Investors hoping to cash in on another galactic IPO like theglobe.com's ninefold rise last week may have been disappointed by Computer Literacy's debut on Friday.
Shares of the computer book retailer were priced at US$10 late Thursday, and more than doubled in the early hours of trading on Friday. The stock (CMPL) closed up US$10.12 at $20.12. It traded as high as $24.50 earlier.
"So its stock doubled. Ho-hum," said Steven Tuen, analyst at IPO Value Monitor. While still successful by any measure, Computer Literacy's IPO can't compare with theglobe.com and EarthWeb, whose stock tripled in price during its market debut.
Computer Literacy sells computer books and technical manuals through its Web site and four retail stores. It had shelved its initial public offering last October, citing volatile market conditions. But the Sunnyvale, California, company decided to tap the stock markets to raise $30 million following a mania for Internet stocks in the past three weeks.
Just because the company sells its wares online, investors shouldn't confuse it with another Amazon.com, Tuen said.
"I'd be wary of this company," Tuen said. "They play to a small audience, computer professionals. There's only a handful of computer professionals compared to the rest of the buying public."
Computer Literacy's site sells books like Ten Minute Guide to Lotus Notes Mail 4.6 and About Face: The Essentials of User Interface Design. The company sells about 300,000 titles from 8,000 publishers.
For the quarter ending 31 July, the company saw a net loss of almost $2 million, on revenues of $4.81 million.
"I like [their] ability to drive traffic to a real narrow focus to get a higher [advertising] rate," said Paul Cook, manager at the Munder Fund, which invests in Internet stocks.
But Cook cautioned, "I don't know that the Net fancies boutiques that much."
Computer Literacy has a good niche focus right now, but if the market for tech manuals and books gets bigger, it would be very easy for an Amazon.com to step in "with a limited expense," said Cook.
