Tag Archives: IPO

Bootstrapping: Weapon of Mass Reconstruction

“Sramana Mitra’s Bootstrapping: Weapon of Mass Reconstruction is a book for our time because it’s something real out of Silicon Valley. No more stories about legendary VC fundings of startup-to-IPO in six months. …This book has some fascinating histories of the different paths people take to entrepreneurship, and the difficulties they face. I would only have wished each of the interviews to be longer and deeper, because every story is worth telling.” – Fast Company

In a world battered by economic crisis, Sramana Mitra believes entrepreneurship is the only sustainable path forward to a healthy economic world order. And core to the success of entrepreneurial ventures today is the invigorating art of bootstrapping. Sramana Mitra–a serial entrepreneur, strategy consultant and Forbes columnist–takes aim at this essential route along the roadmap to startup success with Bootstrapping: Weapon of Mass Reconstruction (Entrepreneur Journeys Vol. 2; BookSurge; June 1, 2009; $16.95 paperback).

Along with the incisive analysis and commentary that have popularized popularized her blog “Sramana Mitra on Strategy” and Forbes columns, Mitra showcases a dozen successful entrepreneurs and their lessons from the bootstrapping trenches. Overflowing with lively entrepreneurial tangents, theories and behind-closed-doors-experience, the book rises to the level of economic policy discussion while simultaneously offering practical advice from experienced bootstrappers. Important issues like doing more with less, getting started with little or no capital, and validating the market on the cheap are discussed with the likes of Om Malik of GigaOm and Greg Gianforte of RightNow.

In her characteristic narrative style, Mitra shepherds established and aspiring entrepreneurs through another inspiring and page-turning expedition into venture land, a territory she hopes will be claimed by many more in the years to come.

“From my perspective it is clear that small business must be a top policy priority,” explains Mitra. “Let us hope that in the coming decade the number of small businesses will double, then triple and quadruple. For here is the most powerful engine of economic growth and sustenance. Here is our way back.”

More Praise for Bootstrapping:

“Mitra clearly has a passion for small businesses. This useful volume is largely comprised of interviews with the founders of such companies. Her skilled questioning prompts a discussion of the many issues involved in starting and growing a business. The entrepreneurs share wisdom and insight useful to any budding or existing business owner. The reader will be struck by the vision, inventiveness and sheer determination of these entrepreneurial heroes, who operate businesses that are successful but far below the radar. A highly relevant and timely work on entrepreneurship’s role in economic reconstruction.” – Kirkus Discoveries

“Sramana’s work on bootstrapped entrepreneurs is an inspiration in these tough economic times. The solutions to our economic problems ultimately lie with the entrepreneur who brings imagination, resourcefulness and good old-fashioned elbow grease to tackle old problems in new ways, create new solutions and new industries. It is all too easy to forget this, particularly when we feed on the depressing daily diet of endless bailouts and hear trillions of dollars being thrown around. A great entrepreneur can do a lot with ten thousand dollars. This book is a good antidote to the depressing mood of these times.” – Sridhar Vembu, CEO of AdventNet and Zoho, Bootstrapped to over $50 million in annual revenue

“In the end, a true entrepreneur will not be denied. What Sramana captures with simple grace are the riveting personal stories of modern day business alchemists, who mix vision, pragmatism and relentless effort to forge creative new and successful ventures. Her collection of interviews will make for an engaging, educational read, for those in the entrepreneurial space, those considering joining the game and those just plain curious about the formative innovators whose efforts provide outsize social returns of the most concrete and enduring nature.” - Don Hutchison, Silicon Valley Angel Investor

ABOUT THE AUTHOR: Sramana Mitra is a technology entrepreneur and strategy consultant in Silicon Valley. She has founded three companies, is a columnist for Forbes, and writes a business blog, Sramana Mitra on Strategy (www.sramanamitra.com). She has a master’s degree in electrical engineering and computer science from MIT.

Via EPR Network

Gaming is hot in China; 9You raised $100M, talks IPO

After reporting on SpinVox’s massive $100M round of funding it seems there is more to come within the same money range – this time from mainland China.

9You, a Chinese online games operator, has received $100 million in equity investment from Temasek Holdings, among other investors. Well, any time someone talks $100M funding rounds the IPO plans are not that far away in the future. The company says is planning an IPO later this year. The investment was said is to the company to continue transforming its business into an entertainment virtual community. The investment came after 9You’s launch of GTown, a virtual world integrating 9You’s existing online games.

Founded in 2003, 9You is currently operating one of China’s most popular online casual games Audition. By February 2008, the company’s games combined have more than 1 million peak concurrent users. The company claims it has reached over 120M registered users in 2006.

It was hard for us to dig some more public information about the deal. Most of the information came from Redline China, which is operated by Pearl Research a San Francisco based business intelligence and consultancy firm.

More about 9You

Nineyou (www.9you.com) (Shanghai Everstar Online Entertainment Co .Ltd.) is the global’s biggest music online game operator, China’s biggest casual game operator, one of biggest interactive entertainment portal sites in China, which is the first to integrate online game services (MMORPG, massive and medium size casual games, mobile game, etc.), fashional digital entertainment contents, a variety of chatting and community services equipped with Avatar System, wireless value-added services and other premiere services to the Chinese language internet users all over the world. With its wide-coverage for all major types of user needs related with digital entertainment service, the 9you.com represents the latest service style and the newest trend for the digital entertainment provider business in China Market. A series of awards and ranking are obtained by 9you.com in 2005 which include Top 10 Online Game Operator in China, and Top 10 Online Game Developer in China, the Cool Company, Shanghai First-class Service Brand in Information Service Industry, etc.

The major investors in Nineyou are several leading international venture capital funds, including the Carlyle Group, which is the world’s largest private investment group, China Merchant Fortune Ventures, and Dragon Groove Inc. who has the background as international strategic investor.

As an integrated service platform for all types of interactive entertainment services, the major business objective of the 9you.com is to bring the best, fastest, all-covered and coolest digital entertainment services to its subscribers of a wide range of ages, including the hard-cored and the light users, male and female users. As of May 2006, the number of total registered users has reached 120 million and the number of the peak concurrent users has reached 800 thousand.

The 9you.com are providing more digital entertainment products in year 2006 and the number of products and types of services will be the No.1 in the whole China Online Game Service industry in the foreseeable future.

More about Temasek Holdings

Temasek Holdings is an Asia investment house headquartered in Singapore.

With a multinational staff of more than 300 people, we manage a portfolio of over S$160 billion, or more than US$100 billion, focused primarily in Asia. We are committed to fostering a sustainable future for our shareholder, staff, portfolio companies and
the community.

We are an active shareholder and investor in diverse industry sectors such as banking & financial services, real estate, transportation & logistics, infrastructure, telecommunications & media, bioscience & healthcare, education, consumer & lifestyle, engineering & technology, as well as energy & resources.

Our total shareholder return since our inception is more than 18% compounded annually. We have a corporate credit rating of AAA/Aaa by Standard & Poor’s and Moody’s respectively.

In 2008, The Economist reported that Morgan Stanley had estimated the fund’s assets at US$159.2 billion

More

http://www.9you.com/
http://mashable.com/2008/03/21/9you-funding/
http://www.paidcontent.org/entry/419-chinese-gaming-site-9you-receives-100-million-investment/
http://www.redlinechina.com/main/?q=node/740
http://www.temasekholdings.com.sg
http://en.wikipedia.org/wiki/Temasek_Holdings

After Internet Brands, LogMeIn, now Al Gore’s Current TV files for an IPO and plans to go public

It seems it is time for small-sized Internet and technology IPOs. After Internet Brands, Inc. went public on NASDAQ, LogMeIn, Inc. filed to do so now Al Gore’s Current is looking forward to do the same. Unlike Internet Brands Inc and LogMeIn, Inc, Current TV is purely from the web 2.0 age, so it would be of particular interest for all companies from the web 2.0 sector to see how the company goes public and what is going to happen after their IPO. The company is planning to raise $100M on $63.8M revenues for the last year with operating losses in the $6M range.

Current TV is, under no doubt, mostly popular due to its co-founder the ex Vice President Al Gore. The registrant is Current Media, Inc., which is the parent company for current.com and Current TV. It has filed to trade on the NASDAQ Global Market under the symbol CRTM.

Current is a global participatory media company with the goal of democratizing media by engaging, informing and enriching our young adult audience and encouraging their participation across platforms. The company operates a television network, Current TV, and a website, Current.com, where they all distribute viewer-created content as well as internally developed and acquired content that is relevant to the lives of young adults. The company believes the combination of their television and Internet platforms creates an immersive and interactive viewer experience for our growing global audience, where the audience participates in both the creation and selection of the content it engages with on both Current TV and Current.com.

