Net Incubator Seeks $300M in IPO

LOS ANGELES -- Idealab, the business incubator that has launched more than 30 companies, plans to raise as much as $300 million in one of the biggest initial public offerings ever for an Internet company, according to U.S. filings made Thursday.

The offering could give the Pasadena, California, company a valuation of more than $10 billion, analysts speculated. It will also give investors a chance to own a piece of the company behind online toy retailer EToys, free Internet service provider NetZero, web search firm and other Net start-ups.

The company did not specify how many shares it would sell or at what price they would be offered. Idealab plans to use the money to start more companies and for general corporate purposes. The incubator has already expanded to Silicon Valley, New York, Boston and London.

The Idealab IPO comes at a time when tech stocks are down generally, especially Internet incubators. Some analysts questioned the wisdom of taking the company public in such a volatile market.

While nearly all of Idealab's offspring are losing money, the incubator itself reported a profit of $118.5 million for its 2000 fiscal year, which ended Jan. 31. The bulk of that income came from selling more than 3.8 million shares of Santa Monica, California-based EToys for a gain of $193 million.

But like most Internet companies, Idealab's filing with the Securities and Exchange Commission reveals that it had an operating loss of $241.2 million in the 2000 fiscal year, up from the $11.5 million loss the year before. The filing said Idealab has more than $700 million in cash and other current assets on hand, which analysts called encouraging.

Four-year-old Idealab prefers to nurture companies that will benefit other firms that are already in its network, since it retains significant financial stakes in them. Its board of directors includes General Electric chairman and chief executive Jack Welch and Compaq Computer chairman Ben Rosen.