PayPal IPO postponed

PayPal, the online payment system, has delayed its initial public offering (IPO) after a rival internet security firm sued it, alleging patent infringement.

CertCo filed the suit against PayPal, claiming the company had violated a CertCo 2000 patent by providing electronic payment services for online auction systems such as eBay.

The suit asks for a jury trial, plus unspecified damages and legal fees from PayPal.

PayPal, which provides an email payment system service, is popular for person-to-person transactions such as online auctions.

According to the company's prospectus, 63 per cent of its transactions in the first nine months of 2001 came from settling auction purchases, in particular on eBay.

PayPal had planned to sell about $76m in stock through Salomon Smith Barney. The shares, to be sold at between $12 and $14, were to trade under the symbol PYPL on the Nasdaq stock market.

A new date has not been set.

PayPal's IPO was to be the first internet-related offering since Loudcloud's IPO in March 2000. The company originally filed for a public offering last autumn.

A CertCo spokesman was not immediately available to comment and a PayPal spokesman, referring to the pre-IPO quiet period, declined to comment.

In the quarter-ended 31 December, PayPal lost $18.54m on revenue of $40.4m. PayPal launched its service just two years ago.

According to the IPO prospectus, it had 10.6 million business and personal accounts as of 30 September.

CertCo, which was founded in 1996, is a provider of transactional security and risk management products and services.