Newegg Inc. has built a brisk business selling low-priced digital devices and consumer electronics over the Internet. Now, the City of Industry online retailer is hoping investors like what it does as much as customers do.

Newegg, which claims to be the largest Internet-only retailer in the country behind Amazon.com Inc., filed a prospectus last week with the Securities and Exchange Commission to go public. The company hopes to raise $175 million from its initial public offering.

Newegg started life as a niche seller of computer parts such as memory cards that tech-savvy customers could install themselves. The company then expanded into consumer electronics and general merchandise, ranging from handbags to car door handles.

However, Newegg's core electronics business is what's expected to power its growth on the public market.

"The stuff Newegg sells, mostly electronics, tends to sell very well online," said Adam Sarner, research director with Gartner Inc. in Stamford, Conn. "We're seeing more electronics and high tech devices and computer equipment move online, and these guys are well-positioned to grab that."

It's all a big step for Newegg, co-founded in 2000 by a duo of Asian immigrants and a U.S.-born engineer who had just $1,000 capital. But the company has seen blistering growth and until 2007 was a regular member of the Business Journal's annual list of fastest-growing private companies. It ranked No. 10 on the Business Journal's list of largest private companies in Los Angeles County in 2008 when it raked in more than $2.1 billion.

Newegg has not said when it plans to go to market, but it's dipping its toe into the game at a time when IPOs are back in vogue. Over the past two months, 15 companies have filed to go public in the United States, a number not seen since 2007. Last year, only three companies filed to go public in August and September.

"We're starting to see the financial market stage a bit of a recovery," said Kathleen Smith, principal at Renaissance Capital, an IPO tracking firm based in Greenwich, Conn.

Newegg executives declined to comment on the IPO.

Part of the reason Newegg has been so successful is its willingness to accept low profit margins, a fact underscored by financial information in the prospectus.



Thin margin

While Newegg's revenue doubled between 2005 and 2008, it typically has had profit margins of less than 1 percent. Last year it had its most profitable year ever, when it made $28.8 million, a margin of just 1.4 percent.

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