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The Internet Stock Lockup Lowdown

Lockup expirations are looming for some big Net players, but their potential impact is an open question.

Amid the recent weakness in Internet IPOs and other Net stocks, investors have one more issue to keep in mind: lockup expirations.

When companies go public, a standard part of the deal is a pledge by early investors, including senior management and venture capitalists, not to sell their shares for a certain period of time after the offering date. These lockup agreements, as they are known, usually expire six months after a company's IPO.

As discussed in stories that ran in

January and

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February, investors have found that these lockups have an effect on individual companies' stock prices. There's no absolute rule at work here, but companies have often seen their stock prices fall in the month preceding the expiration date. In theory, selling by insiders will weaken the stock price. In practice, insiders rarely sell the full amount of stock they're theoretically able to, and companies more and more are jumping the lockup expiration gun by selling shares in a secondary offering.

But the lockup issue remains, with investors citing expirations as a possible weakener of the Internet market in general. So here's a guide to forthcoming Net lockup expirations. Remember, just because a shareholder can sell shares doesn't mean it will. And at many companies, policies restricting insider sales effectively extend lockouts for weeks or months, preventing people from selling at the moment the lockout theoretically expires. That's the case at

Ticketmaster Online-CitySearch


, according to CEO Charles Conn.