The company’s primary sources of revenue are affiliate fees and advertising. Affiliate fees are derived from long-term distribution agreements with cable, satellite and telecommunications operators who pay Current Media, Inc. a monthly fee for each subscriber household that receives Current TV. In the United States, the company’s affiliate customers include DirecTV, Comcast, EchoStar, Time Warner and AT&T. In the United Kingdom and Ireland, affiliate customers include British Sky Broadcasting, or BSkyB, and Virgin Media. In the Spring of 2008, the company has plans to launch in Italy on Sky Italia. Advertising revenue is derived from advertisers who pay for sponsorships and spot advertisements. Selected advertising customers include Toyota, T-Mobile, Johnson & Johnson, General Electric, Geico and L’Oreal. Affiliate revenues accounted for 84% of the company’s total revenues for 2007.

Current TV was launched in August 2005 in approximately 19 million subscriber households in the United States and is now available in approximately 51 million subscriber households in the United States, the United Kingdom and Ireland. In 2006 and 2007, the company recorded revenue of $37.9 million and $63.8 million, respectively where the operating losses were $4.8 million in 2006 and $6.1 million in 2007.

The company intends to use a portion of the net proceeds from this offering to repay in full the principal and accrued interest on an outstanding loan from Dylan Holdings, Inc., which amounted to $30.4 million as of December 31, 2007. The loan is in the form of a senior purchase money note, has an interest rate of 9.25% and matures in May 2008. The company issued this note in May 2004 as part of the purchase price for our acquisition of the NWI television network. NWI television network was purchase in 2004 for $70.9 million, including intangible assets consisting of affiliate distribution arrangements valued at $13.7 million.

The company also intends to use a portion of the net proceeds from this offering to repay in full the principal and accrued interest on their outstanding promissory notes, which amounted to $6.1 million at December 31, 2007. The entered into a note purchase agreement in September 2006 with a consortium of lenders pursuant to which they issued the revolving promissory notes. All of these lenders are currently equity investors in the company. Under the terms of these notes, they borrowed $5M and have made no payments. These notes bear interest at a rate of 15% for the first year and 18% thereafter, which compounds quarterly. In accordance with the terms of these notes, interest is added to the principal through May 4, 2008, at which time the unpaid principal and interest become payable in full.

The company intends to use a portion of the net proceeds from this offering to repay in full the principal and accrued interest on an outstanding note payable to Oracle Credit Corporation, which amounted to $64,000 at December 31, 2007. The company entered into this note payable in May 2006 in connection with the purchase of software and support. The note bears interest at the rate of 9.83%. Under the terms of the note, interest is added to the principal balance. The note requires annual payments of $36,000 on the first day of September of each year until 2009, at which time the final payment of $36,000 is due.

The remaining net proceeds from this offering is planned to be used for working capital and other general corporate purposes. Additionally, the company might also expand their existing business through acquisitions of other complementary businesses, products, services or technologies, although no agreements are currently in place for such acquisitions at this time.

Basically Current relies on its innovative approach, although it is called in their prospectus “innovative but unproven”.

Current was founded with the goal of cost-effectively engaging young adults with news, entertainment and lifestyle programming centered on what is going on in their world. We recognized that to reach young adults it was necessary to reach them via television, where they spend a lot of time and where there is a proven business model, as well as on the Internet, a medium where they are also very active. To do this, we launched a television channel, Current TV, and more recently a website, Current.com. The two serve as distinct consumer destinations, but they are also symbiotic and form a combined platform with which Current engages its audience. Key aspects of our solution include:

Current’s new network model.
Our focus on user-generated content provides a unique connection with our young adult audience. We engage young adults by telling stories in their voices and from their perspectives. We have redefined the scope of “news” for young adults, and broadened our programming to include an array of subjects that are important to our audience.

Current’s programming.
Current has developed a programming model built on several unique content offerings, all designed to reflect the tastes and lifestyles of our target 18-34 year-old audience. Our programming is presented in short segments that we call “pods,” which are typically 2-10 minutes in length, rather than traditional half-hour or hour-long programming blocks.

Current’s innovative advertising solution. 
Our advertising model is designed to appeal to the lifestyles, tastes and needs of young adults. A key solution that we provide advertisers is the ability to let our young adult viewers create commercials that we then air on Current TV. In addition to these viewer created ad messages, or VCAMs, we offer other attractive sponsorship solutions, in which advertisements are integrated with and embedded into our content, providing advertisers a marketing forum that is free from ad-skipping.

Current’s all digital broadcast facility. 
Our TV broadcast facilities are built on an open IP architecture as opposed to traditional broadcast television legacy systems. Unlike high-cost production facilities at traditional cable networks, we have deployed a new, all-digital infrastructure that allows us to produce, acquire and distribute high quality content at a low cost.

Current.com.   
Current.com serves several purposes: it is a news, information and entertainment source for young adults online; it is a real-time connection to programming on Current TV; and it is a platform for collaborative media production. At its core, Current.com is a social news feed.

More about Current TV

Since its inception in 2005, Emmy award-winning Current TV has been the world’s leading peer-to-peer news and information network. Current is the only 24/7 cable and satellite television network and Internet site produced and programmed in collaboration with its audience. Current connects young adults with what is going on in their world, from their perspective, in their own voices.

With the launch of Current.com, the first fully integrated web and TV platform users can participate in shaping an ongoing stream of news and information that is compelling, authentic and relevant to them.

Current pioneered the television industry’s leading model of interactive viewer created content (VC2). Comprising roughly one-third of Current’s on-air broadcast, this content is submitted via short-form, non-fiction video “pods”. Viewer Created Ad Messages (VCAMs) are also open to viewer’s participation.

Current’s programming ranges from daily pop culture coverage to political satire in “SuperNews,” unprecedented music journalism in “The Current Fix,” and unique insights into global stories through Vanguard and Citizen Journalism.

Current is now viewed in the U.S. and U.K. in more than 51 million households through distribution partners Comcast (Channel 107 nationwide), Time Warner (nationwide), DirecTV (channel 366 nationwide), Dish Network (channel 196 nationwide), Sky (channel 193) and Virgin Media Cable (channel 155).

The company is headquartered in San Francisco, California and as of December 31, 2007 employed 391 full-time employees. They also have an office in London, production studios in Los Angeles and an advertising sales office in New York City. The company was initially formed as a limited liability company in Delaware in September 2002 named INdTV, LLC. On May 4, 2004, they have purchased Newsworld International, or NWI, a traditional cable and satellite network. This acquisition enabled the company to gain access to cable and satellite distribution as an independent network. In connection with that acquisition of NWI, they’ve changed their name to INdTV Holdings, LLC and concurrently formed a wholly owned subsidiary INdTV, LLC, a Delaware limited liability company, and transferred all of their operations to INdTV, LLC. Since that time, they have had no operations because all operations are conducted by their subsidiaries. On April 4, 2005, they changed the name of INdTV Holdings, LLC to Current Media, LLC and INdTV, LLC to Current TV, LLC. On August 1, 2005, they terminated NWI’s existing programming and launched Current TV in the United States.

The company faces significant competition in both the cable television and online markets in which they operate. Current TV competes with other television networks that target young adults. These networks include Comedy Central, Fuse, G4, MTV, Spike TV and other major cable networks that are owned by large media conglomerates, such as Comcast, Disney, Time Warner and Viacom. Current.com faces competition from companies that are consumer destination websites, such as AOL, Google, MSN and Yahoo!, online video aggregators, such as Hulu and YouTube, and news and social network platforms, such as del.icio.us, digg.com, Facebook and MySpace.

Executive officers

Albert Gore, Jr. co-founded Current in 2002. He has served as our Executive Chairman and as a member of our board of directors since September 2002, and was elected as Chairman of our board of directors in May 2004. Mr. Gore has served as a Senior Advisor to Google, a global Internet company, since February 2001, and a member of the board of directors of Apple, a consumer electronics company, since March 2003. He has also served as Chairman of Generation Investment Management, an investment management firm, since 2004 and joined Kleiner Perkins Caufield & Byers, a venture capital firm, as a partner in November 2007. He has served as a visiting professor at Middle Tennessee State University. Mr. Gore served as the 45th Vice President of the United States from 1993 to 2001, during which time he also served as President of the United States Senate and as a member of the Cabinet and the National Security Council. Prior to 1993, he served eight years in the United States Senate and eight years in the United States House of Representatives. Mr. Gore was co-winner of the 2007 Nobel Peace Prize. Mr. Gore holds an A.B. from Harvard University.

