Making It Easier For Startups To Cash Out

Mon, Apr 13th 2009 6:35pm

Filed Under:
al gore, ipo

Companies:
current media

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Current Blames Economy For No IPO... But, Lack Of Profitability May Have Been A Bigger Issue

from the let's-get-real dept

Last year, when Al Gore's Current Media filed to go public, we couldn't figure out how it could possibly have a successful IPO, unless it came from the strength of Al Gore's name alone. The company wasn't profitable, wasn't receiving very much buzz, didn't seem to do anything all that unique, and its big plans to be a cable channel "for the internet age" hadn't been very successful (the internet stuff was a failure, almost all revenue came from the pure cable side). So, now that the IPO has been canceled, the company is conveniently blaming the economy, but you have to think that the company's actual prospects had even more to do with it than anything else. If the company had actually been doing well, I'd imagine it would actually be a good time to go out, as those with money actually are looking for decent buys.

Wed, Dec 24th 2008 3:05pm

Filed Under:
ipo, porn

Companies:
adult friendfinder

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The IPO Market Is Dead... Except For Porn?

from the seems-unlikely dept

The IPO market had almost entirely dried up already, before we reached financial meltdown in the second half of the year -- and the resulting financial crisis certainly hasn't made the IPO market any brighter. So, we certainly weren't expecting to hear of any internet companies trying to go public... but it seems at least one company thinks that now's the right time for an online porn company to go public. Apparently, Adult FriendFinder has filed to go public. The company, which used to be known as Penthouse Media Group until it bought the startup Adult Friendfinder not so long ago, is hoping to raise a bunch of money. I'd be surprised if this actually went anywhere. While some might claim that porn is always a growth market, it's a highly competitive one, and often seen as a bit sketchy on the business side. Plus, the underwriters are a little known Russian investment bank. On top of all that, it's looking to use the money not for expansion, but mostly to pay off debt. In this economic climate, with the current IPO window slammed pretty tightly shut, does anyone actually expect this one to go anywhere?

Mon, Feb 25th 2008 6:36pm

Filed Under:
ipo, iridium, satellites, second chance

Companies:
iridium

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Iridium May Go Public Again

from the buying-stuff-up-for-pennies-on-the-dollar-is-good-business dept

It's really quite fascinating to watch infrastructure bubbles, where investors overspend on infrastructure, only to go bankrupt, and have that infrastructure picked up for pennies on the dollar out of bankruptcy and turned into a useful, profitable asset. We've seen it with all the dark fiber investment in the '90s, and perhaps we're now seeing it with satellite communications as well. Remember Iridium? The huge satellite phone operation spun out of Motorola that was valued at many billions of dollars? It was supposed to replace cellular phones with satellite phones that could work anywhere in the world. Of course, there were a few problems with that plan. First, it was insanely expensive to build out and launch the necessary satellites. Then, the satellite phones themselves were huge, ugly and bulky. Third, it cost a ridiculous amount to actually use the phones. Lastly, and probably most importantly, between the time it took for Motorola to come up with this plan and to actually have something to offer the market, cell towers were spread quite widely around the globe and cellular technology had improved greatly -- basically lessening the need (drastically) for Iridium in the first place.

That caused Iridium to go bankrupt, and for a while the entire project was almost abandoned completely with plans in place to destroy the satellites. At the very last minute, though, a group of investors picked up the entire thing for $25 million (yes, the entire system, which had cost the original company $3.4 billion to build). Not only that, but part of the $25 million buyout was a $72 million contract with the US government. The new Iridium was a lot more focused. Rather than going after the entire mobile phone market, it really narrowly focused on occupations where such phones would be necessary. However, even then, we've still been skeptical that the economics could work out. After all, it's still costly to manage those satellites (which have a limited lifespan and need to be replaced) and reports indicated that the new Iridium really had very few customers.

