Taking advantage of a revival of the stock market in general and of Internet-related stocks in particular, Computer Literacy went public November 20, issuing three million shares at $10 per share. The company had originally sought to price the public offering at $7-$9 per share, but the demand for Internet stocks pushed the price to $10, and it closed at the end of the day at just below $20; on November 24 the stock closed at $17.75 per share. What makes the results even more impressive is that in October, Computer Literacy, citing a weak market, had pulled its planned offering.
The company reported that it will use the net proceeds from the sale -- roughly $25 million -- for a variety of purposes, including expanding its direct sales, telesales and marketing operations and systems as well as upgrading its infrastructure. Computer Literacy will also spend $6.1 million on capital expenditures.
In its revised prospectus, Computer Literacy said that, based on preliminary results, total sales in the third quarter ended October 31 amounted to $5.2 million, with $2.9 million generated by its online activities and $2.3 million coming from its retail operations. During the quarter, Computer Literacy closed one of its bookstores, leaving the company with three retail outlets. The company reported that, as of the end of October, its online customers have increased to 58,576 from the July 31 total of 44,000 customers.
Founded in 1994, Computer Literacy has yet to turn a profit; through July 31, 1998, its accumulated deficit was $7.4 million (News, Sept. 14). Sales of technical books account for the vast majority of Computer Literacy's revenues, although the company has added training materials, product manuals and research reports to its product mix, bringing the total number of items it offers to more than 300,000.