PC Mall Unit ECost Plans IPO That Would Raise $35 Million
WALL STREET WEST
Online retailer PC Mall Inc. is latching onto Google’s coattails, filing last week for an initial public offering of its eCost.com subsidiary.
According to the prospectus, eCost a discount retailer that competes with the larger and better-known Overstock.com plans to raise $35 million. In the Securities and Exchange Commission filing, eCost said it would use the cash to pay off debt owed to Torrance-based PC Mall, for general corporate purposes and for acquisitions.
The filing doesn’t say how much of eCost that PC Mall will retain after the offering. However, after six months PC Mall an online and direct-mail vendor of computer equipment plans to distribute its remaining holdings in eCost to PC Mall shareholders. About 14 percent of PC Mall’s current revenues are contributed by eCost.
Chris Krueger, an analyst with Miller Johnson Steichen Kinnard, said eCost is well positioned for the public marketplace, if the performance of Salt Lake City-based Overstock.com is any indication.
“Overstock is a stock whose shares have been moving upward like crazy,” Krueger said. “It trades at a premium to its growth rates.”
(Krueger said he doesn’t own any PC Mall stock and his firm doesn’t have an investment banking relationship with the company.)
Overstock.com went public in July 2002 at $12.26. On May 5, the stock closed at $37.50.
Krueger said eCost is profitable, while Overstock, which is twice its size, is not. eCost has generated profits for PC Mall in each of the past two years.
According to the prospectus, revenues rose 23.3 percent, to $109.8 million.
Krueger said these factors, combined with enthusiasm surrounding Google’s expected IPO, bode well for eCost. “They’re trying to get it done sooner than later,” he said. “There’s some excitement in the IPO markets right now.”
In its prospectus, eCost.com said it would sell shares through William Blair & Co., ThinkEquity Partners and Merriman Curhan Ford & Co.
Karey Wutkowski
Wedbush Wins
Scott Sutherland, vice president of research at Wedbush Morgan Securities, rode the rebound wave for telecommunications software companies in 2003 to become the No. 3 stock picker in the U.S., according to a survey by Forbes magazine.
Sutherland was chosen from among 3,200 analysts primarily for two stocks last year that outperformed the market.
His best calls were At Road Inc., based in Fremont, which swung to a profit in the first quarter. At Road creates global positioning systems that can monitor workers via cell phones. Sutherland also liked Openwave Systems Inc. of Redwood City, a developer of e-mail and messaging applications.
“I like to do a lot of grassroots research in telecommunications by talking to customers, suppliers and all competitors to get the best picture of the overall market,” he said.
Sutherland also hit the bull’s-eye on two “sell” ratings: Metro One Telecommunications Inc. in Beaverton, Ore., which provides directory assistance services, and Boston Communications Group Inc., in Woburn, Mass., a provider of real-time management systems.
He ranked behind No. 1 Stephen Kim, a household durables analyst at Smith Barney Citigroup in New York and No. 2 stockpicker Brett Rabatin, a banking analyst at Midwest Research Securities in Nashville, Tenn. In addition, Wedbush analyst Michael Pachter was ranked No. 1 among 92 software analysts.
Kate Berry
New Bank
A group of local bankers has received one of the speedier preliminary approvals to open a local business bank.
Bank of Santa Clarita is expected to open its doors in the third quarter, said James Hicken, who will serve as the new president and chief executive.
Hicken and Jeffrey Pollard, chief operating officer, both hailed from Valencia Bank & Trust, which had a local market share of 14 percent when it was bought in 2002 by Union Bank. A third founder, Frank Di Tomaso, who is vice chairman and chief business development officer, was formerly a senior vice president at City National Bank.
The new bank’s preliminary approval for a state charter from the Department of Financial Institutions was granted in 31 days, compared with the usual 120 days, Hicken said.
He attributed the speedy approval to the new director of the department appointed by Gov. Arnold Schwarzenegger, Howard Gould, a former banker who has made efficient processing of applications a priority.
Hicken wouldn’t say how much money was raised to found Bank of Santa Clarita, which is focusing on the area’s fast-growing small-business market.
Though there are plenty of competitors in Santa Clarita including Bank of America, Washington Mutual, Walls Fargo & Co., City National and Community Bank of Pasadena, none are locally based.
Kate Berry
