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Posts Tagged ‘IPO news’

Article from GigaOM.

“Reports of the death of Groupon’s IPOplans have apparently been greatly exaggerated. The online daily deals pioneer filed an updated version of its S-1 document with the Securities and Exchange Commission on Friday, as part of its preparation for a planned initial public offering of its stock.

Since the company first filed its S-1 in June, Groupon has been roundly criticized for its seemingly shady accounting practices and that its early founders and investors have already cashed out billions of dollars worth of the company’s stock. CEO Andrew Mason was so irked by the negative press that he sent a long email to Groupon’s employees filled with talking points they could use to defend the company. Ironically, when that email was inevitably leaked to the press, it only attracted more criticism; the missive was seen as a violation of the SEC’s quiet period rules.

These issues coupled with the larger environment of economic unrest have fueled rumors that Groupon had put its stock market plans on ice. But Friday’s S-1 update — the third revision since June — shows that the company is still keen to go public. Despite Groupon’s swaggering reputation and Mason’s grumbling about haters, the company’s management is showing that underneath it all, it’s actually willing to make changes and respond to criticism. Specifically, the latest filing has a few notable tweaks: Groupon said it plans to scale back its marketing budget, reported that its revenue bookings were slightly higher in the second quarter of the year, and reprinted the full text of Mason’s leaked email.

More than anything, though, updating the S-1 shows that Groupon is still serious about making its stock market debut at some point soon. But ultimately, that will only happen if investors show that they have an appetite for the company’s shares.”

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Article from SFGate.

“Facebook has sold about $6.6 million worth of its shares to the investment fund GSV Capital Corp. as the company is believed to be preparing for an initial public offering next year.

GSV said Monday that it had purchased 225,000 shares in the world’s most popular social network at an average price of $29.28 per share. The investment makes up about 15 percent of the publicly traded fund’s total portfolio.

On its website, GSV describes itself as a way for its investors to access “dynamic and rapidly growing” companies ahead of their IPOs.

The investment fund did not say how large its stake in Facebook is, compared with the company’s overall ownership, and did not offer clues to the overall valuation of the social network.

A $500 million investment in the Palo Alto company by Goldman Sachs and Digital Sky Technologies in January valued the company at $50 billion, though some anticipate the IPO will push the company to a valuation of as much as $100 billion.”

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Article from SFGate.

“The lofty language in Groupon’s initial public offering filing is prompting comparisons to Google’s highly anticipated premier seven years ago, as are the lofty valuations.

Various sources have pegged Groupon’s implied worth at $20 billion to $30 billion, dropping it squarely in the neighborhood of Google’s $27 billion at the time of its 2004 IPO.

Groupon is a fast-growing business, luring 83 million subscribers to its daily deal e-mails in 2 1/2 years. And it might end up a perfectly solid one. But for one simple reason and a lot of complicated ones, Groupon is no Google.

Here’s the simple one: Google reinvented an industry. Groupon tweaked one.

There are limits on how transformative a force the Chicago company can ever be, at least pursuing its current business model.

Why?

Strip away all the hope and hype surrounding Groupon and you’re left with this: It’s a coupon company. Its major innovation was to distribute them through e-mail instead of the Sunday paper.

Granted, Groupon does this very well, with a colorful corporate culture that has deservedly won it plenty of fans and attention. Andrew Mason is one of the most refreshing, entertaining and straightforward CEOs in the last decade. His letter in the IPO filing last week carried loud echoes of the “Don’t Be Evil” sentiment in Google’s S-1.

“We want the time people spend with Groupon to be memorable,” he wrote. “Life is too short to be a boring company.”

He added that the business is “better positioned than any company in history to reshape local commerce.”

But coupons have long had limited appeal among retailers and consumers for very specific reasons, and thus restricted sway over the larger retail market.

Small fraction used

In 2010, marketers distributed $485 billion worth of consumer packaged goods coupons, according to a report by NCH Marketing Services. But only about 1 percent of coupons are actually redeemed.

Everyone will occasionally take advantage of a deal that lands in their lap (or inbox), or wait for a sale on a high-priced item. But it’s a limited subset of people who routinely start their shopping by thinking, what can I buy, do or eat that’s on sale. Most people, most of the time know the brand, model or service they want and go from there. There’s no particularly compelling evidence that this is changing.

Here then is a key difference with Google: Thanks to the query you enter into its search engine, Google knows what you’re interested in at the precise point you’re ready to buy, and serves up ads to match.

Even its worst critics acknowledge this revolutionized advertising, bringing to the marketplace a level of scale and targeting never before seen. It unleashed a tectonic shift in how businesses spent their marketing dollars.

Since then, the Internet giant has plowed its huge profits into cutting edge research and development, pushing ahead the fields of information retrieval, language translation, image recognition, satellite imagery, self-driving cars and much, much more. There’s simply an order of magnitude difference in the respective levels of imagination and innovation on display at the two companies.

Reticent retailers

Groupon does remove some of the traditional friction surrounding discounts, by directly delivering deals that are increasingly personalized, while also – not incidentally – eliminating the stigma and hassle of clipping coupons. But the real sandpaper remains on the retail side.

Coupons are typically loss leaders, the discount a business is willing to swallow in order to get new customers in the door. By definition, such marketing tactics can only ever represent a sliver of the retail pie.”

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Article from SFGate.

“LinkedIn Corp. raised the expected price of its initial public offering by $10, to a new range of $42 to $45 per share, making it even more overvalued by any conventional metric.

In my Sunday column (sfg.ly/k0PpDv), I pointed out that LinkedIn was going public at valuations that far exceed established tech companies such as Google, Apple and Amazon – and that was based on its previous expected IPO range of $32 to $35.

At $45 per share, LinkedIn would trade at roughly 17 times its 2010 revenues and 100 times its earnings before interest, taxes, depreciation and amortization, according to Morningstar analyst Rick Summer. That metric, dubbed EBITDA, is seen as a proxy for cash flow. With just $15.4 million in 2010 profit, LinkedIn’s price-to-earnings ratio is meaningless.

By comparison, Google is trading at just under six times revenue and about 14 times EBITDA, Summer says.

LinkedIn still plans to sell between 7.8 million and 9 million shares, which would raise up to $406 million and give it a market value of up to $4.3 billion.

The Mountain View company, which operates an online network for professionals, is expected to set a final IPO price tonight and begin trading Thursday under the ticker LNKD.

Investors are often willing to pay inflated price-to-sales or price-to-cash-flow multiples for fast-growing companies like LinkedIn, Summer says. However, for a higher-risk situation such as LinkedIn, you could argue that investors should be paying a lower multiple.

Less than 10 percent of the company’s shares will trade publicly, which could keep the price up in the short term if demand runs high. But eventually, the venture capitalists and insiders who own the rest of the shares will want to unload some and that could send the price down.

As the first major U.S. social-networking company to go public, LinkedIn could become a favorite of investors who like “pure-play investable themes,” Summer says.

But that also makes it hard to come up with an appropriate value for the company. “This is not an industry we understand incredibly well,” he adds.

Unlike the dot-com companies of yore, some investors argue that social-networking companies deserve lofty valuations because they have “real businesses and real business models,” Summer says. He agrees that LinkedIn has a strong business model and a competitive advantage. “But that’s like looking at a house and saying, ‘It’s livable, it has four bedrooms and two bathrooms. It’s worth any price because it’s a real house.’ ”

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