Joel Hyatt co-founded Current in 2002. He has served as a member of our board of directors and as our Chief Executive Officer since September 2002. Mr. Hyatt has served as a member of the board of directors of Hewlett-Packard Company, a computer electronics company, since May 2007 and as a member of the Board of Trustees of the Brookings Institution since May 2001. From September 1998 to June 2003, Mr. Hyatt was a Lecturer in Entrepreneurship at the Stanford University Graduate School of Business. Previously, Mr. Hyatt was the founder and Chief Executive Officer of Hyatt Legal Plans, Inc., a provider of employer-sponsored group legal plans, and of Hyatt Legal Services, a multi-state legal services firm. Mr. Hyatt holds an A.B. from Dartmouth College and a J.D. from Yale Law School.

Mark Goldman has served as our Chief Operating Officer since December 2003. From July 1999 to December 2003, Mr. Goldman served as a consultant in the media and communications industries. Prior to that time, Mr. Goldman served as Chief Operating Officer for Sky Latin America, a division of News Corp., which provides satellite television service to Latin America, and as an executive at MCA/Universal Television, where he was responsible for business development and the launch of several international cable networks. Mr. Goldman has a B.S. in Economics from The Wharton School at the University of Pennsylvania.

Paul Hollerbach has served as our Chief Financial Officer since October 2007. From August 1997 to January 2007, Mr. Hollerbach worked at Yahoo!, a leading global internet company, where he held a broad range of senior financial roles. At Yahoo!, Mr. Hollerbach most recently served as Vice President, Finance and Investor Relations, and previously served as Vice President, Corporate Controller. Prior to Yahoo!, Mr. Hollerbach held various finance positions at Silicon Graphics, a computer electronics company, and served at KPMG LLP and Ernst & Young LLP, managing technology clients in their assurance practices. Mr. Hollerbach holds a B.S. in Business Administration from California State University, San Luis Obispo and is a licensed CPA in California.

David Neuman has served as our President of Programming since October 2004. From October 2003 to October 2004, Mr. Neuman researched the development of several television and feature film projects and incorporated his own production company, Blackrock Productions, working on primetime television and feature film projects. From January 2001 to October 2003, Mr. Neuman was Chief Programming Officer of CNN Networks, an international television news organization. Prior to that time, Mr. Neuman served as President of Walt Disney Television and Touchstone Television, a television studio. Mr. Neuman graduated from the University of California, Los Angeles in 1983 with an A.B. in Communication Studies.

Joanna Drake Earl joined us in September 2002 and has served as our President of New Media since October 2004. From September 2002 to October 2004, Ms. Drake Earl served as our Senior Vice President of Strategic Partnerships. From February 2001 to July 2002, Ms. Drake Earl was Vice President, Content Strategy, at Digeo, Inc. (formerly Moxi Digital, Inc.), which develops multi-media devices and consumer media applications. Previously, Ms. Drake Earl served as a senior media industry consultant at Booz Allen & Hamilton, an international consulting firm. Ms. Drake Earl holds a B.A. from the University of California, Berkeley and an M.A. from Stanford University.

Joshua Katz has served as our President of Marketing since December 2006. From February 2006 to December 2006, Mr. Katz served as Chief Marketing Officer at TiVO, a provider of digital video equipment and services. From July 2005 to January 2006, Mr. Katz was Vice President of Marketing for Lucasfilm, a film studio. From March 1999 to June 2005, Mr. Katz was President of The Halo Effect, a marketing and brand consulting firm. Previously, Mr. Katz served as Senior Vice President of Marketing at both the Cartoon Network and VH1 cable networks. Mr. Katz has a B.A. from Tulane University.

Directors

Richard C. Blum has served as a member of our board of directors since May 2004. He is the Chairman and President of Richard C. Blum & Associates Inc., the general partner of Blum Capital Partners, L.P., a long-term strategic equity investment management firm that acts as general partner for various investment partnerships and provides investment advisory services, which he founded in 1975. He has also served as the Chairperson and a member of the board of directors of CB Richard Ellis Group, Inc. since 2001. Mr. Blum holds a B.A. and an M.B.A. from the University of California, Berkeley.

Ronald Burkle has served as a member of our board of directors since May 2004. Mr. Burkle is managing partner and majority owner of The Yucaipa Companies, a private investment firm that he co-founded in 1986. Mr. Burkle has also served as a director of Occidental Petroleum Corp. since 2005, KB Home Corporation since 1995, and Yahoo! since 2001.

Edward Renwick has served as a member of our board of directors since May 2004. Mr. Renwick is a partner of The Yucaipa Companies, a private investment firm where he has worked since 1999. Prior to that, Mr. Renwick served as a consultant at The Boston Consulting Group, a strategic consulting firm. Mr. Renwick holds a B.A. from Stanford University and a J.D. and M.P.P. from Harvard University.

Mark Rosenthal has served as a member of our board of directors since May 2004. From June 2005 to December 2006, Mr. Rosenthal served as Chairman and CEO of Interpublic Media, the media operations organization of the the Interpublic Group of Companies. From July 1996 to July 2004, Mr. Rosenthal served as President and Chief Operating Officer of MTV Networks, a cable network. Prior to becoming President and COO of MTV Networks, Mr. Rosenthal rose through positions of increasing responsibility in the affiliate sales and marketing organization at MTV Networks and its predecessor company, Warner Amex Satellite Entertainment Company, ultimately supervising the sales, distribution and marketing for all of MTV Networks’ domestic television networks. Mr. Rosenthal joined Warner Amex Satellite Entertainment Company in 1982. He has also served as a member of the board of directors of CNET Networks since April 2007. Mr. Rosenthal has a B.A. from Kenyon College and an M.F.A. from Yale University.

Orville Schell has served as a member of our board of directors since May 2004. Since January 2007, Mr. Schell has been the Director of the Center on U.S.-China relations at the Asia Society. From January 1997 to January 2007, Mr. Schell served as the Dean of the Graduate School of Journalism at the University of California, Berkeley. Mr. Schell holds a B.A. from Harvard University and an M.A. from the University of California, Berkeley.

Major stockholders include Al Gore, entities affiliated with Blum Capital Partners, L.P., Yucaipa Corporate Initiatives Fund I, L.P., DirectTV, Inc. and Comcast CTV Holdings, LLC. Underwriters include J.P. Morgan Securities Inc., Lehman Brothers Inc. and Pacific Crest Securities Inc.

More

http://current.com
http://current.com/tv
http://www.sec.gov/Archives/edgar/data/1424470/000104746908000572/a2182152zs-1.htm
http://current.com/items/88827879_current_files_for_100m_ipo
http://www.paidcontent.org/entry/419-current-media-files-for-100-million-ipo/
http://www.readwriteweb.com/archives/current_files_for_ipo.php
http://www.readwriteweb.com/archives/current_tv.php
http://www.readwriteweb.com/archives/al_gore_current_re-defining_television.php
http://today.reuters.com/news/articlenews.aspx?type=technologyNews&storyid=2007-10-16T030718Z_01_N15319230_RTRUKOC_0_US-INTERNET-TELEVISION-CURRENT.xml [the story is down]
https://web2innovations.com/money/2008/01/15/logmein-files-for-an-ipo-hoping-to-raise-86m/
https://web2innovations.com/money/2008/01/14/internet-brands-inc-went-public-on-nasdaq/
http://en.wikipedia.org/wiki/Al_Gore
http://www.hoovers.com/yucaipa/–ID__40153–/free-co-factsheet.xhtml

A big question: is Alibaba.com overvalued or Yahoo is seriously undervalued?

Let’s put it that way Alibaba lost $13B from its market cap in just one month, yet the company’s market value is close to 50% from what Yahoo!’s current value is!

When Alibaba went public on the Honk Hong Stock Exchange a couple of months ago everything was more than perfect and the company has raised from the public sector the whopping amount of $1.49 Billion. Alibaba’s market capitalization then skyrocketed to the $25.7B range, just not too far from what Yahoo!’s market capitalization looked like by the time of the IPO of the Chinese Internet company. All those numbers made it the largest Internet IPO in Asia and the second largest globally. Yahoo! was then happy too.

Shares of Alibaba.com, the Chinese B2B marketplace, nearly tripled in their Hong Kong debut, closing at HK$39.50 (US$5.09), after its IPO priced at HK $13.50 (US$1.74). The steep rise was easy to see coming, considering the groundswell of enthusiasm for the company preceding the IPO. The company quickly reached a $25.7 billion market cap, which brings it close with Yahoo (NSDQ: YHOO) Japan as the largest internet company in Asia, according to online sources. 

