CMP Media, a publisher of print and electronic computer-related content, went public Friday, offering 5 million shares at an initial price of US$22. CMP said it is selling off a 22-percent stake in the company to repay debts and to fund ongoing operations.
The stock finished its first day of trading up at $24.87 after hitting an early high of $26. The IPO values the company at approximately $500 million.
Chris Le Tocq, an analyst at Dataquest, said CMP's diversity should make it attractive to investors seeking a new Internet play. "These guys have all these content-generating sources that they can repurpose," he observed. "If they were just doing electronic, they would have only one way to leverage their resources."
Although CMP has invested heavily in its online efforts, the real bread and butter of the company is its print magazine titles like Windows, InformationWeek, and Computer Reseller News. CMP's various publications earned about $16 million last year, up from $9.5 million in 1995. The company's total revenues last year were approximately $418 million.
Le Tocq noted that CMP seems to be in a stronger overall position than Wired Ventures, publisher of Wired News, which last year scuttled plans to go public. Although Wired does well with its print flagship, he said, the company does not yet seem to have a strong balance between its print and electronic offerings.
"The magazine industry is slower-growing and cyclical, but it's not very volatile," said Arthur Newman, an analyst at Gerard Klauer Mattison. "The Internet has the potential for rapid growth, but it's clearly unpredictable."
The trick to pulling the pieces together, he added, is for media concerns to leverage existing resources - titles, content - without creating a basketful of new costs. "The Internet is a funny beast," Newman said. "It's not an industry all by itself. It's something media companies are using as part of other resources."
Alan Braverman, an analyst at CS First Boston, pointed to the success of publisher Mecklermedia in balancing its online and offline properties. The company publishes Internet World and WebWeek, among other titles, and also runs the Internet.com Web site.
"Arguably, the Internet is nothing more than another distribution medium," Braverman said. "On a stand-alone basis, it doesn't make sense [as a media enterprise], although that will change over time."
In CMP's case, the company said in documents filed with the Securities and Exchange Commission that it plans to expand both its print and online offerings, as well as establish a stronger presence overseas.
It estimated that revenues for the three months ending on 30 June will be about $125 million, up from nearly $108 million a year earlier. Net income is expected to total $13.5 million for the period, compared with $9.2 million a year before. CMP said the increases will come mainly from higher revenue for InformationWeek, and Computer Reseller News.
The company will shut down its NetGuide magazine after August, integrating Internet-related content into Windows and NetGuide's Web site. CMP will also change the name of CommunicationsWeek to InternetWeek as of 1 September.
The company was founded in 1971 by Gerry and Lilo Leeds. Its IPO is being handled by Goldman, Sachs; Lazard Freres; Bear, Stearns; and Furman Selz.
Of the 5 million shares of Class-A common stock being sold, 3.75 million are being offered by the company, and 1.25 million by stockholders. The company's shares are being quoted on Nasdaq under the symbol "CMPX."
