Shares of Prodigy Communications, an early Internet service provider that fumbled a huge lead over America Online, almost doubled on the first day of trading, amid hopes that the company can still profit from its name.
Prodigy's stock was priced at (PRGY) US$15 a share. On Thursday, the shares rose to as high as $32, and closed at $28.13. The company sold 8 million shares, raising $120 million.
Paul Bard, analyst at Renaissance Capital, said Prodigy's brand recognition helped boost the stock. In the early 1990s, Prodigy had more than 2 million customers and was far ahead of fellow pioneers CompuServe and America Online.
"Everyone knows the name Prodigy and associates it with the Internet," Bard said.
Still, others hadn't expected quite such a strong showing.
"I really thought that Prodigy was going to be under intense scrutiny, and this is one that really surprised me," said Steven Tuen, director of research at IPO Value Monitor. Prodigy has had a lot of trouble in recent years, and has seen its customer base fall to a little under 700,000.
In its prospectus, Prodigy noted that "the market for Internet and online services is presently characterized by low operating margins and minimal profitability," adding that "there can be no assurance the company will be able to compete effectively."
Prodigy reported revenue of $101.5 million in the first nine months of 1998, but had a loss of $47.9 million in the same period.
Until 1994, Prodigy was jointly owned by International Business Machines and Sears, Roebuck. The partners sold off the company when dozens of scrappy Internet service providers, along with AOL, took control of the dial-up business.
Prodigy's main shareholders are Carso Global Telecom, which owned 65.3 percent of common stock, and Mexican phone company Telmex, which owned 20.9 percent.
