Wall Street welcomes the cyber contender

Wired, the fashionable but loss-making magazine, is the latest in a series of Internet-related stock offerings to cash in on Wall Street's cyber frenzy, which in the past year has seen stock in other loss-makers such as Yahoo! reach astronomic levels.

Goldman Sachs, which will be handling the initial offering, announced last week that Wired Ventures, which publishes the magazine, would be offering investors 6.3 million shares - or roughly 17 per cent - of the company at $12 (pounds 7.80) a share.

The sale should raise $76m and result in a market capitalisation for the company of around $565m. This is a figure that has left many analysts questioning the wisdom of what Goldman Sachs calls "hi-tech investment opportunities".

Wired is a monthly magazine devoted to the Internet and cutting-edge computer technology with a circulation of 325,000. Spin-offs include an Internet edition, HotWired, and a start-up book publisher, HardWired. It has also announced plans to introduce HotBod, a "web browser" to help Internet users navigate around cyberspace.

The magazine, which routinely features media celebrities such as Microsoft's Bill Gates, TCI's John Malone and Bell Atlantic's Ray Smith in irreverent poses on its cover, is credited with making the nerdish world of computer technology hip. It was founded in San Francisco in 1993, and was the first magazine to portray the culture of cyberspace. It has managed to convince Americans that they need to buy the magazine in order to keep up with the digital world.

The good publishing stamp of approval was bestowed in 1994 when SI Newhouse, owner of Advance publications, which includes the Conde Nast magazine titles and Random House publishers, acquired a reported 15 per cent stake in Wired Ventures for $3.5m.

If the offer is successful, his investment will be worth some $67m.

The Wired offering, which is expected in late July, will leave 37.5 million shares outstanding and make paper millionaires out of some of its editors and journalists.

Founding editor Louis Rossetto's 6 million shares will be valued at $71.3m and Nicholas Negroponte, computer visionary and director of the Media Lab at the Massachussetts Institute of Technology, will enjoy a stake valued at $29m.

Alhough Wired is the most recognisable publication devoted to computer innovations - "smart media for smart people" - many analysts judge the $12 share price (at nearly 18 times the company's 1995 revenue) as speculation reminiscent of the great tulip craze of 18th-century Holland. "A magazine in the US typically sells for within one to two times its gross revenue but Wired is being priced at 171/2 times that," says New York-based media consultant, Martin Walker. "There is no magazine in the world with a 325,000 circulation that's worth that kind of money.

"They're suffering from Silicon Valley fever."

According to its latest report to the Securities and Exchange Commission, Wired Ventures lost $3.4m on sales of $7.6m in the first quarter of the year. Last year it lost $6.5m on sales of $25m and $3.5m on revenue of $9.2m in 1994.

HotWired has yet to show any revenue at all. As an Internet magazine, it cannot charge a subscription so has to rely on advertising revenue. But, Mr Walker says: "Advertisers are unable to measure the impact of their advertising."

Nor has Wired's venture into Europe been successful. Its joint venture with the Guardian broke up acrimoniously last year, and the European edition is struggling to find a niche.

This is not the first time Goldman Sachs has underwritten a company that carries the magic word "Internet" but lacks a proven means of revenue. In April, it underwrote Yahoo! - the Internet company whose software searches the net for specified information. At an opening price of $13, shares instantly soared to $43 (valuing the company at an astonishing $1.1bn) before dropping $33 at the end of the first day's trading. Last week Yahoo! shares were at $28 - still 528 times the company's revenue.

Whether Goldman Sachs is lending its name to an offering of virtual junk or, as the Wired Ventures offering statement says, "a new kind of global, diversified media company engaged in creating a competitive, branded content with attitude for print, on-line and television" is for investors to judge.

