By Stephen Baker in Paris
News of the F/rite Air initial public offering appeared Apr. 1 on a Dutch financial Web site, Iex.nl. In a Europe newly obsessed by high-tech stocks, it unleashed a buying frenzy. After 12 hours, the famously conservative Dutch investors had placed orders for $7 million worth of F/rite Air stock. They didn't seem to care that the Iex.nl Web site was neither a bank or a brokerage, nor that Frite Air was Dutch for "hot air." And, of course, the date, April Fool's Day, passed them by completely.
Indeed, such is the rage for high-tech issues, that orders for F/rite Air kept pouring in on Sunday and Monday, after Dutch newspapers had run front-page stories on the April Fool's IPO hoax. "We had 500 people placing orders for the stock," says Iex.nl founder Michael Kraland. "Not one asked for a prospectus."
You'd think Dutch investors would know better. Just two weeks earlier, the country's biggest-ever tech IPO, Internet service provider World Online, fizzled on the Amsterdam exchange. The day of the IPO, protesters outside the stock exchange criticized the company and its founder, Nina Brink, for selling little more than -- you guessed it -- Frite Air.
BILL'S ON BOARD. What excited investors so much about the F/rite Air issue? According to the Web site, it was a bold new technology, secretly tested in Tel Aviv and Berkeley, Calif., that microwaved air molecules. The purified product, used by the Israeli Air Force, not only regenerated human tissue and stimulated brain cells but also battled depression. Pharmaceutical giant Pfizer, the Dutch site went on, was investing in the company and looking to F/rite Air as a next-generation Viagra. Investors supposedly included Microsoft co-founders Paul Allen and Bill Gates, along with mega-investor and philanthropist George Soros.
The popular Dutch Web site told readers that it had acquired rights to purchase a large lot of stock that would be issued the following Monday on the Nasdaq. It said the initial price would be between $16 and $18 but added that analysts were expecting F/rite Air to soar to $80 on the first day of trading. To avoid running afoul of authorities, Kraland told readers not to send money or bank information but simply to send e-mail reserving blocks of shares.
Orders totaling millions of dollars started pouring in immediately. "It shows how easy it is to be an investment bank these days," laughs Kraland. He says many of would-be investors instructed Iex.nl to sell their stock when it reached $80. Others seemed content to ride the miracle hot-air technology even higher.