However, the company now claims it's in pretty good shape, with good revenue and EBITDA, and is even talking about trying to go public once again. I'm sure the roadshow pitch will be quite different than the original Iridium. And, considering the name is still synonymous with one of the biggest failures in business, it will be interesting to see how investors react. Still, it's yet another example of companies buying up expensive assets for pennies on the dollar after an investment bubble, and turning those assets into something useful. Sometimes it's good to be a scavenger, apparently.

Mon, Jan 28th 2008 5:42pm

Filed Under:
al gore, cable tv, ipo, losses

Companies:
current media

5 Comments | Leave a Comment..

Al Gore Throws Hat Into The IPO Ring...

from the not-quite-what-some-were-expecting dept

While there's still some speculation about an Al Gore run for the presidency, it appears he's got bigger fish to fry, such as an IPO for his cable TV station Current Media. Honestly, it looks like a tough sell as an IPO. It's not profitable. There are some serious questions about how viable a business it can be, and its "unique" angles, such as embracing the internet, haven't been all that successful (almost all of its revenue still comes from the TV side). If it succeeds as an IPO, it may be entirely on the strength of Gore's name, which seems like the opposite of what the company should want at this point.

Thu, Dec 20th 2007 7:32pm

Filed Under:
dutch auction, ipo

Companies:
netsuite

So Much For Efficient Pricing: Auction-Priced NetSuite Shares Still Surge

from the rationality-is-a-myth dept

I've always been a fan of the idea of a dutch auction IPO -- where the price is set via an auction rather than some investment bankers picking a price based on what they've heard from institutional investors. When bankers just set the price, it tends to lead to companies leaving money on the table, as the banks price the stock too low in order to get the publicity of a first day "pop." While some of that pop is reasonable, the size of some of them suggest that the company threw away many millions of dollars for no good reason. An auction, in theory, solves that by making the price more explicitly set on the market (though, there are some who make compelling arguments about the problems the auction model has as well). For the most part, it was smaller, less well known companies that tried to use Dutch auctions for IPOs -- but the concept got a lot of publicity when Google IPO'd using a Dutch auction. Of course, many investment banks were so freaked out about it that they starting spreading FUD about Google. That didn't work out so well. However, many other companies have still been scared off from using a dutch auction, in some cases probably costing the company millions.

That's why it was nice to see NetSuite become one of the few "hot" companies to also go Dutch auction with its IPO. Yet, with the shares pricing last night and hitting the markets today, there was still a significant first day pop (though, it started the day heading down rather than up). While this definitely worked out well for NetSuite, it does raise some questions about the dutch auction process. It still seems like a much more efficient way to price IPOs than an investment banker picking the price -- but it's pretty clear that there are many other factors that go into how investors actually treat a stock once it hits the market.

Filed Under:
ipo, sarbanes-oxley

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Should The SEC Allow For A SOX-Less Market?

from the might-we-suggest-the-Amex? dept

As evidence that Sarbanes-Oxley has made it too burdensome for small companies to go public, many have pointed to the rise of London's Alternative Investment Market (AIM), where several American companies have chosen to list. This market is basically a haven for shakier companies that can't list on more established exchanges. A new academic paper suggests that AIM itself represents a model of financial market regulation that warrants exploration. The basic idea is that if you have a system like Sarbanes-Oxley in place, you could also have a market that is exempt from the regulation. Smaller, shakier companies would flock to this market, but investors would know to be wary about investments in these firms. Such a market might resemble the NASD-owned OTC BB market, which trades penny stocks, except that even that market is currently subject to SOX. You can see this concept in place to some extent in the private stock exchanges being established by Wall Street banks, which offer companies a place to list without being subject to regulation. But these are off limits to most investors, and for smaller companies, listing on them doesn't make much sense. One possible objection is that if a SOX-less market were to exist, companies of all sorts would try to list on it, but they'd be imperiling their reputation by doing so. Most likely, the majority of companies would opt to remain on established, reputable exchanges. Seeing as the SEC is actively looking for ways to reform Sarbanes-Oxley, it might be worthwhile to explore the possibility of allowing for the establishment of such an exchange.

by Joseph Weisenthal

Tue, Aug 21st 2007 1:44pm

Filed Under:
ipo, solar

Companies:
photowatt