"Outside of a lot of excitement Wired hasn't proven itself in any way," says Mr Walker. "I can't say that [the offer] is crazy or wrong because the market decides. But whatever it is that they smoke in California, they don't smoke it here."

voicesGood for Lana Del Rey for helping kill that myth, writes Grace Dent
Life and Style
fashion Designs are part of feminist art project by a British student
The University of California study monitored the reaction of 36 dogs
sciencePets' range of emotions revealed
Snoop Dogg pictured at The Hollywood Reporter Nominees' Night in February, 2013
people... says Snoop Dogg
Life and Style
food + drinkZebra meat is exotic and lean - but does it taste good?
Arts and Entertainment
Residents of Derby Road in Southampton oppose filming of Channel 4 documentary Immigration Street in their community
voicesSiobhan Norton on why she eventually changed her mind
Arts and Entertainment
The Tour de France peloton rides over a bridge on the Grinton Moor, Yorkshire, earlier this month
ebookA unique anthology of reporting and analysis of a crucial period of history
Scottish singer Susan Boyle will perform at the Commonwealth Games opening ceremony in Glasgow
commonwealth games
Arts and Entertainment
Dwayne 'The Rock' Johnson stars in Hercules
filmReview: The Rock is a muscular Davy Crockett in this preposterous film, says Geoffrey Macnab
Life and Style
Arts and Entertainment
British author Howard Jacobson has been long-listed for the Man Booker Prize
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

PMO Analyst - London - Banking - £350 - £400

£350 - £400 per day: Orgtel: PMO Analyst - Banking - London - £350 -£400 per d...

Cost Reporting-MI Packs-Edinburgh-Bank-£350/day

£300 - £350 per day + competitive: Orgtel: Cost Reporting Manager - MI Packs -...

Insight Analyst – Permanent – Up to £40k – North London

£35000 - £40000 Per Annum plus 23 days holiday and pension scheme: Clearwater ...

Test Lead - London - Investment Banking

£475 - £525 per day: Orgtel: Test Lead, London, Investment Banking, Technical ...

Day In a Page

Noel Fielding's 'Luxury Comedy': A land of the outright bizarre

Noel Fielding's 'Luxury Comedy'

A land of the outright bizarre
What are the worst 'Word Crimes'?

What are the worst 'Word Crimes'?

‘Weird Al’ Yankovic's latest video is an ode to good grammar. But what do The Independent’s experts think he’s missed out?
Can Secret Cinema sell 80,000 'Back to the Future' tickets?

The worst kept secret in cinema

A cult movie event aims to immerse audiences of 80,000 in ‘Back to the Future’. But has it lost its magic?
Facebook: The new hatched, matched and dispatched

The new hatched, matched and dispatched

Family events used to be marked in the personal columns. But now Facebook has usurped the ‘Births, Deaths and Marriages’ announcements
Why do we have blood types?

Are you my type?

All of us have one but probably never wondered why. Yet even now, a century after blood types were discovered, it’s a matter of debate what they’re for
Honesty box hotels: You decide how much you pay

Honesty box hotels

Five hotels in Paris now allow guests to pay only what they think their stay was worth. It seems fraught with financial risk, but the honesty policy has its benefit
Commonwealth Games 2014: Why weight of pressure rests easy on Michael Jamieson’s shoulders

Michael Jamieson: Why weight of pressure rests easy on his shoulders

The Scottish swimmer is ready for ‘the biggest race of my life’ at the Commonwealth Games
Some are reformed drug addicts. Some are single mums. All are on benefits. But now these so-called 'scroungers’ are fighting back

The 'scroungers’ fight back

The welfare claimants battling to alter stereotypes
Amazing video shows Nasa 'flame extinguishment experiment' in action

Fireballs in space

Amazing video shows Nasa's 'flame extinguishment experiment' in action
A Bible for billionaires

A Bible for billionaires

Find out why America's richest men are reading John Brookes
Paranoid parenting is on the rise - and our children are suffering because of it

Paranoid parenting is on the rise

And our children are suffering because of it
For sale: Island where the Magna Carta was sealed

Magna Carta Island goes on sale

Yours for a cool £4m
Phone hacking scandal special report: The slide into crime at the 'News of the World'

The hacker's tale: the slide into crime at the 'News of the World'

Glenn Mulcaire was jailed for six months for intercepting phone messages. James Hanning tells his story in a new book. This is an extract
We flinch, but there are degrees of paedophilia

We flinch, but there are degrees of paedophilia

Child abusers are not all the same, yet the idea of treating them differently in relation to the severity of their crimes has somehow become controversial
The truth about conspiracy theories is that some require considering

The truth about conspiracy theories is that some require considering

For instance, did Isis kill the Israeli teenagers to trigger a war, asks Patrick Cockburn