WebSideStory Completes IPO
WebSideStory began trading today on the NASDAQ. Symbol is WSSI. This company has wanted to IPO for nearly 4 years. Last year it had revenues of more than $16.3 million and losses of just under $2 million. It turned profitable in the first six months of this year. The stock is trading above $9, up from its opening price of $8.50. They apparently sold 5 million shares in the IPO. My rough research shows about 15 million outstanding shares, giving this company a market cap of $135 million.
WebSideStory’s competitors include Coremetrics and Omniture. Coremetrics (Austin, TX) got a new CEO in March 2004 and had 60 employees at that time. Websidestory reported in its S-1 that it had 120 employees as of June 30, 2004. Omniture has the strongest story by far of the three companies–with faster revenue growth and more marquis customers, including eBay and AOL.
The largest company in this space may be NetIQ, which acquired WebTrends in 2001. NetIQ had revenue of $68 million in the quarter ended June 30, 2004 and a narrowing loss of about $7 million, but it offers many more services than just web analytics. It’s hard to tell how much of its revenue comes from WebTrends. The company had more than 1,200 employees in mid 2002.
Every serious internet business must use powerful web analytics services. Web developers and marketers rely on these tools to determine how many visitors your site has, where they are coming from, the ROI of marketing campaigns, what products are selling, what paths customers take before purchasing, and how site design changes impact revenue. There are free and cheap web stats packages everywhere, but once you’ve used a high-end package, you realize they are the key to eliminating guess work from your marketing and design decisions and turning your web site into an optimized revenue generating machine.
Many of our (Infobase Ventures) companies use Omniture SiteCatalyst.
WebSideStory IPO Update
WebSideStory, whose IPO was delayed in August until after Labor Day, plans to sell 4.4 million shares; pricing is expected to be $8-9 per share.
Largest IPO in Utah History
I blogged recently about the IPO of Extra Space Storage, which may have been the largest IPO in Utah history.
But that IPO will surely be dwarfed by the forthcoming IPO of Huntsman Chemical. Some speculate it may raise as much as $1.5 billion. The company has debts of approximately $5.8 billion, which it needs to pay down.
Now it will be interesting to see Huntsman’s market capitalization. I have a Utah Portfolio on Yahoo Finance which tracks all the publicly traded companies in Utah, and with Utah ties. Zions tops the list with a $5.5 billion market cap. Questar is at $3.3 billion. Nu Skin is at $1.8 billion. Huntsman, with 15,000 employees and revenues approaching $10 billion annually, may top them all.
Shopping.com IPO reduced slightly
From CBS Marketwatch: Shopping.com will raise $126 million instead of $143 million in its IPO.
The Israeli e-commerce firm said that it’ll offer 5 million shares and that inside stockholders will sell 1.9 million shares, down from 2.9 million previously. The company still plans to price the IPO at $14 to $16 per share. Goldman Sachs and CS First Boston are underwriting the deal. Shopping.com, which received about 38 percent of its 2003 revenue from the company’s relationship with Google (GOOG: news, chart, profile), plans to list its stock on Nasdaq under the symbol “SHOP.”
Ecost prices shares
Ecost, an online retailer similar to Overstock.com, priced its shares today at $5.80 per share.
Largest IPO in Utah History?
I heard today that Extra Space Storage, based in Salt Lake City, UT may have had the largest IPO in Utah history. It apparently sold 20.2 million shares at $12.50 per share, raising more than $240 million. If Yahoo Finance is correct, it’s market cap today was $400 million, which means that it sold more than half of its outstanding shares in the IPO. Does anyone know what the largest IPOs were prior to this one?
Entrepreneurs Need Liquidity; Tough Public Markets Slow Economic Growth
WebSideStory postponed its IPO today to after Labor Day. Lindows, an interesting Linux company founded by Michael Robertson of mp3.com fame, has indefinitely postponed its IPO. eCost, a profitable e-commerce company with revenues of more than $100 million in 2003 and profits of more than $6 million has lowered its price-range.
These are three exciting if not promising companies who ought to be able to go public. Perhaps they all will go public eventually. But in my opinion, the bar has been raised too high. The traditional IPO process demands too hot a market so that all the money-hungry hands that want a big piece of the pie can get their cut. In a cool market, there just isn’t enough irrational exuberance to go around.
Today’s “adverse market conditions” keep making it difficult for good companies to go public. But why? Why can’t good companies go public quietly, no matter what the market conditions are? Why does the market have to be so hot?
I like the Dutch Auction approach that Google has just used, which cuts out a lot of the intermediaries. I think if more retail investors were familiar with this process, and if the Street hadn’t created such an anti-Google media frenzy, the stock would have priced north of $100. Google would have gotten what it deserved. As it stands, Google was undervalued. Smart investors who saw past the negativity bought in at $85 and will get a nice ride upwards, north of $135, as Google soars past Yahoo’s market cap. Google is a better, more focused, more efficient company in my opinion. Its growth rate is much higher than Yahoo’s.
