Andover.Net Files for IPO

The title of this story pretty much says all I can say: Andover.Net has filed a registration statement for an Initial Public Offering. This means that we are officially in a quiet period and I can say nothing more than "No Comment" from this point on. I am however allowed to post the Press Release which you can get from the link below. For more information, please go to open.andover.net.

FOR IMMEDIATE RELEASE:

Contact: Janet Holian
Andover.Net
Communications
978/635-5300
[e-mail]

Shawn Whalen/Manya Rossignoli
Schwartz
781/684-0770
[e-mail]

ANDOVER.NET FILES REGISTRATION STATEMENT FOR INITIAL PUBLIC OFFERING

Acton, MA-September 17, 1999- Andover.Net (www.andover.net), a network of Linux/Open Source web sites which include Slashdot.org, today announced that it has filed a Registration Statement on Form S-1 with respect to a proposed initial public offering of 4,000,000 shares of Andover.Net common stock. All 4,000,000 shares are being offered by Andover.Net at a proposed price range of $12 to $15 per share. The offering is being underwritten by WR Hambrecht + Co. LLC, Advest, Inc. and DLJ Direct through WR Hambrecht + Co.'s proprietary OpenIPO system.

Andover.Net is a leading Linux/Open Source Internet destination with a total of over 2 million users and over 40 million page impressions on a monthly basis. Its network of web sites provides an independent, unbiased source for content, community and commerce for the Linux/Open Source communities. Andover.Net properties include Slashdot (slashdot.org), a Web site for Linux/Open Source news, community comments and resources and Freshmeat (freshmeat.net), a downloadable Linux software application repository.

The OpenIPO process is similar to a traditional underwriting except that the pricing and allocation of the shares will be based on the results of a modified Dutch auction. All investors place a bid for the number of shares they want to own and the price they want to pay. To participate in the offering, an investor must have an account with WR Hambrecht + Co. or a participating broker in the OpenIPO Network.

Information regarding the OpenIPO process may be obtained through www.wrhambrecht.com. Copies of the preliminary prospectus relating to the offering may be obtained when available through WR Hambrecht + Co.'s website, www.wrhambrecht.com, or by contacting WR Hambrecht + Co. in writing at 555 Lancaster Avenue, Suite 200, Berwyn, PA 19312 or by calling toll free 1-877-673-6476. Copies of the preliminary prospectus may also be obtained by contacting Advest, Inc. in writing at 100 Federal Street, 29th Floor, Boston, MA 02110, or by calling [phone] x2390.

A registration statement relating to these securities has been filed with the Securities and Exchange Commission but has not yet become effective. The securities may not be sold nor may offers to buy be accepted prior to the time that the registration statement becomes effective. This press release shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of these securities in any state in which such offer, solicitation or sale would be unlawful prior to their registration or qualification under the securities laws of such state.

###

Andover.Net and AndoverNews Network, are trademarks of Andover.Net.

Saw it coming

With venture capitalists [ta.com] investing $10 million in them recently, Andover had better find a way to rake in the dough.

That raises an interesting point.. Since Slashdot is a key selling point for them in this, you'll probably be forced to give up some creative control. It just won't fly in corporate-land if your main selling point can be taken elsewhere by a single person at a moment's notice. Then again, with the chunk of dough you'll be getting out of this, maybe creative control won't be an issue for you anymore. I don't know.

I've been watching Andover for awhile now, even moreso since they started their whole "Linux campaign". Their sole agenda seems to be advertising. With the way banner ads are going lately, I sure do hope they plan to branch out into other areas.

One possibilty to watch for is subscription print publication.. (Slashdot Magazine, anyone?) I just can't see a model centered solely on banner ads working for a media company. It may work for the porn industry, but there has to be something more there. What would really be neat is if they'd team up with Walnut Creek CDROM and sell subscriptions to weekly or monthly CDs of Freshmeat-featured Unix applications.

Oh well. Might be something to throw a few grand at. We'll see.

Stock symbol "FSCK", anyone?

Huh?

Did anyone else notice that it said they'd be using the "proprietary OpenIPO system"? Doesn't that sound kind of contradictory?

-- Does Rain Man use the Autistic License for his software?

Who currently owns Andover?