Alibaba.com and its parent company Alibaba Group initially offered a total of 858,901,000 shares under the Global Offering, of which 227,356,500 shares were offered by the Company and 631,544,500 shares were offered by Alibaba Group. An additional 113,678,000 shares were sold by Alibaba Group upon exercise by the International Underwriters of their Over-Allotment Option.

The eight Cornerstone Investors which participated in the Global Offering included Yahoo! Inc., AIG Global Investment Corporation (Asia) Limited, Foxconn (Far East) Limited, Industrial and Commercial Bank of China (Asia) Limited, Cisco Systems International B.V., and entities affiliated with Mr. Peter Kwong Ching Woo (Chairman of The Wharf (Holdings) Limited), the Kwok family (controlling shareholders of Sun Hung Kai Properties Limited) and Mr. Kuok Hock Nien.

The total cornerstone investment was HK$2.1 billion (US$274 million) and all Cornerstone Investors agreed to a lock-up period of 24 months from the date of listing.

Goldman Sachs (Asia) L.L.C. and Morgan Stanley Asia Limited were the Joint Global Coordinators and Joint Sponsors, and with Deutsche Bank AG, Hong Kong Branch, Joint Bookrunners and Joint Lead Managers of the Global Offering while N M Rothschild & Sons (Hong Kong) Limited was the Financial Advisor to the Company.

Let’s take a look at how the things looked like for the US Internet giant by that time.

Yahoo! is known to own 39% in Alibaba Group. Alibaba Group holds a 75% stake in Alibaba.com, which was worth $17.4 billion. Yahoo owns 39% of Alibaba Group, which puts the value of their share at $6.8 billion. Yahoo! has also bought around 1.2% stake in Alibaba.com by paying $100M so the direct-owned 1.2% stake was worth about $278 million. That puts the total value of Yahoo’s interest in Alibaba.com at north of $7 billion. That’s about 16.7% of Yahoo’s then $42 billion valuation.

What happened next? A few days after the IPO things appeared to be worsening. Many investors took the money and ran, driving shares of Alibaba.com Ltd. down 17% a day after their debut, when they nearly tripled from their initial-public-offering price. Analysts said the flagship business-to-business unit of Alibaba Group is likely to fall further on continued profit-taking for a while, as the stock is still overvalued. The shares of Alibaba.com then fell to 32.60 Hong Kong dollars (US$4.20) from almost 41.50HKD. Aside the fears of the investors that the stock price was unsustainable the company’s stock was also hit by Yahoo!’s CEO Jerry Yang’s appearance on Capitol Hill, defending the company’s handling of Chinese censorship probe. The major support, however, for the company’s falling stock price came earlier this month when Yahoo! announced to lay off hundreds of employees. The final number of people to be laid off from Yahoo’s work force of about 14,000 is yet to be determined and is likely to be announced around the end of the month, perhaps during Yahoo’s January 29 conference call with analysts after it reports fourth-quarter financial results, but it for sure had influenced the stock performance of its smaller Chinese brother Alibaba. Over the weekend, some blogs reported that Yahoo was considering layoffs of 10 percent to 20 percent of its work force. But the people close to the company, who discussed Yahoo’s layoff plans on condition that they are yet to be identified, said the cuts would likely be in the “hundreds.” Yahoo’s stock itself declined 20 percent in the last quarter.

Alibaba’s today stock price is 20.20HKD fallen down from 40.50HKD as what the price was in its best days. The company’s market capitalization is close to $13B (US Dollars), which is a major decline from what the company’s highest value was – close to $26B. 

So, let’s now take a look at how the things look like for the US Internet giant today. Logically Yahoo!’s interest total market value in Alibaba.com is now close to $3,5B falling down from the previous $7B mark. A couple of months ago Alibaba’s value was about 16.7% of Yahoo’s then $42 billion valuation. Today Yahoo!’s market capitalization is $27.77B, which makes Alibaba’s today value close to 50% of Yahoo!’s market value.

The big question here is whether Alibaba.com is overvalued or Yahoo! is undervalued? One should take into serious consideration the fact that Yahoo! is making more than $6B in revenues per year while Alibaba.com is having, as far as we know, no more than $150M in annual revenues. A quick online research revelead that Alibaba had GAAP Revenue of around $46.3M for 2004 while the company’s revenue in the first half of 2006 was about $100 million (presumingly $200M for the entire 2006). For the first 6 months of 2007 Alibaba had revenue of RMB957.7M (~$132MM) (presuming $260M for the entire 2007). The numbers show big difference, no?

All calculations are made on the 1 HKD = 0.128087 USD and 1 CNY (RMB) = 0.138941 USD basis respectively.

More about Alibaba.com

Alibaba.com (HKSE:1688), a member of the Alibaba Group of companies, is one of the world’s premier e-commerce brands and the number one online marketplace for global and domestic China trade. We provide an efficient, trusted platform connecting small and medium-sized buyers and suppliers from around the world. Our international marketplace (www.alibaba.com) focuses on global importers and exporters and our China marketplace (www.alibaba.com.cn) focuses on suppliers and buyers trading domestically in China. Together our marketplaces form a community of more than 24 million registered users from over 200 countries and regions.

Our operational headquarters is based in Hangzhou in eastern China. We have field sales and marketing offices in more than 30 cities in China, Hong Kong, Switzerland and the United States. The company had more than 4,400 full-time employees as of June 30, 2007.

History & Milestones
Jack Ma, our lead founder and chairman, and 18 other founders launched Alibaba.com in his Hangzhou apartment in 1999. Originally, Alibaba.com operated as a bulletin board service for businesses to post buy and sell trade leads, and later became a vibrant marketplace for small and medium enterprises around the world to identify potential trading partners and interact with each other to conduct business online. Alibaba.com listed on the Hong Kong Stock Exchange on November 6, 2007 and is the flagship business of the Alibaba Group.

  • October 2000 Gold Supplier membership launched to serve China exporters.
  • August 2001 International TrustPass membership launched to serve exporters outside of China.
  • March 2002 China TrustPass membership launched to serve SMEs engaging in domestic China trade.
  • July 2002 Keyword services launched on our international marketplace.
  • November 2003 TradeManager instant messaging software launched to enable users to communicate in real time on our marketplaces.
  • March 2005 Keyword bidding launched on our China marketplace.
  • April 2007 Gold Supplier membership launched to serve Hong Kong exporters.
  • November 2007 Alibaba.com listed on the Main Board of the Stock Exchange of Hong Kong Limited, under stock code 1688.

Below is what the Alibaba’s CEO David Wei stated at the time of their IPO.

We have just celebrated our successful listing on the Main Board of The Stock Exchange of Hong Kong Limited and I’d like to welcome all our new investors and many thanks for your visionary investing commitment.

Alibaba.com’s mission is to make it easy to do business anywhere. Over the years, we focused on Small and Medium-sized Enterprises (“SMEs”) sector, which have been the key driving forces for China’s economic growth and playing an increasingly important role in China’s economy. Through our world’s leading B2B e-Commerce marketplaces, we have made it possible for SMEs to grow their business and reach out to the world. We will maintain such long term focus by providing the best user and customer experience.

We take our responsibility to our shareholders very seriously. We adhere to the highest levels of ethical practices and create optimal corporate governance. Our Board of Directors include a number of experienced and high caliber independent directors who chair and run our board committees.

Going public is another a milestone in Alibaba.com’s history. Our belief of being a public company is to create growing sustainable value for customers and shareholders. I look forward to the ongoing support of our shareholders as we continue to build the world’s number one online marketplace for international and China trade.

More

http://blogs.barrons.com/techtraderdaily/2007/11/06/huge-surge-in-alibabacom-stock-price-following-ipo-could-spur-tuesday-rally-in-yahoo-shares/
http://sanjose.bizjournals.com/sanjose/stories/2007/01/29/daily22.html?from_msn_money=1
http://www.bloomberg.com/apps/news?pid=20601080&sid=aLtQSTnRGzdw&refer=asia
http://www.alibaba.com/
http://www.yahoo.com/
http://ir.alibaba.com/ir/stock_information.html
http://finance.yahoo.com/q?s=1688.hk
http://online.wsj.com/article/SB119446125893585466.html?mod=yahoo_hs&ru=yahoo
http://www.paidcontent.org/entry/419-alibabacom-prices-at-top-of-the-range
http://www.news.com/Hundreds-of-layoffs-expected-at-Yahoo/2100-1038_3-6227041.html?tag=nefd.top
http://yhoo.client.shareholder.com/
http://finance.yahoo.com/q?s=YHOO
http://www.tjacobi.com/50226711/alibabacom_revenue.php
http://money.cnn.com/2006/12/31/news/international/alibaba/index.htm
http://startuplay.com/tag/alibaba
http://www.chron.com/disp/story.mpl/ap/fn/5491544.html
http://www.forbes.com/business/2008/01/09/china-internet-media-biz-media-cx_pm_0109notes.html
http://online.barrons.com/article/SB119931045594863115.html?mod=googlenews_barrons
http://www.hkex.com.hk/
http://www.247wallst.com/2008/01/the-coming-inte.html
http://www.hkex.com.hk/Alibaba.htm
http://www.alibaba.com/aboutalibaba/releases_071106.html

LogMeIn files for an IPO hoping to raise $86M

It seems it is time for small-sized Internet and technology IPOs. After Internet Brands, Inc. went public on NASDAQ it is now turn of yet another second-tier technology company LogMeIn, Inc. to do the same looking for pretty much the same amount to raise. It has filed to trade on the NASDAQ under the symbol LOGM.

