By SHELLY GARCIA

Staff Reporter

When Ramy El-Batrawi began planning to take his company public about a year ago, he figured he had a sure thing.

Internet stocks were hot even for companies that weren’t making money, and GenesisIntermedia.com was transforming itself into an Internet company and actually turning a profit (though not on its Internet operations).

But two months after going public, its share price has fallen more than 30 percent, off about $3 since the initial public offering price of $8.50.

The market for Internet stocks, and with them IPOs, has been highly sporadic. Share prices for a number of companies have plummeted and while a few new IPOs have seen share prices skyrocket, many others have been unable to sustain their opening numbers. Some companies have even chosen to cancel or postpone their IPOs as a result.

Analysts attribute the market softness to everything from concern over higher interest rates to increasing investor scrutiny over the pool of Internet stocks.

For micro-caps like GenesisIntermedia, the problems are more striking. Without the support of a prominent underwriter that can market the stock, these companies have been unable to distinguish themselves from the glut of other offerings.

“A company like this doesn’t have the market-maker support. And it’s a small company anyway, and they can get lost in the shuffle,” said Tom Taulli, an analyst with Internet.com, a financial information technology Web site.

GenesisIntermedia was founded in 1993 to market (through the use of infomercials and direct mail) a diverse range of products from audio and videocassettes based on the best-selling pop psychology book “Men Are From Mars, Women Are From Venus” to Mark McGwire’s Gold Baseball Cards.

Last year, the company acquired Vision Digital, a developer of computerized kiosks for shopping malls, with the intention of redirecting its marketing efforts to the Internet arena.

As part of GenesisIntermedia’s Centerlinq Network, shoppers register at a mall-based kiosk to enroll in a rewards program in which purchases earn gifts and prizes, and in which they can receive discount coupons for merchandise sold at the mall. The registration information then becomes a database for the mall operator and tenants, as well as for GenesisIntermedia, all of which can use the information to run their direct marketing programs.

Revenues to GenesisIntermedia are generated by the fees charged to the malls and by the advertising that runs on the computer screen. Meanwhile, GenesisIntermedia is transforming itself into an e-commerce company, hoping to sell its own merchandise and that of others through its Web site.

Officials at the malls that have installed Centerlinq say the system provides a cost-effective marketing tool. “Centerlinq allows us to create a real-time, highly effective database of our shoppers,” said Cindy Bohde, senior vice president for marketing at Urban Retail Properties Co. in Chicago.

As a rule, direct-mail strategies yield a response rate of 1 percent to 5 percent. But at the Urban Retail Properties malls using Centerlinq, 20 percent to 30 percent of shoppers solicited through Centerlinq return to make purchases.

“It means we’re talking to people, bringing them back in, and we’re encouraging increased sales,” Bohde said.

So far, GenesisIntermedia has contracted with about 40 malls, and it expects to add another 150 before the end of the year. Meanwhile, the company is building the base of products it markets through infomercials and direct mail, adding revenues that can support the Centerlinq expansion plan.

For the second quarter ended June 30, the company reported net income of $248,280, compared with $338,242 in the year-earlier quarter. But a bottom line in the black hasn’t prevented the stock price from falling. The initial public offering on June 15 at $8.50 a share, with the 2 million shares sold, raised $17 million. The shares rose briefly to nearly $10 a share in early July, but then the free-fall began. As of last week, the shares were trading on Nasdaq in the $5 range.

Companies like eBay and Amazon.com have been able to attract and hold investors, in part because of the marketing support they receive from large underwriters like Goldman Sachs & Co. and Morgan Stanley & Co. These companies have extensive research departments and other resources to reach investment fund managers and keep the stocks in the public eye.

But GenesisIntermedia.com was too small to attract the likes of a Goldman Sachs. Underwriters that took it public were Millennium Financial Group Inc., HD Brous & Co. Inc. and American Fronteer Financial Corp., all of which have limited marketing resources. To make matters worse, an abundance of Internet IPOs began to hit the market in July, creating even more competition for investors’ attention.

“The problem is, nobody knows about us,” said El-Batrawi. “So we have to go out there and market ourselves.”

In recent weeks, GenesisIntermedia has hired a public relations firm that specializes in working with the investment community and an investor relations firm, and El-Batrawi is planning to go on the road to tell his company’s story to mutual fund managers and other investors.

Debra Fiakas, a research analyst with HD Brous & Co., said the poor stock performance is to be expected given the company’s small size and its lack of visibility on Wall Street. “Everybody knows IBM. Everybody knows Intel. That’s the tough thing about micro-cap companies. It takes time,” she said.

But others wonder if the problems that GenesisIntermedia.com is facing go beyond mere name recognition. As the market for Internet stocks has become more competitive, investors have become more critical about the kinds of companies they buy. The stocks that are doing well offer a proprietary product or technology in an industry with high growth potential. And despite the dot-com at the end of its name, GenesisIntermedia.com’s main business isn’t even yet related to the Internet.

“If you’re a company that’s got something unique, and you’re very fast growing, you’ll attract (investment),” Taulli said. “EBay did that, Amazon.com, Yahoo, all those companies have something that stands out. Investors will knock down the door to get a piece of that action. This company is probably not in that category.”

El-Batrawi is not unaware of the difficulty he faces. “It’s tough,” he said. “Your story has got to be better.”

But he believes that if he gets out there to tell it, the share price will rise.

“The good thing is, there’s a lot of money out there,” he said. “There’s a lot of investors chasing deals, and if they believe in what you’re doing, they’ll buy (the stock) and hold it.”