Online bookseller Barnes & Noble and German media giant Bertelsmann plan to float their joint venture Barnesandnoble.com in an attempt to cash in on the hot market for Internet related initial public offerings (IPOs).
On Thursday, the two companies registered between 15-20 per cent of Barnesandnoble.com?s shares, and analysts said they expected the long awaited move to be successful.
The IPO has already been called off once, when Bertelsmann acquired a 50 per cent stake in Barnesandnoble.com for $200 million in late 1998.
Jack Staff, director of ecommerce at Zona Research, said: "They?re coming into the market at a hot time. I expect the stock to do well."
In the IPO filing, Barnes & Noble disclosed that the online store had sales of $61.8 million in 1998, but lost $83.1 million. Its chief competitor Amazon.com, in contrast, saw revenues of $610 million in the same year, while making losses of $124.5 million.
Barnesandnoble.com hopes to raise up to $200 million in the filing, which it will use for working capital to build up its business. But in taking Barnesandnoble.com public, Barnes & Noble also hopes to boost its own share price.
Despite annual sales of $3 billion and 1998 profits of $56.2 million, the book store has a market capitalisation of just over $2 billion ? one tenth of Amazon?s value.
However, while it is trailing Amazon in both market and mindshare, Barnesandnoble.com does have some things going for it. While Barnes & Noble?s traditional ?bricks and mortar? stores are considered to be little more than overheads by ecommerce advocates, they may also deliver some interesting advantages.
Zona?s Staff suggested that book buyers might order a rare book online, then collect it at a local Barnes & Noble store to save on shipping charges. "[Barnes & Noble] really needs to explore these synergies," he said.
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