A closely watched initial public offering (IPO) by online sports broadcaster, Quokka Sports, surprised analysts on Thursday by being one of the few Internet stocks to fall short of expectations.
The firm’s shares closed down five per cent or $0.63 on the offer price, at $11.38, despite a previous 20 per cent increase in the offering terms from an initial filing range of $9-11 per share.
But Dana Serman, an Internet analyst with Lazard Freres, said: "The Internet medium is not entertainment centric yet," and Quokka "will never reach a mass market portal sized audience - it will always reach a refined group of users."
Concerns about the company's limited market appeal and competition with major media companies in the online sports arena are also likely to have contributed to the fizzle.
Quokka said, however, that it was more interested in niche markets such as auto racing, sailing, mountain climbing and marathons, than winning over online fans from viewers that watch huge enclosed arena sports such as baseball.
The company's major event so far was the 1997-1998 Whitbread Round The World Sailing Race. It has also arranged with NBC for rights to cover the Olympics through 2004.
Alan Ramadan, Quokka’s founder and chief executive, said: "It has been our intention from day one to build Quokka Sports into the leading digital sports media company. We are ramping up to become the first digital, global ESPN."
He added that Quokka was not just interested in the Internet as a medium, however. "We plan on digital television, radio, print and a host of other interactive digital devices, which have yet to come to market," he explained.
Quokka Sports provides video, text, audio, images, and data on athletes’ vital signs, location and timing collected at the sports event and from other sources. The company, which was named after a rare kangaroo, was founded in 1996 and has 200 employees, with offices in London and Melbourne.
Mark Hardie, an analyst with Jupiter Communications, said: "Quokka is not only about redefining the value of a marquee event. It's about identifying digital assets, deciding which asset goes into which channel and then figuring what you should charge for each. If you believe there will be a class of digital devices, then you've got to believe in this."
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