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Two new technology stocks list despite dramatic Nasdaq fall

By Aimee McClinchy

Friday 7th April 2000

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The Nasdaq's worst performance in its history was reflected in local listed technology stocks but fears the bubble has burst have not deterred two more local companies from listing.

Telco solutions company GDC Communications, developing an ASP (applications service provider) service, and online music retailer EstarOnline, have targeted April 26 as listing day.

Their investment statements were released this week as the roller-coaster Nasdaq, stung by the Microsoft anti-trust ruling, made a 349-point plunge and then recovered.

These falls affected already listed technology stocks, with Advantage Group closing on Wednesday 25c down at $4.95. Other technology-based stocks fell too: Eforce, the renamed Paynter Timber, closed at 37c, down from 40c, and Ebet remained unchanged at 70c. Yesterday morning all three were trading at the same lower price.

Online cosmetics retailer Beauty Direct, the first e-stock to list at an issue price of 25c a share, was down to 18c on Wednesday and 17c on Thursday.

Both GDC, a 12-year-old company issuing at $1.50, and EstarOnline, a 12-month-old company issuing at 60c, believe their company structures can withstand the hype.

GDC has turned around its performance since 1994 and had revenues of $33.5 million in 1999 with net profit after tax of $3.2 million. It has more than 250 employees and at least 70 more staff to be appointed this month, directors said.

The 5.8 million new shares on offer to raise $8.7 million have already been allocated and there is no public pool.

GDC Communications' project division, under managing director Paul Honnor, will extend its service providing networks to companies under its ownership and become established as an applications service provider (ASP). An ASP is a company that provides and hosts IT services for companies that do not want to run their own IT activities.

Analysts believe GDC is poised to buy Telecom maintenance subsidiary ConnecTel but GDC is not commenting.

The parent company of music retailer CDStar, Christchurch-based EstarOnline is trying to raise $10 million through an offer of 16.67 million shares. EstarOnline chief executive Matthew Darby said the funds would be used to fund expansion into Canada and for other revenue streams.

Both EstarOnline and GDC Communications' offers close on April 19.

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