In times when the IPO market isn’t what it was even a few months ago the remote computer access service provider LogMeIn has filed to raise up to $86.3 million through an initial public offering, according to a filing late last week with the SEC. This happens despite the fact a growing crowd of other technology companies are being forced to pull or postpone their IPOs. Some popular and web 1.0 Internet companies that have recently pulled off their IPOs include GoDaddy, Classmates and Accoona (Planned on $80.5) among others. By contrast, looking to capitalize on the Apple halo effect, three former company executives, including co-founder Steve Wozniak, took their new company, Acquicor Technology, public 2006 in an IPO raising $150 million. The money they raised is purely based on their reputation, as Acquicor Technology, is officially designated as a “blank-check” company, meaning they don’t have any principal activity or business model yet and can do whatever they want with investor money, when raised.

LogMeIn intends to use the net proceeds from this offering for working capital and other general corporate purposes, including the development of new services, sales and marketing activities and capital expenditures. They may also use a portion of the net proceeds for the acquisition of, or investment in, companies, technologies, services or assets that complement their business. They also intend to invest the net proceeds from this offering in short-term investment grade and U.S. government securities.

LogMeIn is a leading provider of on-demand, remote-connectivity solutions to small and medium-sized businesses, or SMBs, IT service providers and consumers. Businesses and IT service providers use our solutions to deliver remote, end-user support and to access and manage computers and other Internet-enabled devices more effectively and efficiently. Consumers and mobile workers use their solutions to access computer resources remotely, thereby facilitating their mobility and increasing their productivity. Their solutions, which are deployed on-demand and accessible through a Web browser, are secure, scalable and easy for the customers to try, purchase and use. The company’s customer base has grown from approximately 48,000 premium accounts in November 2006 to approximately 92,000 premium accounts in November 2007.

They believe LogMeIn Free and LogMeIn Hamachi, their popular free services, provide on-demand connectivity to more users than any other on-demand connectivity service, giving them access to a diverse group of users and increasing awareness of our premium services. Our users, they claim, have connected over 30 million computers and other Internet-enabled devices to a LogMeIn service, and during November 2007 the total number of devices connected to their services increased at an average of over 60,000 per day. They complement their free services with nine premium services, including LogMeIn Rescue and LogMeIn IT Reach, the company’s flagship remote support and management services, and LogMeIn Pro, their premium remote access service. Sales of the premium services, the company claims, are generated through word-of-mouth referrals, Web-based advertising, expiring free trials that they convert to paid subscriptions and direct marketing to new and existing customers.
 
LogMeIn delivers each of their on-demand solutions as a hosted service that runs on their proprietary platform called Gravity. Gravity establishes secure connections over the Internet between remote computers and other Internet-enabled devices and mediates the direct transmission of data. This robust and scalable platform connects over 4.2 million computers to the company’s services each day.

The company sells its services on a subscription basis at prices ranging from approximately $40 to $1,900 per year. During the nine months ended September 30, 2007, the company has completed over 159,000 transactions at an average transaction price of approximately $160. During the nine months ended September 30, 2007, LogMeIn generated revenues of $18.4 million, as compared to $7.3 million over the same period in 2006, an increase of 151%.  

Principal stockholders in the company as of December 31, 2007 are as follows:

  • Prism Venture Partners IV, L.P.- 23.98% 
  • Polaris Venture Partners – 21.16% 
  • Technologieholding Central and Eastern European Funds – 15.96%
  • Integral Capital Partners VI, L.P. – 8.98% 
  • Intel Capital – 5.47%
  • Michael K. Simon – 7.92%  
  • Marton B. Anka – 6.94%
  • Kevin K. Harrison – 1.35%

As it uses a peer-to-peer data transfer model after it makes the connection between the home computer and the remote user, LogMeIn faces less of an infrastructure burden as it grows. The company has a patent-pending service delivery platform called Gravity, which reduces their bandwidth and other infrastructure requirements, which, they believe, makes their services faster and less expensive to deliver as compared to competing services.

The company sells primarily to enterprises, so the IPO may also be an effort to gain some credibility with corporate buyers. Some of that credibility may also come from a deal LogMeIn signed with Intel in December 2007. The previously undisclosed deal involves Intel investing $10 million in LogMeIn and an agreement to tightly integrate LogMeIn’s services with Intel hardware. Based on the prospecutus filed with SEC, it turns out that Intel took only 5.47% for its $10M investment. The chipmaker will also market and sell LogMeIn’s service to its customers and share that revenue with LogMeIn. Polaris Venture Partners, Prism Venture Partners, Integral Capital Partners and Intel Capital are backing the five-year-old company.

Over the past weeks I have seen lots of online ads of LogMeIn all over the Web. I guess this is meant to fuel the company’s growth as it is approaching its IPO.

LogMeIn Hamachi, the company’s popular free services is actually a result of an acquisition done back in 2006. By that time LogMeIn has acquired the based VPN provider, Hamachi as the terms of the deal were not disclosed publicly. Hamachi has by that time about three million beta users, and the company claimed it is adding 400,000 computers a month.

A disturbing fact popped up on Web while we were researching for the company. Experts by that time gave the following explanation: “the technical side of this service establishes a VPN tunnel via a gateway server on Cocos Island. If this service were to ever embrace port hopping technology like Skype-uses, you’d have a peer to peer link established from your corporate network to foreign soil. This is problematic for many businesses.”

More about LogMeIn

LogMeIn, Inc. was established in 2003 by the creators of RemotelyAnywhere, the award-winning remote control and administration software. The company develops and markets innovative remote access, productivity, management and security products that serve mobile professionals and system administrators with a suite of SSL, TLS and SSH-encrypted products.

Based outside of Boston, Massachusetts, LogMeIn also maintains a development center in Budapest, Hungary. In February 2003, the company incorporated under the laws of Bermuda. In August 2004, they have completed a domestication in the State of Delaware under the name 3am Labs, Inc. and later changed their name to LogMeIn, Inc. in March 2006.

LogMeIn, Inc. has the following trademarks or registered trademarks: Gravity™, LogMeIn® Backup™, LogMeIn® Free®, LogMeIn® Hamachi™, LogMeIn® Ignition™, LogMeIn® Rescue®, LogMeIn® Rescue+Mobile™, LogMeIn® Pro®, LogMeIn® IT Reach® and RemotelyAnywhere®.

Some of the company’s major clients include 3M, BestBuy, AMD, DHL, HSBC, IBM, Konika Minolta, Rolls-Royce and SAP.

Management Team

Michael Simon, CEO
Simon was the founder, chairman and CEO of Uproar Inc., a Nasdaq – and Easdaq – listed company that was acquired by Vivendi Universal in March 2001. He has a BS in Electrical Engineering from the University of Notre Dame and an MBA from Washington University St. Louis.

Marton Anka, CTO
Anka was the original creator and principal architect of RemotelyAnywhere. Anka has been at the forefront of Internet technology since 1995. He created the first high-volume, real-time, secure-transaction platform in Java that was commercially launched in August 1996. Anka earned his diploma in Information Technology from the Szamalk Institute (Hungary).

Jim Kelliher, CFO
Kelliher has more than 20 years experience in key financial roles in the high tech industry. Most recently, he was Chief Financial Officer of IMlogic, Inc. , a venture backed start-up in the enterprise instant messaging market. Prior to Imlogic, Jim was Sr. VP of Finance and Operations at Parametric Technology and was European Finance Director of Cullinet Software. He began his career with PricewaterhouseCoopers after receiving a Bachelor of Science degree in Accountancy from Bentley College.

