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Buy.Com Reduces Price of Stock for Sale to $8 Per Share

Posted on: Saturday, 17 December 2005, 00:00 CST

By Hang Nguyen, The Orange County Register, Calif.

Dec. 17--Buy.com, the online retailer in Aliso Viejo, said Friday that it will sell its stock for $8 per share, a price below its original range.

A month ago, it disclosed through a filing to the Securities and Exchange Commission that it hoped to sell its shares for $11 to $13 apiece. The new price is about 40 percent lower than the high end of that initial estimate.

The company still plans to sell 4.2 million shares in a sale to the public expected to start Monday.

It's common for firms to change or reduce their initial stock price, said Gordon McBean, director of asset management for investment bank Roth Capital Partners in Newport Beach.

"Market conditions can change," McBean said. "And the price becomes a moving target." Buy.com wants to price its stock at a level that will garner interest, McBean said.

"They can price it at $13, but if they get zero interest in the stock, that would not be a good thing," he added.

By comparison, competitors Amazon.com and Overstock.com trade their stock at $49 and $37, respectively, as of Friday.

Buy.com plans to use the money raised from the public stock offering on an advertising campaign to expand business.

The struggling company, founded in 1997 by Chief Executive Scott Blum, has never made a profit.

However, its latest financial report shows improvement. In the nine months ended Sept. 30, the company had sales of $234 million. That's up from 15 percent from the same period a year before.

The company's net loss for that period dropped from $14million last year to $8.5million this year.

Blum will control 77 percent of the company after the stock sale.

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Copyright (c) 2005, The Orange County Register, Calif.

Distributed by Knight Ridder/Tribune Business News.

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AMZN, OSTK,

Source: The Orange County Register

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