Avoid the Secondary Offering and Lock-Up Period Pitfalls

Nov 27, 2011, 8:00 am EDT
Avoid the Secondary Offering and Lock-Up Period Pitfalls

When a company goes public — especially in an emerging industry — it’s important to have a nice spike on the first day of trading.  In a sense, this is a show of strength as well as a media event.

Here’s a look at some of the notable first-day performers for 2011: Company Return LinkedIn 109.4% Zillow 78.9% Groupon 30% Angie’s List 25%

Part of these pops came from investors’ excitement to juice up their portfolios with growth plays.  But there has been another catalyst:  Wall Street underwriters have generally issued small amounts of shares.  In fact, for the companies in the table above, it was routine to float less than 10% of the outstanding shares. Read 

Groupon Crashes Through Its IPO Price

Nov 23, 2011, 11:02 am EDT

After spiking 30% on Groupon‘s (NASDAQ:GRPN) IPO debut in early November, GRPN shares had been fairly quiet, with the stock remaining in a tight range of $24 to $25.

Things changed for the worse this week. The stock had broken through its $20 IPO price and was trading under $18 as of midday Wednesday, meaning some painful losses for investors who jumped into the stock right after the opening.

No doubt, the horrible performance of the equities markets in general has been a key factor. Still, there are lingering doubts about Groupon’s business model itself, the flaws of which the media keeps bringing to light. Consider a recent story from NBC: A London baker nearly went bust because a Groupon offer resulted in the business having to make 102,000 cupcakes — at a 75% discount! The store lost nearly $20,000 on the “deal.” Read 

Pandora: Investors Don’t Hear the Music

Nov 23, 2011, 10:40 am EDT
Pandora: Investors Don’t Hear the Music

Even though Pandora (NYSE:P) is a next-generation online music operator — with a focus on the radio market — its post-IPO stock performance has been lousy. Since mid-June, the shares are off 43%. Then again, investors have been skeptical about whether Pandora can generate a profit. Doesn’t the company have to pay substantial amounts to license its content?

Perhaps so. But in the latest quarter, Pandora was able to produce net income of $638,000 (break-even on an earnings-per-share basis). This compares to a loss of $1 million, or 15 cents per share, in the same period a year ago.

What’s more, Pandora continued to grow at a torrid rate. Revenues nearly doubled to $75 million, which handily beat the Wall Street consensus of $71 million. Breaking things down, advertising revenues soared 102% to $66 million, and subscription revenues increased by 80% to $9 million. Read 

Asset Manager’s IPO Struggles Out of the Gate

Nov 22, 2011, 12:06 pm EDT

Shares of asset manager Manning & Napier (NYSE:MN) went public last Friday, pricing at $12 each. Unfortunately, it wasn’t an easy deal to pull off, as the expected range on the transaction was $15-$17 a share. What’s more, the stock was unchanged on its debut.

Despite all this, Manning & Napier is a solid company. Founded in 1970, the firm is now a broad-based provider of managed accounts, mutual funds and collective investment trust funds. It’s also a leader in “life cycle” funds, which have become quite popular for retirement planning.

The company takes a team-based approach to investment management, which is meant to achieve absolute returns (with an emphasis on value plays), meaning a portfolio should be positive in any environment. In light of the market volatility and global uncertainty, this approach has certainly been attractive to clients. Read 

Salesforce.com Skittishness May Hit Cloud IPOs

Nov 22, 2011, 11:32 am EDT
Salesforce.com Skittishness May Hit Cloud IPOs

Marc Benioff left Oracle (NASDAQ:ORCL) in 1999 to start his own business software company, Salesforce.com (NYSE:CRM). But his new venture would be unconventional — the software would be accessed via the Internet and sold with ongoing subscriptions. With this approach, Salesforce would lower costs for customers since there would be no need to buy expensive servers (and maintain them). And Benioff believed in making the software extremely easy to use — much like Amazon.com (NASDAQ:AMZN).

At first, this “cloud” approach was controversial. But Benioff was tireless in evangelizing the concept.

Of course, now cloud services are one of the biggest trends in tech.  And Salesforce is the dominant player in the industry, with a market cap of a cool $15 billion. Read 

Intermolecular Shares Built for Tech’s Big Picture

Nov 22, 2011, 10:48 am EDT
Intermolecular Shares Built for Tech’s Big Picture

Intermolecular (NASDAQ:IMI) had a tough time finding investors for its IPO late last week. Even though the price range was $12-$14, the company priced the deal at only $10 — and it still wasn’t low enough. On its first day of trading, the stock fell by 5%.

But might this ultimately be a good deal for investors?

Founded in 2004, Intermolecular provides high-end research services for the semiconductor and clean-energy industries. Because of its focus, the company has been able to develop sophisticated processing tools and equipment. For example, its so-called combinatorial processing allows research and development experimentation — on various materials — that can be 100 times faster than traditional methods. Read 

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