Kevin Bardos, VP Product Development
Bardos, a 15-year high-tech veteran, manages the development team for LogMeIn’s suite of IT support tools. He led business development efforts for ERP company Scala Business Solutions (now Epicor) and was co-founder and managing director of the Central European online media agency Red Dot. Bardos received a B.A. in Economics from Queen’s University, Ontario, Canada.

Andrew Burton, VP Product Marketing
With more than a decade of industry experience, Burton has driven product strategy, product marketing and product management for a number of market-leading technology companies. He was previously with Symantec Corporation, where he held a senior product management position. Prior to Symantec, Burton delivered new products and innovative solutions at IMlogic, Groove Networks (a Microsoft company), USinternetworking (an AT&T company), and Accenture. He earned his MBA from Boston College, a Masters in Information Systems from University College, Dublin, and a BS from Oregon State University.

Michael J. Donahue, VP and General Counsel
Donahue is responsible for all the company’s legal affairs. Previously, he was vice president and general counsel for C.P. Baker & Company, a Boston-based venture capital and management services company. Prior to that, he spent six years with Wilmer, Cutler, Pickering, Hale and Dorr LLP – leaving as a junior partner in 2005. Donahue has a BA from Boston College and received his JD from Northeastern University School of Law.

Kevin Farrell, VP and GM, Digital Living
Farrell has driven strategy and product management for several successful start ups and is responsible for extending LogMeIn’s award-winning remote connectivity service and future initiatives. He was formerly Sr. VP at Ensim Inc., a software startup in the hosted Web, VoIP, messaging and collaboration space after serving as VP, Product Management and Marketing for TeleGea—which was acquired by Ensim. He has a BS in Mechanical Engineering and a MS in Computer Science from Villanova University, and a MBA from Seton Hall University. Farrell also holds several patents.

Kevin Harrison, VP Sales
Harrison drove the worldwide sales strategy and organization, including enterprise, partner, and direct sales channels, for Ximian, a leading Linux application company. Before Ximian, Harrison had sales leadership roles with MapInfo, Netegrity, and NetCentric. Harrison received a BS in Accounting from Boston College.

Richard Redding, VP and GM, Mobile
Redding worked in strategy and business development at AT&T, and previously was at Excite@Home in international business development and operations. Excite@Home was the leading broadband Internet company offering high-speed Internet access and producing a network of web properties including the Excite portal. Redding graduated with honors from the University of California at Santa Cruz and has his MBA from the University of Santa Clara.

Conan Reidy, VP Business Development
Reidy is responsible for identifying key technology partnership opportunities for LogMeIn. He was previously with Symantec Corporation, where he held a senior business development position. Prior to Symantec, Reidy ran business development for IMlogic, Inc., an instant messaging management vendor, and was instrumental in the sale of IMlogic to Symantec in early 2006.

Board of Directors

Dave Barrett, Polaris Venture Partners
Dave joined Polaris Venture Partners after a 22-year operating career. Prior, Dave served as chief operating officer of Calico Commerce, where during his tenure, the company evolved from venture-backed startup to a $45M, publicly-held corporation, helped to pioneer the e-business market, and with market value in excess of $3 billion, was both one of the top-performing IPOs of 1999 and 6th most successful offering in the history of NASDAQ. Before that, he served as senior vice president of worldwide operations for Pure Atria Software Corporation, continuing in that role after the company was acquired by Rational Software Corporation for $1 billion in 1997. Prior to Rational, Dave spent twelve years with Lotus Development Corporation, where among many roles, he served as vice president of field sales and services, leading the build-out of the company’s global sales & services effort. He also served as general manager of worldwide federal systems, the company’s then-fastest growing division. Lotus was acquired by IBM in 1995 for $3.5 billion, the largest merger in software industry history up to that time.

Woody Benson, Prism VentureWorks
Benson is a general partner at Prism VentureWorks. He joined the firm in 2004 and primarily invests in digital living companies. He also focuses on mobile and on-demand business models. He came to Prism from Lazard Technology Partners, where he managed the firm’s Boston office. Career highlights include serving as Chairman, President and CEO of MCK Communications, which went public in 1999 and completed a secondary offering in 2000.

Kenneth Cron, Midway Games
Cron is chairman of Midway Games, a Chicago-based developer and manufacturer of home video game entertainment products. He has held key leadership roles in businesses that have been instrumental in transforming the contemporary technology, media and entertainment markets. His involvement steering both public and private companies to success includes overseeing and growing stable organizations into global enterprises, revitalizing large companies, and launching start-ups with eventual public offerings. As interim Chief Executive Officer of Computer Associates International Inc., Cron was instrumental in stabilizing the company following a challenging period. Prior to Computer Associates, Cron was Chairman and CEO of Vivendi Universal Games, Inc., a global leader in the publishing of online, PC and console-based interactive entertainment.

Irfan Salim, MarkMonitor
Salim is president and chief executive officer, of MarkMonitor, the global leader in enterprise brand protection. He brings more than 20 years of experience growing and leading world-class Internet security, fraud prevention, and domain registrar companies. Prior to MarkMonitor, he was president and chief operating officer of Internet security company Zone Labs, which was acquired by Check Point Technologies. Earlier, Salim was president and CEO of NameSecure.com, an Internet domain name registrar and services company as well as serving as president of US and European operations at security leader TrendMicro.

More

https://secure.logmein.com
http://www.sec.gov/Archives/edgar/data/1420302/000095013508000171/b67378lmsv1.htm#116
http://gigaom.com/2008/01/14/logmein-files-for-86m-ipo-gets-money-from-intel/
http://gigaom.com/2006/08/08/logmein-buys-hamachi/
http://ipadventures.com/?p=1124
http://gigaom.com/2006/08/08/logmein-buys-hamachi/
https://secure.logmein.com/go.asp?page=pressrelease&id=49
http://redmondmag.com/features/article.asp?editorialsid=2400#neverwas
http://www.tmcnet.com/planetpdamag/articles/16929-logme-enables-remote-tech-support-smartphones.htm
http://www.canada.com/montrealgazette/columnists/story.html?id=6e9a2720-cdac-4366-bb94-3c71a728bcc8
http://www.pcmag.com/article2/0,2704,2219740,00.asp
https://secure.logmein.com/corp/pressrelease.asp?id=99
 

Internet Brands, Inc. went public on NASDAQ

Internet Brands, Inc., the smaller brother of IAC in terms of Internet strategy, and an Internet holding company with a number of second tier e-brands went public in the last weeks of 2007. They filed for their IPO back in July 2007 and were then planning to raise $100M/$115M million.

Internet Brands, Inc. was by that time planning to sell 3,750,000 shares of Class A common stock and the selling stockholders named in this prospectus are selling 5,816,454 shares of Class A common stock. We will not receive any of the proceeds from the shares of Class A common stock sold by the selling stockholders. The company and some of the selling stockholders have granted the underwriters a 30-day option to purchase up to an aggregate of 1,434,968 additional shares of Class A common stock, to cover over-allotments, if any. This was an initial public offering of our Class A common stock. They have an expectation the initial public offering price of our Class A common stock to be between $10.00 and $12.00 per share and they have applied for approval to list our Class A common stock on the NASDAQ Global Market under the symbol “INET.” 

The company revealed no specific plans for the use of the net proceeds of this offering. The principal reasons for the offering are to provide their stockholders liquidity in the public equity market, raise cash for general corporate purposes, which may include working capital and capital expenditures, and support the company’s general growth plan, which includes possible future acquisitions of complementary products, technologies and businesses. The timing and amount of their actual expenditures will be based on many factors, including cash flows from operations and the anticipated growth of the business. Pending these uses, Internet Brands Inc. intends to invest the net proceeds of this offering primarily in investment-grade, interest-bearing instruments.

The company was founded in 1998 as CarsDirect.com and, reflecting its growth and diversification, changed its name in 2005 to Internet Brands, Inc. and is a subsidiary of Idealab. Credit Suisse and Thomas Weisel Partners were underwriting the IPO. Investors include Idealab, the company’s largest shareholder, Foundation Capital, Clearstone Venture Partners, among others. It is interesting to note the fact that Idealab Holdings, L.L.C., through its ownership of our Class A common stock and exclusive ownership of our Class B common stock, will have control of approximately 67% of the votes represented by our Class A common stock, on an as-converted basis, and Class B common stock outstanding as of September 30, 2007. Thus, Idealab Holdings, L.L.C. will be able to influence or control matters requiring approval of our stockholders, including the election of directors and the approval of mergers, acquisitions and other significant corporate transactions.

What happened since then?

