The Internet banking outsourcer e-Profile has put its initial public offering of common stock on hold until market conditions improve.
"The valuations of comparable IPOs are at their lowest right now, and it's not the best time to issue a new IPO," said Michael Sanchez, chief executive officer of e-Profile and chairman of its parent company, Sanchez Computer Associates. "Also there are a lot of IPOs hitting the street that are going to flood the market. We didn't want to be a part of that flood."
E-Profile, which filed for the offering with the Securities Exchange Commission on Aug. 7, has until next May 7 to complete the offering before it must be pulled or re-filed.
Mr. Sanchez said he still hopes to complete the stock offering within that time. "We certainly still feel very optimistic about the Internet and electronic delivery of services."
Glenn Green, a vice president and senior analyst at ABN Amro, said he considered Mr. Sanchez's evaluation of the market to be accurate. "The market for that sector has been weak," he said. "Comparable common-stock performances have not been stellar."
E-Profile may see other benefits to waiting, Mr. Green said. "They may want more visibility from clients they recently signed and perhaps to make some new customers and announcements."
Mr. Sanchez said many of the sites e-Profile has produced for its large clients, such as American Express Co., Morgan Stanley Dean Witter, and Lehman Brothers Bank, will not have their "full-blown" functions until next year.
Sanchez Computer Associates' third-quarter results will not be adversely affected by the postponement, he said. The company is expected to generate approximately $17.2 million of revenue and a per-share loss of about 14 cents in the third quarter, according to a First Call consensus of analysts. Mr. Sanchez said he agrees with those estimates.
Merrill Lynch & Co., Robertson Stephens, First Union Securities Inc., and Pennsylvania Merchant Group are the managing underwriters for the public offering.
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