Bankers who want to compete with Web brokers are seriously considering offering Internet-based initial public offerings (IPOs), if only because their rivals are doing so. Offering them, of course, would be helpful to a bank's image as a powerhouse in big-time investment banking. But they may want to reconsider: IPOs are one-shot deals that inherently restrict potential transaction volume. And early Web offerings are too limited to be lucrative. So why all the hype? Because consumers want in on the ground floor of the next Microsoft or Dell.

IPOs traditionally have been sold first to securities houses, which, in turn, sell them to their customers at a profit. But in the past year at least two small, Internet-based broker-dealers, IPO.Net, a division of W.J. Gallagher & Co., based in Pasadena, CA, and Wit Capital, based in New York, have offered new stock offerings directly to the public from the underwriter. Wit Capital, which opened for business in September, has gotten prominent play in the press; IPO.Net has been in business for about a year.

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