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Computergram - Section: 03. Financial News
B2B Software Company WebMethods Files for $45m IPO
By Rachel Chalmers
WebMethods Inc, the Fairfax, Virginia-based provider of infrastructure
software and services for business to business integration, has filed with
the Securities and Exchange Commission for an IPO valued at $45m. The
company's software, WebMethods B2B, helps customers deploy real-time
business to business e-commerce applications by integrating their existing
enterprise applications with those of their suppliers, customers and other
partners. Morgan Stanley Dean Witter is lead manager of the offering, with
Merrill Lynch & Co, Dain Rauscher Wessels and Friedman Billings Ramsay
acting as co-managers. As ever, it's the "Risk Factors" section of the S1
filing that tells the most interesting tales. "We have never been
profitable," WebMethods' lawyers report. "We have incurred net losses in
every fiscal period since we began operations. For the fiscal year ended
March 31, 1999, our net loss was $3.3m. For the six months ended September
30, 1999, our net loss was $5.0m. As of September 30, 1999, our accumulated
defici t was approximately $11.1m."
That's not all. WebMethods notes that its customer base is highly
concentrated, and that the loss of a single customer could significantly
harm its business. "During the six months ended September 30, 1999, two
customers accounted for approximately 45% of our total revenue, one for
approximately 35%, and one for approximately 10%," the lawyers write. The
same holds for WebMethods' business partners, especially SAP AG. A developer
partner agreement between the two gave WebMethods credibility and access to
the SAP customer base. "We cannot be certain that SAP AG's interest in
promoting our software to its customers will be consistent with our own,"
the company admits. If it's not, WebMethods could find itself in big
trouble.