Services Firm Zefer Takes Shelter From Storm

SAN FRANCISCO (04/17/2000) - Timing is everything, especially when it comes to initial public offerings. Boston-based Internet professional services firm Zefer was scheduled to go public today. But after a week of record-breaking losses, the company didn't dare brave the market's chilly waters. Instead, it has opted to hold out for better market conditions before refiling its S-1 document with the SEC.

"Yesterday was the last day of our road show, and while people were enthusiastic about the stock, it became clear to us that we wouldn't get the price we deserved, so we pulled our filing today," says Bill Seibel, the chairman, CEO and president of Zefer. "We will go forward when the volatility stabilizes." Zefer had hoped to raise about $60 million today by offering its shares at between $11 and $13 a share. But the company said that going public today wouldn't be fair to shareholders or its 480 employees. Tech stocks on the Nasdaq were hammered all week, and consulting firms - a category that has historically enjoyed enormous valuations - didn't escape the carnage. Finding an Internet services firm whose stock price was above $30 today was next to impossible.

MarchFirst, which was born of the marriage of USWeb and Whitmann-Hart, is hovering around $21. Viant, which was in the 60s this year, dropped below $21.

Modem Media Poppe Tyson is at $17; Razorfish below $16 and Organic below $12.

Scient saw its 52-week high of $133.75 drop to $39.50. None of the issues is worth even half of their 52-week highs. "Good companies should not go out in bad markets," says Credit Suisse First Boston managing director Mark Wolfenberger, the lead underwriter of the Zefer offering. "They get branded with multiples that are difficult to expand."

While Zefer has set no date for its IPO, the company claims that it remains in a good position. "Last year, we closed a $100 million round," says Anthony Tjan, founder and executive VP at Zefer. "We don't need the cash from the public event. We have the luxury of waiting for the right time." Zefer says it can afford to remain private for now, and that it would spend this postponement period recruiting. "We plan to bring more senior people," said Seibel. "It's a good opportunity to get talent, now that we are pre-IPO again." Executives even say that the decision to pull out brought some relief. "Yesterday, we cared about every up and down," says Seibel. "Today, we feel more insulated."

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