet.

The news of the expected filing comes on the heels of the most recent

Media Metrix

monthly report, which revealed that Buy.com's April reach dropped about 17.9% from March results. Reach represents the number of individuals who visit a Web site during a particular month. While it's not unusual for reach to taper off somewhat during the spring and summer months,

Amazon.com

(AMZN) - Get Report

, by comparison, lost just 3% during that same period.

BancBoston Robertson Stephens

says that shopping sites on average declined 8.1%.

"We are still unconvinced that consumer propositions based primarily on price can succeed long term," wrote Robbie Stephens analyst Keith Benjamin in his weekly Web report published Friday. "Consumers are already choosing the higher quality shopping experience and reliable service they get from Amazon over purely low prices." Benjamin rates Amazon a buy, and Robbie Stephens has no underwriting relationship with the company.

Buy.com's at-cost/below-cost model, which aims to make money on advertising, has shaken up a lot of Internet retailers.

Onsale

(ONSL)

, for example, said after reporting its most recent results that its margins would be chopped in half to about 4.5% as the company goes aggressively after Buy.com.

One skeptical analyst who asked not to be named said, "It's an awful lot of work to be an ad company."

-- Suzanne Galante

A Weak Finish

Internet stocks were marginally weaker, continuing to feel the fallout from the Media Metrix report.

TheStreet.com Internet Sector

index closed down 1.4 points, or 2%, at 623.3, but traded as high as 636.6 early in the session.

In a note today following the Media Metrix report,

Merrill Lynch

analyst Henry Blodget said he did not want to read too much into a single-month's decline, "but we can't help but notice it and wonder whether it is a harbinger of the flattening of the growth of Web users in the U.S." He added, "We do take it as a reminder, however, that all good things will come to an end and that at some point, the steady sequential growth of all three consumer online value drivers (new users, new advertising dollars and new commerce dollars) will give way to seasonality and more modest year-over-year gains."