WESTLAKE VILLAGE, Calif. – NetZero Inc., a provider of free Internet access in exchange for demographic information, went public September 24, offering 10 million shares at $16 apiece. The company’s stock priced at the high end of its $14 to $16 filing range.
Underwritten by Goldman, Sachs & Co., Donaldson, Lufkin & Jenrette, Hambrecht & Quist and Wit Capital Corp., the initial public offering left 102.9 million shares of stock outstanding.
There were no selling shareholders. Venture backers included Idealab Capital Partners, Draper Fisher Jurvetson, Foundation Capital and CPQ Holdings Inc.
NetZero provides clients with free, unlimited Internet access and e-mail in exchange for demographic information such as age, salary and on-line behavior. The company then sells the subscriber information to on-line advertisers who use the data to target customers.
NetZero plans to use the expected $147.6 million generated from the IPO to enhance its server and network infrastructure, for brand marketing, advertising and user acquisition programs and to fund operating losses. The company also will use the proceeds for working capital and for general corporate purposes. A portion of the proceeds might be used to invest in or acquire businesses, products and technologies that complement NetZero.
NetZero has never been profitable, losing $5.1 million in the three months ended March 31 and $8.2 million in the three months ended June 30.
James Armstrong, a principal at Idealab, and Bill Gross, a managing director at Idealab, joined the company’s board of directors in September 1998. Jennifer Fonstad, a partner at Draper Fisher, and Paul Koontz, a general partner at Foundation Capital, joined in January.
NetZero – Selected Financial
(in thousands, except per share data)
July 21,1997 (inception) Three Months Ended Year Ended
to June30, 1998 Sept. 30, 1998 Dec. 31, 1998 March 31, 1999 June 30, 1999 June 30, 1999
Total revenue 122 781 3,731 4,634
Net loss -25 -217 -1,795 -5,095 -8,193 -15,300
Net loss per share -0.02 -0.22 -0.5 -0.72 -1.42