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AOL Latin America, a joint venture between AOL and Venezuela’s media giant Cisneros Group, priced 25 million shares for its IPO today at $8 a share, at the bottom of the estimated range of $8 to $10. AOL Latin America raised $200 million, way below the $425 million it hoped to raise originally with its $15 to $17 price range, reflecting the poor market conditions for Net companies targeted at Spanish and Portuguese-speaking audiences. “This price reflects the current market conditions. AOL Latin America was determined to do this deal, and they just had to take the price reduction,” says John Tonelli, chairman of investment bank International Venture Partners. Analysts have criticized AOL Latin America for seeking to go public at such an early stage of development in the region. So far, the company has only 129,000 subscribers among the five million Internet users in Brazil. It has only recently launched in another major market, Mexico, and will launch its Argentine portal on Tuesday. Analysts are concerned about the low-revenue prospects for a company that has racked up $53.1 million in losses between December 1998 and March 31 and that is targeting a region where e-commerce and advertising figures remain underwhelming due to region-wide barriers, such as low credit card usage, faulty postal services, and high import tariffs. “This is more like a venture capital deal where the market takes all the risk,” says Lars Schonander, Internet analyst at ING Barings. AOL Latin America decided early on that it would lean on its marquee name to convince analysts of its chances to become a heavy hitter in Latin America’s fast-growing Internet market. But early last week, the market seemed reluctant to give the company the benefit of the doubt, forcing it to postpone the IPO by a week and slash its targeted price by about 50 percent. The company also brought AOL President and COO Bob Pittman onto the pre-IPO road show to generate much-needed enthusiasm. Nevertheless, industry participants do agree that AOL Latin America has the necessary Internet savvy and deep pockets to prevail in the long term. “This is certainly a company that understands better than most what the Internet industry is all about,” says David Joyce, Latin American analyst at investment bank Guzman & Co. According to Jupiter, the region would boast 65 million users by 2005, up from the current 10 million. E-commerce figures should then reach $8 billion, up from about $500 million now. The AOL Latin America deal is the first IPO since the market crash in April and could open the door to other regional companies that have been eyeing the Nasdaq for some time. Related Articles from The Industry Standard: AOL’s Southern Strategy AOL Latin America Slashes IPO Price AOL Latin America Puts Faith in Family Name Copyright � 2000 The Industry Standard

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