E-Commerce Stock Watch: NetObjects IPO Underwhelms

NetObjects (Nasdaq: NETO), which develops end-to-end solutions for online businesses, is well-known and well-respected compared to many Internet companies. IBM is a major shareholder in NetObjects, and NetObjects’ clients include IBM, Microsoft, Netscape, Apple, Hewlett-Packard, Compaq, Sun Microsystems, Lotus, Novell and Mitsubishi, among others. The company has also won more than 25 awards from publications such as PC Magazine and BusinessWeek. Despite all this, NetObjects’ initial public offering on Friday was a disappointment and a sign that investors are becoming much more selective about Internet IPOs.

Unlike the IPO of real-estate information provider Comps.com (Nasdaq: CDOT), which actually closed down on its first day of trading last Wednesday, NetObjects’ IPO closed higher. The problem was that shares of NetObjects’ climbed just 1 to close at 13 on Friday. That’s more than an eight percent gain, but when it comes to Internet IPOs, we’re used to expecting much more.

One thing’s clear after the Comps.com and NetObjects offerings: You can’t count on stratospheric gains for Internet IPOs anymore. The era of free money may be coming to an end.

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