A Lust for Profits
Pornography is a huge and growing cyberspace draw. But will salacious Web sites be a hit on Wall Street?
Adult companies believe a breakthrough is at hand, however. The industry is abuzz with hope over Playboy.com's impending IPO, which is being underwritten by top-tier investment bank Credit Suisse First Boston (box, Page 43). "With First Boston underwriting the Playboy.com deal, it validates that this is a real industry, that there's real revenue," says Warshavsky, who has reshuffled IEG's management and would like to attract Goldman Sachs for his next crack at an IPO.
If Playboy.com is a hit, Wall Street may start taking a closer look at the last dot-com niche it has yet to invade. "If there's a company that has strong fundamentals in an area that is continuing to grow, I think the market would end up accepting them," says Craig Gould, vice president of corporate finance at National Securities Corp. Good candidates, he adds, would be film or magazine producers like Vivid and Zane Entertainment, which have built strong brand-name recognition among connoisseurs before branching into cyberspace.
Normal guy. As for moral qualms, they may be of secondary importance to financiers in the grip of dot-com madness. "I'm not a weirdo or a pervert, it's not my deal," says Bruce Biddick of Centex Securities, a microcap underwriter in La Jolla, Calif. "I've got kids and a family. But if I can see as an underwriter going out and making bucks on people being weird, hey, dollars are dollars. I'm not selling drugs. It's Wall Street."
Porn's stock-market fate may ultimately depend on whether small investors raise a stink. "People really pay attention to what's in their mutual fund," says IDC's Maclachlan. "A certain percentage of investors don't want to invest in companies that support certain causes, or harm animals, or whatever." Many prominent "sin stocks," however, continue to perform despite heaps of negative press. "People are still buying Philip Morris," says Joel Isaacson, head of the financial planning firm Joel Isaacson & Co., "and I think a lot of people might say tobacco is worse than pornography."
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