I’d like to see more companies by-pass the traditional IPO route and go with the Dutch Auction. I think this approach will succeed if more investors figure out how easy it is to get a bidder ID and bid on shares.
In a Dutch auction, the public sets the price–not the bankers. So why can’t good, decent companies go public, even in adverse markets, accepting a low price if that’s what the public is willing to pay, in order to get the advantages of being public? (Along with the disadvantages)
Who decides when a company’s IPO is postponed? Is it the investment bankers who can’t sell the deal? Is it the board of directors or the company’s management team who don’t want to accept such a low price?
Who loses when this happens? I think mainly the existing shareholders who need liquidity. Who wins? Perhaps nobody, except the attorneys who still have to be paid.
If you have insights know how and why IPOs are postponed, please let me know.
Also, I’m doing more research on reverse mergers with public shells, something I blogged about a few months ago, and Pink Sheets, and I’m going to pull out the book on Direct IPOs that I bought a few years back.
Liquidity is a key ingredient of free markets. Capitalism requires capital. If small and medium sized companies can’t achieve liquidity through public markets, then one major incentive of entrepreneurship is stiffled significantly.
I’m currently reading “The Mystery of Capital: Why Capitalism Triumphs in the West and Fails Everywhere Else” by Hernando de Soto.
De Soto claims that trillions of dollars of assets exist in under-developed nations but
“Because the rights to these possessions are not adequated documented, these assets cannot readily be turned into capital, cannot be traded outside of narrow local circles where people know and trust each other, cannot be used as collateral for a loan, and cannot be used as a share against an investment.”
“In the West, by contrast, every parcel of land, every building, every piece of equipment, or store of inventories is represented in a property document that is the visible sign of a vast hidden process that connects all these assets to the rest of the economy. Thanks to this representational process, assets can lead an invisible, parallel life alongside their material existence. They can be used as collateral for credit.”
Turning assets into investable capital is essential for entrepreneurs.
De Soto states that “the single most important source of funds for new businesses in the United States is a mortgage on the entrepreneur’s house.”
If we didn’t own titles to documented property that could be leveraged into capital for business formation, most small businesses in this country probably would never get started.
But similarly, if we can’t transform the assets (including the future value) of existing companies with ongoing operations and real growth opportunities into capital (through public offerings), then much of the growth potential that exists in entrepreneurial companies will not be achieved.
As a typical US Entrepreneur, I have borrowed against my home multiple times, turning that asset into capital, and then utilizing that capital to build companies which produce revenue and profits.
But almost all of the value of the companies I have helped created is completely locked up. Like an undocumented plot of land in the third world, I cannot borrow against my MyFamily.com stock, because the company is privately held (and my founders shares are still restricted).
If I could sell some of my equity, or borrow against it, I would turn around and invest it in new startups which have perhaps more growth potential (at least percentage wise) than MyFamily.com does with its 1,100 employees and market leading status.
But as long as my equity in MyFamily.com (and six other early-stage companies in which I own equity) cannot be turned into liquid assets, the economic growth which I can generate depends on using capital from other sources.
As an entrepreneur, I am becoming more and more obsessed with liquidity, since so much else depends on it.
I think the public markets should be far more open than they currently are. Unfortunately, in this country we are moving in the wrong direction. Because of corruption and lack of ethics, we require legislation like Sarbanes-Oxley, which raises the cost of running a publicly traded company nearly three-fold, according to estimates I have read.
Corruption has brought on legislation which hampers liquidity which stifles entrepreneurship. Our future economic growth depends largely on entrepreneurs. If we raise the bar to liquidity too high, all of us will suffer.
Claria (Gator) Delays IPO
Claria is postponing its IPO. Formerly known as Gator, Claria had 2003 revenues of about $90 million and net income of almost $35 million. They filed back in April. The IPO market must be extremely tough right now as companies seem to be pulling out left and right.
Google bidder registration ended yesterday
I went through the easy and fast process of becoming a Google IPO bidder yesterday, and found out how easy it was to use my Ameritrade account to get ready to bid on the IPO shares once Google opens the auction.
Paul Allen to buy 5 times more Google shares because of the anti-Google Media frenzy
I have been stunned at how many sharks smell blood and are circling Google and attacking with vicious criticism. They bemoan the Dutch auction approach, the voting rights, the price range being over $100 per share. Google has gone from being the best loved internet company in the world, doing everything right, to being attacked and hated by the media, investors, and everyone else almost overnight. Meanwhile, Google is in their quiet period and can’t respond or participate in the debate.
The firestorm, the media frenzy will soon pass. I can’t wait.
Google is still the smartest, best internet company since eBay. It will be worth tens of billions of dollars in the near term. I have never seen a company execute so well and make so many smart moves that anticipate where the world is heading.
But the frenzy will do some short term damage and drive the buy-and-flip crowd away from the IPO. Personally, I’m planning to buy 5 times more shares in the auction than I was planning to previously, precisely because of all these ridiculous attacks.
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