What were the terms of the acquisitions of /. and fm? Were they bought outright for cash, or was it a cash and shares deal, leaving CmdrTaco, Hemos and Scoop with shares in Andover? If so, I hope you guys make a fortune out of it.

However, someone else raised a valid point. If traffic decreases, will changes be forced upon you to try and increase readership? I believe there's enough integrity there to try and fight such a move, but at the end of the day, you may not have much choice. One of the perils of beign publically traded is that the company is legally bound to maximise shareholder value, whatever the ethics of doing so. Hopefully, it'll never come to that, but you never know...

Re:Do the same thing as redhat

I'd personally rather that those of us with higher karma get preference... ;)
---
"'Is not a quine' is not a quine" is a quine.

Good luck

I really support this IPO system. By having everyone bid up the shares *before* they go to market, the offering company gets the benefits of all the speculation (or the lack of funds for a poorly timed or low value IPO). It will be interesting to watch this offering, since it doesn't present the same opportunity for ridiculous first-few-day gains that RedHat did.

Good luck.

No Comment

I don't think I can handle several weeks of "No Comment" stories... Although, hearing nothing but that from JonKatz would be very refreshing.

---

Me: Rob! I think we should have MetaMetaModeration for those people who unfairly MetaModerate posts...
Rob: No Comment.

Me: Hemos, I have devised a way to build miniature construction equipment from individual atoms.
Hemos: [gasp!] No Comment!

Me: Jon, I didn't like highschool. [snif]
Katz: err... ungh... erp.. NO COMMENT!!! [head explodes]

Ok, Rob, here's what you do:

Leak stuff to us by posting as an AC and moderating the post to level 5. Nobody can prove it's you.

What does slashdot "own" ....

After the fracas [slashdot.org] with Yahoo's takeover of GeoCities, I think I would not be alone in expressing some concern as to the "ownership" of all the submitted content of slashdot. I have previously submitted personal observations on the assumption that slashdot was a private forum and not a public newspaper where libel and/or copyright issues can arise. While I think people are generally reasonable and don't object to profit-making ventures (e.g. I can see scope for a yearly compilation of the best stories/comments from slashdot ... let's call it "Voices from the Source" :-)) it does raise the tricky issue of the readers also being the contributors and thus technically copyright owners of their own words.

I think least there be a major misunderstanding along the lines of Yahoo/GeoCities, I would appreciate some assurance or indication of the separation between roles of the various key stakeholders.

LL

So what happens now?

It is with feelings of profound ambivalence that I read the press release....

Slashdot has been my #1 favorite site for years now, and the character of its free-wheeling conversation and deep-think geek info has been the greatest part of it. I was happy for Rob and Jeff when /. was acquired, because I appreciate the cost and effort that goes into running this crazy place.

But with the dust yet to settle on the legal aspect of the net, I have to question whether it will have an effect on the /. I know and love. From the perspective of Andover, no doubt, an IPO will be heaven-sent, a greatly needed infusion of cash.

What happens if traffic on Slashdot decreases? Will shareholders insist on a format change to drive ad impressions up?

If stock price plummets, shareholders will eventually hold the company accountable. I do not see any way to avoid ramifications to /. itself.

Moreover, neo-fascistic legislation has yet to run its course on the net. What happens when a 12 year-old's mother sees him reading Anonymous Coward flame-drivel, and sues Andover for child endangerment? (Could this bring even more moderation changes?)

In the end, though, I wish Andover the best. And I hope that when all is said and done, /. will retain the qualities that made it great.

ANDN vs RHAT

Where's the revenue stream? Banner ads?

[snip]

And given the choice between Redhat at 12 and Andover at 12, I'd take RH in a heartbeat.

Let's do some math here. Assume for the sake of argument that all andover.net's current revenue is from banner ads (they also expect some from software, according to the prospectus). andover.net says the sites they own currently get 40 million page views a month. Last I read, banner ad space generally was going for $20-60 CPM (cost per 1,000 page views) industrywide, as much as $100 CPM for specialty sites. Slashdot, freshmeat etc have GREAT demographics -- folks who'd run out and buy the Single-Person Air Scooter before we got to the seventh First Post on the subject. So I may be conservative in guessing they charge $50 CPM, but for the sake of argument:

$50 CPM at 40 million pageviews/month equals $2 million revenue/month or $24 million/year.

