Bloomberg News

NEW YORK - It looked like a money-making formula: an Internet company, a bull market in stocks, and Goldman Sachs & Co., Wall Street's leader in taking businesses public.

For investors, though, Inc. was a money-loser from the start. Priced by Goldman bankers at $21 in August and recommended by Goldman's industry analyst, shares in the online florist were trading below $7 on Tuesday.

That hasn't been the only Goldman flop. Since January 1999, one out of three of the firm's U.S. initial public offerings has been trading below the original price, according to CommScan LLC.

By contrast, one in six IPOs managed by rival Morgan Stanley Dean Witter trades below its initial price. At Credit Suisse First Boston, it's one in five. The three firms, which have focused on managing Internet IPOs, accounted for about half of the money raised in new share sales in the past 14 months.

The gap between Goldman and its competitors in part reflects the firm's bet on Web retailers, ranging from Inc. to eToys Inc. Shares in that category have stumbled, while the software and telecommunications companies that Morgan Stanley brought public, such as Sycamore Networks Inc. and Brocade Communications Systems Inc., have surged.

Managing new share sales is among the most profitable businesses on Wall Street. Record earnings from IPOs in 1999 helped drive Goldman's profit to $2.7 billion. The firm said Tuesday that first-quarter profit surged 67%, to an all-time high of $887 million.

Sagging stock prices have not impeded Goldman's ability to woo companies, and observers say Goldman will not lose business anytime soon. Spencer Waxman, president of the gift service, says he would jump at the chance to have Goldman underwrite his IPO.

Toby Lenk, chief executive of eToys in Santa Monica, Calif., said, "No one bank has an ability to fight negative momentum in an entire sector.''

Goldman spokeswoman Kathleen Baum declined to comment.

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