How Much Rope Will Investors Give Tech IPOs This Time?
I mentioned yesterday that the bookrunners had closed the book on Yelp a couple of days ago, a good sign that the local business review website would price above the $12 to $14 a share price talk. Indeed it did — at $15 a share.
Yelp had revenues of $83.3 million in 2011, up 74 percent from 2010, but has never made a profit, with a net income loss of $16.7 million last year. The company will assure everyone it is concerned with growing revenues, not profits. That, of course, was the mantra in the 1990s...until investors tired of it, and the whole tech bubble imploded.
Ancient history? Marc Andreesen doesn’t think so...here’s what he said on our air this morning: “The public market is still completely traumatized by the dotcom crash. I think investors and reporters and analysts and everybody is determined to not get taken advantage of again and that is what everybody who lived through 2000, what they kind of remember.”
The issue is, what is truly unique about the company? What stops anyone from horning in on their territory? What stops ...or Google...or Foursquare?
That question could be asked of several other tech giants, like Groupon. It priced in November at $20 a share, well above the price talk of $16 to $18 a share; it closed yesterday at $19.50.
Yelp CEO Jeremy Stoppelman will be on “Squawk on the Street” at 9:50 a.m. ET; I’ll be speaking with the NYSE’s head of listings, Scott Cutler, at 10:20 a.m. ET on the future of tech IPOs. There are 200 IPOs in the pipeline now! What will get them out to the public?
That’s easy: have something to do with cloud computing . Of the six tech IPOs this year, four have been cloud computing players, and all are doing well:
- Guidewire up 74%
- Greenway up 48%
- Bazaarvoice up 38%
- Brightcove up 35%
We’ll see how well players outside this space can do.
1) The European Central Bank’s Mario Draghi, at a dinner last night, made it clear that there would not be more injections of cheap cash into Europe any time in the near future.
2) Rajoy to the European Union: drop dead. Spanish Prime Minister Mariano Rajoy bluntly told the EU the country would not make the agreed-upon target of 4.4 percent deficit-to-gross domestic product, and would instead come in at 5.8 percent in 2012. Expect other countries, like Ireland, to miss targets, as well.
3) Big Lots shares drop 1.7 percent pre-market after the close-out retailer reported fourth-quarter earnings and provided first-quarter forecast largely below the Street’s expectation. Big Lots beat fourth-quarter earnings estimates on strong demand for its discounted products, with same-store sales increasing 3.4 percent for U.S. stores. The company reported fourth-quarter earnings of $1.83 excluding items, compared to the Street’s $1.73 estimate. It forecast first-quarter earnings of $0.75 to $0.81, below analysts’ $0.81 expectation. Big Lots has seen its gross margins fall as it continues discounting to keep up with rivals Dollar General and Wal-Mart Stores.
4) Sara Lee shares jump 5.2 percent pre-open — poised to open at a new high — after the U.S. food and beverage maker said it expects the spin-off of its coffee and tea segment, which will be moving to the Netherlands, to be finished by the end of June. Sara Lee’s move is part of a plan to split itself into a North American meat company and a European-based coffee and tea business. Each share will be split into two, one for each business. Additionally, in a separate statement, Sara Lee said it would pay a $3 dividend to its shareholders soon after the divestment of its coffee and tea business.
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