By comparison, Red Hat reported revenue of $10 million for the year ended 2/28/99.

Now in reality, andover.net reports $1.1 million revenue for the nine months ending June 30, all of it from advertising, and figures that will actually come to $1.6 million (including $215,000 for software) once the acquisitions of /. and The Animation Factory are factored in. But when was /. acquired? IOW, if we deduce that /. adds $300,000 to andover.net's bottom line for the 9 months ended June 30 and all of it in ad revenues, is that 5 day's worth of ads, a month's, or what? And the balance sheet doesn't seem to factor in FM at all.

I haven't looked much at the expense side of the picture yet but I'd think Red Hat would incur far greater R&D and tech support costs than andover.net. Although who knows what it might cost to get us to truly flawless MetaMetaMetaMetaMetaModeration? ;-)

So much for the quiet period

The SEC does not mandate a quiet period for IPOs. What the regulations require is that the company not make any effort to promote the company other than the offering itself. Also a company must keep track of all the material it used for promotion.

In the world of the internet frenzy and the legal vultures, a lot of interesting theories have been offered, mostly because the SEC hasn't made regulation on these issues. Its generally the underwriter that enforces the "quiet period", in an effort to avoid any flaps with the SEC.

Generally, the undewriter laywers will tell you that sites that have conversation boards generally can't use them to promote the offering. Does HQ know what it going on here? I wouldn't be suprised if they shut this thread down.

Also, it's possible that the entire thread could end up in court one day in a shareholder lawsuit. Oh what fun.

I'm also interested in seeing what happens with OpenIPO. Because of the dutch auctions, the IPO is not likely to see ANY first day gains, which may be pasted in the the media as a "linux failure", since they tend not to be familiar with the OpenIPO approach

Will slashdot remain opensource? Will they start beating up anyone who makes a parody site? What about sites that have the same "trade-dress", due to use of the open source? Stock for people with high karma? Oh this is going to be fun.

Andover.net == Linux/Opensource Hub?

Doesn't anderover.net also do sites such as Davecentral, Internet Traffic Report, and Slaughter House? Of the 11 anderover.net "holdings", 3 are Linux/Open Source, yet the press release makes them seem like Linux/Open Source is all they do. A bit misleading if you ask me.

I understand they're trying to work off the RHAT Linux buzz to boost their IPO price but it's still an inaccurate characterization of the company as a whole.

Boy - you guys were a cheap date

From the S1

Acquisition of Slashdot.org. In June 1999, we acquired certain assets and
assumed certain liabilities relating to the Slashdot.org web site from
BlockStackers, Inc. for consideration consisting of a $1.5 million cash payment
made at the closing, and contingent payments of $2.0 million of stock valued at
the initial public offering price issuable upon the closing of this offering, up
to $3.5 million in cash and up to $5.0 million in stock valued at the initial
public offering price and payable during the two years following this offering.
The amount of cash and stock consideration that is contingent solely on the
continued employment of the principals of Slashdot.org in the amount of $6.3
million will be recorded as a compensation charge ratably over the period of the
payments. The amount of stock consideration that is contingent on the
achievement of performance milestones and the continued employment of the
principals of Slashdot.org will be recognized upon the achievement of these
milestones. To the extent any stock consideration is issued, we will record a
non-cash compensation charge based on the fair value of the shares issued at
such time.

A real company to invest in....

I have to say that I feel safer putting money into Andover than Redhat. Andover owns two parts of the glue that holds the Linux community together, and, barring any screwups, can forge into new paths using the money. They seem to have a good collective head on their shoulders, and I wait to see what will happen in the months ahead.

This will not change Slashdot

I don't believe this will change Slashdot regardless of what happens with Andover's stock. If Slashdot were ordered to cater to a different crowd or change WHATEVER in order to boost revenue many of us who frequent this site would leave in droves. It would cease to be the community builder Slashdot is. Andover knows this, that is why they purchased this site and agreed not to change it except to rake in the banner ads. They know that if they force some mandatory changes on Slashdot, the community built up around it will go elsewhere. So take heart people and don't worry, I predict that regardless of the stock, Slashdot will not have any mandatory changes made to its content in any way.

Just my .02