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Hot Magazine Gets Cold Shoulder

One of the hottest publications for the on-line savvy is getting a decidedly lukewarm response from investors - again.

In the latest deal underscoring the risk of Internet-related stocks, the publisher of Wired magazine on Thursday prepared to sell its shares to the public to raise needed cash. But after weeks of sampling sentiment, Wired Ventures Inc. was forced to cut the expected price of the stock offer by more than 25 percent, to a range of $8 to $10 a share.

The stock was expected to be priced as early as Monday, according to Wall Street investment bank Goldman, Sachs & Co., which is leading the deal. The deal could come to market as early as Tuesday.

Behind the tepid investor response is skepticism about the company’s ability to make money. More broadly, industry observers say, the cool reception for a “hot” magazine demonstrates that investors have started to sour on companies that hitch their stars to the computer Internet.

Wired, a monthly magazine with paid circulation estimated at 325,000, is thick with stories that speak to the ‘90s generation of cybernauts - from profiles on hacker heroes to “bulletins” on the latest cool technology to features on the best Web sites.

Wired Ventures also has an electronic network called HotWired, which lets Internet cruisers click through colorful graphics, chatlines and fresh incarnations of magazine articles. Wired also plans to offer an Internet search engine called HotBot.

But the publishing company has never turned a profit amid heavy spending to keep and get magazine subscribers, create content for its Web site and push into new ventures. It lost about $15 million on operations in the first half of 1996, more than the previous three years combined, according to the prospectus for the stock offer.

About 90 percent of the San Francisco-based company’s revenues come from its magazine, which is filled with advertisements for products from Absolut vodka to Ford cars to Microsoft software.

But the magazine is pitching itself as a provider of electronic information, saying it wants to commit substantial resources to new on-line and TV media properties.

That Wired’s stock was coming to market at all could be seen as an accomplishment, considering the company in July outright pulled its first attempt to crack the market for first-time stocks because of a slump on Wall Street.

But this deal is dramatically scaled back, with only 4.75 million shares expected to be sold to raise up to $48 million, according to Robertson, Stephens & Co., the co-manager on the deal. That is far less than the $66.5 million Wired hoped to raise just weeks ago - at as much as $14 per share - and the $75.9 million planned back in July.

If the company gets its price this time around, the newly public company would have a market value of up to $210 million, with 21 million shares outstanding.

Investors, who have seen cyberstocks soar and crash, are growing pessimistic toward untested cyberspace companies.

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