In times when the IPO market isn’t what it was even a few months ago the El Segundo, Calif.,-based operator of small, consumer-focused Web sites managed to go public, unlike a growing crowd of other technology companies being forced to pull or postpone their IPOs. Some popular and web 1.0 Internet companies that have recently pulled off their IPOs include GoDaddy, Classmates and Accoona (Planned on $80.5) among others. By contrast, looking to capitalize on the Apple halo effect, three former company executives, including co-founder Steve Wozniak, took their new company, Acquicor Technology, public 2006 in an IPO raising $150 million. The money they raised is purely based on their reputation, as Acquicor Technology, is officially designated as a “blank-check” company, meaning they don’t have any principal activity or business model yet and can do whatever they want with investor money, when raised.

Interestingly, instead of going further with its initial plans to sell 9.57 million shares between $10 and $12 a share, Internet Brands, Inc. settled for selling 6 million shares at $8 each. This put together with the fact their three quarters of 2007 resulted in a $2.5 million loss, which is not a good way to kickoff an IPO.

Second, instead of raising as much as $115 million, the company took in $48M or about 42 cents for every dollar it had hoped to raise. Internet Brands closed its first day of trading at $8, unchanged from the offer price — despite trading volume of 1 million shares, which was more than 10 times the average daily volume since then.

The company’s today (January 14, 2008) market capitalization is $260.63M where the 52Wk High was $8.87 while the 52Wk Low is $5.84. Today’s stock quote is at $6.20, way below its IPO stock price.

The company had revenues of $85 million in 2006 while the 2007’s revenues have actually declined from $65.2 million to $64.9 million. Its Q107 revenues declined to $19.1 million, compared to $21.9 million in Q106. This has been attributed to the slowing interest in the consumer Internet segment, especially for the auto industry. With 35 acquisitions during 2007, including Jelsoft Enterprises’ vBulletin, ApartmentRatings.com, DVD Talk and ePodunk, it has been looking to improve the communications technology across its growing network of commerce sites.

The acquisitions made by Internet Brands, Inc. total $84.8M as of today.

The guys behind vBulletin (JelSoft Enterprises)  have said by that time “We are pleased to announce that Jelsoft Enterprises Limited has been acquired by Internet Brands, Inc., a leading provider of automotive, travel and home-related sites and communities. As part of a larger organisation, with more than 500 employees, Jelsoft has access to additional resources, support and business expertise which will ensure that we can continue to grow and flourish. Products will continue to be actively developed and fully supported, and as time goes on you will begin to see noticeable changes and improvements that are made possible by being part of a larger organization.” The vBulletin’s co-founder, John Percival, left the company.

The company is leveraging over 27M unique visitors per month and is having agreements and relationships with the various vendors that benefit through their sites. CarsDirect does, for example, collect money from the dealers that are signed to their network. These dealers provide the vehicles to the shoppers on the site. The larger dealers clearly source more vehicles and are therefore likely to be paying more to CarsDirect. Some public sources claim the dealers pay anywhere from $35-$75/CPM, which is fairly high price and is perhaps brining in solid ad revenues to the company. More than 3,000 local car dealers have joined its nationwide network and it has alliances with Penske Automotive Group (formerly United Auto Group).

In general, Internet Brands Inc. seems to have some clear strategy problems. Their intent is to be a leading provider in community based research and transactions in the areas of automotive, real estate and travel, and they certainly own enough web properties in the respective categories to be the leader.  However, what Internet Brands Inc. has not done well is to leverage the 40+ brands they own to create an ultimate experience in any of those sectors. Online sources claim that the teams, part of the many acquired companies, were forced to integrate to their corporate structure way too quickly resulting in the opposite situation where Internet Brands Inc.’s companies seem disjoint, disintegrated with little to no ability to create game changing synergy. 

Maybe even more concerning is that Internet Brands Inc. owns many so called web 1.0 or web 1.5 brands, websites that are community driven, but are doing so with a look and feel of the past Internet decade. What makes this concerning is that Internet Brands Inc. is in a dangerous position of gradually losing its various communities to new-comers that take full advantage of web 2.0 technologies and functionality. Internet Brands Inc. should use the money they’ve raised from the IPO to either develop or acquire better positioned web properties towards the web 2.0-age if they want to retain and expand their online offerings and reach.

By contrast, Jefferies & Co initiates INET with a Buy and a $10 target saying as an owner-operator of a broad portfolio of vertically-oriented sites, INET is benefiting from the fragmentation of online audiences, and advertisers’ quest for highly targeted consumers. The investment firm says traffic growth, in part through acquisitions, and improvement in monetization should continue to drive INET’s prospects long-term.

Below are some of the recent sales of unregistered securities, including acquisitions and stock option plans. Since January 1, 2004, the company has issued the following securities that were not registered under the Securities Act of 1933:

1.  On December 31, 2004, we acquired certain assets and liabilities of LoanApp, Inc., and all of the stock of LoanApp, Inc., an affiliate of Myers Internet, Inc., for $2.4 million, including 212,563 shares of our Class A common stock. The 212,563 shares were issued to Warren H. Meyer, the controlling stockholder of Myers Internet, Inc. and the then sole stockholder of LoanApp, Inc., as follows: On December 30, 2007, January 31, 2005, February 2, 2005, and June 10, 2005, we issued 152,284, 15,863, 22,208, and 22,208 shares, respectively.

2.  On April 26, 2005, we exchanged 2,200,000 shares of Series D preferred stock for 2,000,000 shares of Class B common stock, pursuant to a Share Exchange Agreement with Idealab Holdings, L.L.C.

3.  On June 1, 2005, we acquired the assets and certain liabilities of 1-800 Communications, Inc. and Advanced Lead Generation, Inc. for $8.5 million, which consideration included 89,392 shares of our Class A common stock issued on June 1 to Jonathan Kratter and 89,392 shares of our Class A common stock issued on June 1 to Stuart Heller, the sole shareholders of the selling corporations.

4.  On July 15, 2005, in connection with the acquisition of VacationHomes.com, we issued 15,000 shares of Class A common stock to Kurt Leinbach.

5.  On February 22, 2006, we acquired certain assets and liabilities of Client Shop, Inc. In connection with this transaction, we issued 14,113 shares of Class A common stock to Client Shop, Inc.

6.  On September 13, 2006, we issued 5,000 shares of Class A common stock to Heidrick and Struggles, Inc. pursuant to a warrant exercise at $0.70 per share.

7.  On February 27, 2007, we extended the expiration date for four warrants to purchase 1,554,314 shares of Series F preferred stock, issued to Penske Motor Group, Inc. (formerly Penske Automotive Group, Inc.), Penske Automotive Group, Inc. (formerly United Automotive Group, Inc.) and Penske Corporation, to (i) as to three of the warrants, the earlier of December 31, 2008 or the termination of Roger Penske’s service as a director and (ii) as to one of the warrants, December 31, 2008.

8.  Between January 1, 2004 and the date hereof, we granted stock options to purchase 3,519,755 shares of Class A common stock at exercise prices ranging from $0.50 to $9.50 per share, with an average price per share of $3.31, to employees and consultants pursuant to our 1998 Stock Plan.

9.  Between January 1, 2004 and the date hereof, we granted stock options to purchase 95,500 shares of Class C common stock at exercise prices ranging from $0.50 to $4.70 per share, with an average price per share of $1.12, to employees and consultants pursuant to our 2000 Stock Plan.

10.  Between January 1, 2004 and the date hereof, we awarded stock options to purchase 16,750 shares of Class A common stock at an exercise price of $9.70 per share, and 386,702 shares of our restricted stock, valued at $9.70 per share, to directors, officers and employees pursuant to our 2007 Equity Plan.

11.  Between January 1, 2004 and the date hereof, we granted stock options to purchase 181,806 shares of Class A common stock at exercise prices of $1.50 per share to employees and directors outside of our 1998 and 2000 Stock Plans and 2007 Equity Plan.

12.  Between January 1, 2004 and the date hereof, we issued an aggregate of 2,293,378 shares of Class A common stock upon exercise of options under our 1998 Stock Plan, of which 532,569 shares were reacquired through repurchase of restricted (unvested) shares, promissory note repayment and exercise of right of first refusal.

13.  Between January 1, 2004 and the date hereof, we issued an aggregate of 20,641 shares of Class C common stock upon exercise of options under our 2000 Stock Plan.

14. Between January 1, 2004 and the date hereof, we issued an aggregate of 106,806 shares of Class A common stock upon exercise of options granted outside of our 1998 and 2000 Stock Plans and 2007 Equity Plan, of which 29,748 shares were reacquired through repurchase of restricted (unvested) shares.
 
15. Between January 1, 2004 and the date hereof, we issued an aggregate of 1,042,985 shares of Class A common stock upon the exercise of a warrant held by JPMorgan Chase & Co.

