posted on February 7, 2002 12:34:09 PM new
this is a article from msnbc
THE SUIT WAS filed earlier this week by CertCo, a privately held New York-based online security company.
A PayPal spokesman declined to comment on the suit or the delay, citing the company’s quiet period. Representatives for CertCo did not return calls seeking comment.
A representative for Salomon Smith Barney who declined to give his name, confirmed that PayPal had delayed the public offering, which had been set for this week, because of the patent infringement suit.
The Salomon Smith Barney representative said the company has not yet determined when it will go through with the public offering.
The company had set a range of $12 to $14 for its 5.4 million share offering, underwritten by Salomon Smith Barney. The shares were scheduled to be priced Wednesday night and debut Thursday, Salomon said. PayPal would trade under the symbol “PYPL.”
PayPal originally filed for a public offering last fall. Analysts at the time speculated that the filing may have been a vehicle to show its finances to potential buyers.
PayPal’s service allows consumers to make and accept online payments. A payer deposits money in a PayPal account using a credit card, bank account, or an existing PayPal account. The recipient can leave the money in the account to earn interest, transfer the money to a separate bank account, or have PayPal cut a check.
The service is wildly popular for person-to-person transactions such as auctions. Indeed, eBay consumers make up the bulk of PayPal’s customer base. According to the company’s prospectus, 63 percent of dollar volume for transactions in the first nine months of 2001 came from settling auction purchases, particularly on eBay.
While eBay’s success does provide PayPal with a significant customer base, it also represents a competitor. PayPal is far more popular than eBay’s Billpoint service, but there is no guarantee that eBay will continue to allow PayPal access to its customers. Yahoo, the U.S. Postal Service and Citibank, among others, also offer competing services.
Tech IPOs got a boost last month with the successful launch of Synaptics, a maker of touch pads for notebook computers. That IPO, the first one of the year, closed the day up 19 percent, giving investors a promising sign for the year.
But Synaptics has something that PayPal doesn’t: profits.
In a throwback to the Internet IPOs of a few years ago, PayPal states in its prospectus that it anticipates “having a net loss from operations in fiscal 2001 and may not be able to reach or sustain profitability in the future.”
In the quarter ended Dec. 31, PayPal lost $18.54 million on revenue of $40.4 million, an improvement from a year ago, when the company lost $41.9 million on revenue of $8.8 million.
