Internet harvest starting to sour

Perth-based Internet software maker HarvestRoad had a steady debut on the ASX yesterday, butmarket watchers said the path for Internet floats remained slippery, with jaded retail investors nowturning to biotechnology stocks.it of body text

Internet companies still waiting to go public include Internet Service Provider iiNet, online financeplayer InvestorWeb and Fairfax Online.

InvestorWeb and iiNet are set to list on September 30 and Fairfax is expected to announce a float ofits Internet business as soon as this afternoon, when it issues its full-year result.

HarvestRoad performed better yesterday than other recent Internet floats such as eisa and Isis, whichboth listed last week at a discount to their issue prices.

Harvest began trading at 63c, a 3c premium, and dipped to 57c before recovering to close at 60c. Tradewas sluggish with just 822,300 shares changing hands.

Author: By: KATRINA NICHOLAS Date: 08/09/1999 The Sydney Morning Herald

However, Ms Caroline Egan, equity researcher with Commonwealth Securities, said that despite recentgains on Nasdaq, retail investors were beginning to shy away from local Internet stocks.

``There really wasn't much support from retail investors for HarvestRoad yesterday," Ms Egan said. ``Itlooks as though retail investors are switching out of Internet stocks and into biotech stocks. They arestill looking for capital gain, but the Internet bubble has burst."

She also said most buying and selling in HarvestRoad was from the float's joint underwriters, FalkinersStockbroking and EL&C Baillieu Stockbroking.

Yesterday the recently listed eisa and Isis put in nondescript performances, with the former hitting anall-time low of 71c before recovering to close at 75c and the latter remaining steady at 62c. Isisraised $55 million while eisa raised $57 million.

CPS Capital Group Managing director Mr Tony Cunningham saidHarvestRoad's better performance demonstrated that to avoiddisgruntled shareholders stockbrokers must learn to priceconservatively.

The Perth Internet software developer raised $6 million issuing 10 million shares at 60c each. A further$1 million was raised in oversubscriptions.

` ``The stock will be competing with a lot of other companies' stock and if you can make it cheap andattractive, you are going to win a lot of friends."

But an adviser with Shaw Stockbroking, Mr Mal Webber, said predicting the performance ofInternet stocks yet to list was still difficult. ``It's all in the eye of the beholder really," he said.

``Some [Internet stocks] will fail and some will succeed it's all very arbitrary and defies aclean analytical approach."

Associate director with William Noall Mr Peter Lyon said of the next two Internet companies to list,InvestorWeb was a ``better bet". Its float, which closed oversubscribed this week, raised $10.23million through an issue of 51.16 million shares at 20c each.

The Melbourne-based company, which has more than 26,400 registered customers and ownsfunds management group Investors Mutual, revealed a net profit after tax of $310,000 for the lastfinancial year.

This figure is expected to grow to $1.44 million this year and to $2.85 million next year.

In contrast, Perth ISP iiNet is offering shares at $1 to raise $15.75 million.

``I'd be more relaxed about InvestorWeb holding its price than iiNet," said Mr Lyon. ``For iiNet to beasking $1 is a big call."

HarvestRoad Money raised $7 millionIssue price 60cClose on first day 60cComing floatsInvestorWeb $10.2m Sept 30iiNet $15.75m Sept 30Fairfax Online Undecided