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Posts Tagged ‘Changyou’

Here is a recent article from CNN.

“If you have been an investor in technology IPOs in recent months you’ve done well.

Starting in April, and really gathering momentum this summer, there has been a slew of tech companies that leapt through the public market window including Changyou (CYOU), Rosetta Stone (RST), OpenTable (OPEN), and most recently Emdeon (EM).”

The article continues,

“Right now in Silicon Valley, investment bankers are busy making the rounds of promising portfolio companies trying to convince them of the wisdom of an IPO. There is always the question of what kind of company can – or should – go public. During the last wave of tech IPOs, after the dotcom bust, the rule of thumb was that firms with $100 million in revenue and profitability were IPO candidates.

Investment bankers on the prowl in Silicon Valley

Now, according to one prominent venture capitalist who asked to remain anonymous, investment bankers are telling him, “If a company can show revenue of $15 million per quarter, a good business model – and if not profitability, a path to profits – they can deliver an oversubscribed offering.” (One wonders wonder whether these simply are investment bankers who have had nothing to do for the last 12 months, trying to make their bonus figures.)

Venture capitalists have not had much to be happy about, either. It wasn’t just IPOs, but acquisitions that came to a screeching halt during the recession. Both of these groups desperately want the IPO window to stay open, and so far it is.”

And concludes,

“In Google’s day it was bulge-bracket investment banks – Morgan Stanley (MS), CSFB (CS), Goldman (GS), Lehman Bros or no one. The economics of the banks (characterized as going “down-market” to even do $500 million IPOs) required bigger deals. Today’s deals, with their much more modest size, are better tailored for the boutique banks – Thomas Weisel Partners, Jeffries, JMP Securities, Piper Jaffray, and the like. These are the banks pounding the streets in Silicon Valley the hardest.

Could it all end badly? Of course, and usually it does when the rush toward IPOs at some point sends half-baked companies into the public markets and they tank. But between now and then we are likely to see a group of very high quality tech companies look to go public – think Greenplum, LinkedIn, Pacific Biosciences and Zynga among many others.

For those investors with the stomach, it might not get much better.”

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Reading an analysis over the 4 IPO´s this year – OpenTable, Mead Johnson Nutritional, Bridgepoint Educational and Changyou – I came across some new speculations regarding possible IPO´s this year. We covered this topic yesterday as well.

Here is some excerpts from a Wall Street Journal article.

“In particular, the debut of network software firm SolarWinds Inc. last week showed there’s “appetite for untested, unproven, unknown names out there,” says Brenon Daly, a senior financial analyst at The 451 Group.

However, Mr. Daly cautions that few tech newcomers can match the financial strength of SolarWinds, which generated strong revenue and net-income growth in the first quarter, even as many more-established technology companies reported declines.

But he said there could be strong interest in companies such as closely held computer-security outfit Fortinet Inc.; security risk and compliance service provider Qualys Inc.; network performance software company NetQoS Inc., and systems and security management firm BigFix Inc.

A Fortinet spokesman said the company is considering an IPO, as well as other options, but has no definitive plans at this point. A Qualys spokesman said the firm wants to prepare for an IPO by the fall of 2010. NetQoS said it had no immediate plans to go public, “but all options are on the table.”

It continues…

“Another area to watch in the 12 to 18 months is smart-grid technology, which allows for more efficient power distribution, based on where and when demand and supply exist, says Trip Chowdry, managing director of equity research at Global Equities Research.

On her radar screen is closely held DS2, a company based in Spain that provides power-line communications semiconductors.

In the next three years, some cloud computing and enterprise-level mobility technology firms could also be ready for IPOs, she added.

For now, though, the tech environment “continues to be challenging. Investors should look for companies who have a very sticky customer base,” she says.”

Read the full article here.

Please comment on other candidates and I will seek out some info on the topic.

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