O.C. BUSINESS PLUS : IPO Raises Hopes at Collectors Universe : Investment: Struggling Santa Ana auction and authenticating company seeks $46 million influx.

Santa Ana-based Collectors Universe Inc., which auctions collectibles such as coins and memorabilia, hopes to raise up to $46 million in an initial public offering.

The company, created in February by the combination of five companies in the collectibles and auction industry, already faces a crowded field with established online competitors such as eBay Inc. and Yahoo! Inc. as well as traditional rivals such as Sotheby’s Inc. and Christie’s Inc.

In February, the owners of Professional Coin Grading Service acquired several other authentication and grading firms and, along with its sports-related collectibles firm, consolidated the companies into Collectors Universe.

The company said proceeds from the offering, which will be underwritten by Needham & Co., will go toward increasing its advertising and marketing programs and to acquire collectibles for resale in the company’s auctions. The company did not say how many shares it would offer at what price.

The firm had a net profit of $387,000 on revenues of $22.6 million in the year ended June 30, according to the company’s filing last week with the Securities and Exchange Commission. But in its most recent quarter, the company lost $440,000 on revenue of $8.2 million as gross margins fell and operating costs rose.

The company also said its Internet operation, the key to its future growth, is not profitable.

While conducting online auctions is the company’s fastest growing revenue stream, increasing 250%, to $4.9 million last year, the bulk of its sales--$17.7 million--came from its authentication and grading services, which verify the quality of merchandise being sold.

The authentication and grading services, however, offer better margins than the auction side of the business, according to the company’s filing with the Securities and Exchange Commission. Because that area has not grown as fast as the auction business, the company’s overall gross margins slipped last year to 61.6%, from 73.5%.