Application service provider Corio is planning
to raise up to $50 million in an initial public offering, according
to a recent filing with the Securities and Exchange Commission.
Corio manages, implements and remotely hosts business
applications for customers in the so-called application service
provider market. ASPs target their services at businesses looking to
outsource software upgrades and other internal computer systems
maintenance.
The San
Carlos, Calif.-based company said in its SEC filing, released on
Friday, that its offering will be managed by Goldman Sachs and
co-managed by underwriters Merrill Lynch and Robertson Stephens.
Corio was one of the first companies to enter the application
hosting market, alongside USinternetworking and Interpath. The
market has recently garnered
attention from a wide range of technology providers, including
giants AT&T, Oracle, SAP, Gateway and Dell. Several companies
are making an effort to grab a piece of the lucrative application
hosting pie, a market analysts say could be worth $23 billion by
2003.
Under the ASP model, customers pay a monthly fee to have their
software hosted and maintained by a service provider. Typically, the
company pays for the software license up front and forms a
three-year maintenance agreement with the ASP, which promises to get
the software up and running in about six to eight weeks or less.
To date, Corio rents business applications from software makers
such as PeopleSoft, SAP, Siebel Systems, Broadvision and Commerce
One. Revenues for Corio's fiscal period of 1999 totaled $5.8
million, up from $1.3 million in its year-ago period.
Corio, which is led
by former Oracle executive George Kadifa, said in the filing that it
has incurred "significant" operating losses and has yet to turn a
profit. As of Dec. 31, 1999, the company, which currently employs
about 456 workers, had an accumulated deficit of $48.2 million.
The company said it expects to use part of the proceeds from the
IPO to repay outstanding debt of approximately $10 million under a
loan agreement to computer services firm Comdisco. The company said
additional net proceeds from the offering will be used for working
capital and general corporate purposes such as marketing and sales
efforts, research and development, expansion, and possibly
acquisition of or investment in other complementary businesses,
product lines or technologies.
Founded in early 1998 by current chief strategy officer Jonathan
Lee, Corio said its client roster includes Internet giant Lycos and
online grocer Homegrocer.com.
Earlier this year, Corio won a $10 million investment
from computing giant Microsoft for joint application hosting
marketing and sales efforts. To date, companies that have already
taken an equity stake in Corio include PeopleSoft, Siebel,
Concentric Networks and Sun Microsystems.
The company said it plans to trade on the Nasdaq under the ticker
symbol "CRIO."
