LoopNet IPO Prices Tuesday, Trades Wednesday

The company plans to sell 4 million shares and certain stockholders will sell 2 million shares. The underwriters--Credit Suisse, Thomas Weisel, Pacific Crest Securities and Pacific Growth Equities-- will have the option to buy another 900,000 shares to cover over-allotments.

LoopNet was launched in 1997 in an effort to gain a piece of the commercial real estate marketing pie by allowing commercial real estate agents to list and search for available properties with less cost and greater efficiency. The company now has 1.3 million basic members--who pay no fee for limited access and functionality--and 65,000 premium members who pay $49.95 per month for enhanced listings and more advanced search capabilities.

The company generates 80% of its revenue from premium members, 40% of which are replaced each year. The other 20% of its revenue is generated by advertising and by licensing its technology to third party commercial real estate sites.

In the quarter ended March 31, 2006, LoopNet reported net income of $3 million and revenue of $10.2 million, compared with net income of $1.9 million and revenue of $6.2 million in the first three months of 2005. For all of 2005, revenue hit nearly $31 million, an 82% increase over 2004. Operating cash flow has increased 119% to $12.4 million, with a 40% profit margin.

The biggest threat to LoopNet is competition. Its primary competitor is CoStar Group, which provides more of a one-stop shop than LoopNet, though like CoStar LoopNet recently began offering a service that provides information on commercial property sale transactions. Behemoth's like Google, Yahoo and Microsoft are also considered threats due to the business' low barrier to entry.

LoopNet is run by chief executive Richard Boyle. Boyle joined LoopNet in 1999 as Vice President, and was in charge of product and technology development and operations prior to being named President & CEO in 2001.