In an attempt to raise millions of dollars to fund their mounting expenses in an e-commerce “War of the Roses,” FTD.com and 1-800-Flowers.com — two rival online florists — are slated to make their debuts on Wall Street this week.
Analysts say that along with the optimism surrounding the launch of both IPOs, potential investors should also consider the sobering risk factors outlined in both companies’ latest filings with the Security and Exchange Commission.
For instance, the Downers Grove, Illinois-based FTD.com says in its latest SEC filing that it will continue to bleed red ink: “We currently are not profitable and expect to record significant losses for the foreseeable future.”
In addition, FTD.com’s filing emphasizes its technological vulnerability by saying it “may not be able to increase capacity or introduce enhancements to our Web site in a timely manner or without service disruptions.”
On the other hand, Westbury, New York’s 1-800-Flowers.com cites its heavy dependency on Internet portals and America Online to drive its business as a risk.
“If these third-parties do not attract a significant number of visitors, we will not receive a significant number of online customers from these relationships and our revenues will decrease or not grow,” the filing says.
It also outlines the increasing costs of maintaining these relationships in the filing, revealing that it shelled out $4.3 million (US$) to companies such as Excite, Microsoft Network and AOL for the nine months ended March 28, 1999.
Big Backers, Big Hopes
Nonetheless, big backers like Benchmark Capital and Japan’s SOFTBANK Corp. have helped to fund 1-800-Flowers.com, while FTD.com has such heavy-hitters behind it as Bain Capital, Fleet Financial Group and PC mogul Michael Dell.
Both companies will trade on the Nasdaq Stock Market. 1-800-Flowers.com will makes its debut under the symbol of FLWS, hoping to raise $102 million (US$) from the sale its 6 million shares being offered at a price of $16 to $18 per share. Lead underwriters will be Goldman, Sachs & Co.
Meanwhile, FTD.com’s stock will trade under the symbol of EFTD, offering 5.5 million shares priced from $13 to $15 per share — raising an estimated $77 million. Bear, Steans & Co. Inc. is the lead underwriter on the issue.
History of Two Rivals
Industry experts say this week’s Wall Street coming out party for both online florists will once and for all establish which one is destined to become the dominant e-commerce player of the future.
But the past shows both companies have used technology to grow exponentially:
In 1986, James McCann decided to take advantage of the popularity of toll-free numbers by founding 1-800-Flowers. The new venture provided consumers with a way to bypass their local florists. Of the two companies, it was the first to go online. Initially, in 1992 with CompuServe, and later with an exclusive agreement with AOL. In 1995, 1-800-Flowers launched its own Internet site and just recently added the .com to its name. About 1,500 independent florists affiliate themselves with 1-800-Flowers.com.
The FTD Association jumped into the flowers via phone market in 1993, establishing its own 800-number. FTD went online in 1994 and formed FTD.com as a subsidiary in May. About 6,500 florists in the FTD Association fill the site’s orders.