More about Internet Brands, Inc.

Internet Brands is a leading Internet media company that builds, acquires and enhances a rapidly growing network of branded websites in the automotive, travel and leisure, and home and home improvement categories. Utilizing a cost-efficient, proprietary operating platform, the Company operates and enhances websites that attract consumers through rich content, opportunities for participation in strong online communities, and user-friendly functionality, which enables the company to sell targeted advertising through various formats, such as cost per lead, cost per thousand impressions, cost per click, cost per action, and flat fees. Internet Brands operated 45 principal websites as of September 30, 2007, and attracted 27 million unique visitors during the month of September.

The company is based in El Segundo, CA and as of 2006 it had 559 employees. Major competitors include Autobytel, AutoNation, IAC, among others.

Some of the more popular brands of the company are:

Other web properties include:

  • Autodata
  • NewCarTestDrive.com
  • BBOnline.com
  • CruiseMates.com
  • VacationHomes.com
  • Loan.com
  • Mortgage101.com
  • RealEstateABC.com
  • AudiWorld.com
  • CorvetteForum.com
  • Ford-Trucks.com
  • FlyerTalk.com
  • TrekEarth.com
  • Wikitravel.org
  • BrokerOutpost.com
  • DoItYourself.com

And more…

Management team

Robert N. Brisco / Chief Executive Officer

Bob Brisco has been CEO, President, and Director of Internet Brands since 1999. He has led the growth of the company from an early stage to a position today of significant and rapidly growing profitability. Brisco has extensive experience in building high performing organizations and consumer brands, has led business turnarounds, and has been instrumental in the success of several Internet businesses.

Brisco joined Internet Brands from Universal Studios Hollywood and CityWalk, where he was President of one of the largest entertainment destinations in the world, hosting 10 million visitors per year. He oversaw all aspects of the business, including operations, marketing, sales, technology, finance, and entertainment. Prior to Universal, Brisco was senior vice president of advertising, marketing, and new business development for The Los Angeles Times. At The Times, he was responsible for over $1 billion of revenue. He oversaw all of The Times’ new media operations, directing the launch of LATimes.com, and leading acquisitions such as Hollywood.com. As a corporate officer of Times Mirror, Brisco was central in the company’s new media investments. He was a founding board member of Classified Ventures, which has launched Internet services in the real estate, rentals, and automotive categories. He also served as a Director of La Opinion, the largest Spanish language newspaper in the U.S. Previously, Brisco was a consultant with McKinsey & Co. and the Boston Consulting Group. As a consultant, he specialized in media and consumer products and developed winning business strategies for many clients. Brisco received an MBA from UCLA and a BA from USC (summa cum laude) in economics and journalism.

Lisa Morita / Chief Operating Officer

Lisa Morita oversees the company’s day-to-day operations including sales, customer service, pricing, and product and business strategy for the Automotive and Home Divisions. Prior to joining Internet Brands in March 2007, Morita was Senior Vice President of Customer and Content Solutions at Yahoo! Search Marketing. She was responsible for leading the customer and editorial operations that supported online advertisers who spent billions of dollars in search marketing. She led the customer operations team through the successful migration of its hundreds of thousands of online advertisers onto an entirely new platform, “Project Panama.” Morita joined GoTo.com in 2001 and scaled the operation during its rapid growth as Overture Services. Morita has extensive marketing and general management experience in companies ranging from early stage to Fortune 500 companies. She was SVP of Marketing at eMind, LLC, where she was part of the team that grew the start-up company into a leading provider of eLearning solutions. Previously, Morita was Vice President of Advertising and Marketing at The Los Angeles Times, responsible for retail ad sales and marketing. She began her career at Carnation Company/Nestle USA in brand management running brands including the most profitable in the division. Morita received an M.B.A. from Stanford University and earned a B.A. from Occidental College.

Debra Domeyer / Chief Technology Officer

As Chief Technology Officer, Debra Domeyer oversees information technology, creative services, development and architecture for Internet Brands. Prior to joining Internet Brands in 1999, she served as Vice President and Chief Information Officer at PG&E Energy Services. There, she created Web-based information products in support of a $220 billion nationwide industry initiative promoting commodity products. Prior to PG&E, she was Vice President of Information Systems for Times Mirror Company. Domeyer also has extensive experience in the mortgage industry. From 1989 to 1993, she directed information systems operations for the Federal Home Loan Mortgage Corporation during a year of record growth, then led re-engineering improvements at Countrywide Home Loans, one of the country’s leading mortgage loan companies. From 1983 to 1988, Domeyer served in the White House, supervising development of distributed applications and secure communications for the President’s trips worldwide, including the Japan Economic Summit and the US/Russia Summit in Iceland. Domeyer has a B.A. in Business from Loras College and a master’s degree in Information Systems Technology from George Washington University.

Alexander E. Hansen / Chief Financial Officer

Alex Hansen is responsible for the controllership, operational accounting, finance, planning and treasury functions for Internet Brands. He has been a Chief Financial Officer for over 15 years, serving as the finance executive for both public and private companies ranging in size from start-ups to middle-market companies with revenues over $800 million. Companies he has served, spanning the consumer products, software development, advertising and entertainment industries, include CreativePlanet, Quisic, J. Walter Thompson and GROUPE DANONE. Hansen is a partner and board committee member of Tatum LLC, a CPA (former manager with PriceWaterhouse), a member of the AICPA and the CSCPA, and a graduate of Williams College and Princeton Theological Seminary.

B. Lynn Walsh / Executive Vice President, Corporate Development and General Counsel

Lynn Walsh is responsible for structuring and negotiating acquisitions and strategic partnerships and oversees all human resource, legal, and regulatory aspects of the company’s business. Prior to joining Internet Brands in 2000, Walsh was a partner in the Technology group at Alston & Bird LLP in Atlanta, Georgia, where she specialized in public and private offerings of securities, mergers and acquisitions and corporate finance. Previously, Walsh was a partner at Hunton & Williams in Atlanta. She received her B.A. from the University of Michigan and her J.D. from Wayne State University Law School.

Chuck Hoover / Senior Vice President, Marketing and Business Development

Chuck Hoover oversees Internet Brands’ marketing including online and offline advertising, consumer and product research, acquisition and retention strategies, and PR. He is also responsible for Internet Brands’ business development initiatives to create relationships with strategic partners and oversees advertising sales. Hoover joined Internet Brands in December 1999 from Homestore.com, operator of the nation’s largest real estate Web sites. At Homestore he was responsible for consumer marketing including management of distribution partnerships with top portals and product development. Prior to Homestore, Hoover was Vice President of Marketing for PeopleLink, the first company incubated by Idealab and the leader in providing business to business community services. Previously, Hoover worked at the Los Angeles Times in the Marketing and New Business Development group developing new advertising products for major retailers and entertainment companies, including the acquisition of Hollywood.com. Hoover received an MBA from Stanford University and a BA in economics Phi Beta Kappa from Occidental College.

Gregory T. Perrier / CEO & President, Autodata Solutions Company

As President and CEO since 1993, Greg Perrier has built Autodata Solutions into one of North America’s largest software and services boutiques focused on the automotive industry. The company, which Internet Brands acquired in mid-1999, serves every manufacturer in North America from Acura to Volvo through its diverse suite of products and services. Autodata’s products and services help auto manufacturers throughout all stages of the selling-chain from market analytics, product planning, vehicle configuration management, order placement, in-dealership retail systems, and dealership personnel training, to consumer-facing web sites. Perrier earned an honors degree in business from the Ivey School of Business in 1984 and immediately following served as a consultant with Price Waterhouse.

Board of Directors

Dr. Howard Morgan

Dr. Morgan has served as a Director of Internet Brands since February 1999 and as Chairman of our board of directors since September 1999. He is also a Director of Idealab, a creator and operator of technology companies. Since 1989, Dr. Morgan has also been President of Arca Group, Inc., a consulting and investment management firm specializing in the areas of computers and communications technologies. He serves as a director for a number of private and public companies, including Franklin Electronic Publishers, Inc., Segue Software, Inc. and Unitronix Corp. Dr. Morgan holds a B.S. in Physics from City University of New York and a Ph.D. in operations research from Cornell University.

Robert N. Brisco

Bob Brisco has been CEO, President, and Director of Internet Brands since 1999. Mr. Brisco joined Internet Brands from Universal Studios Hollywood and CityWalk, where he was President of one of the largest entertainment destinations in the world. Prior to Universal, Mr. Brisco was Senior Vice President of advertising, marketing, and new business development for The Los Angeles Times. He oversaw all of The Times’ new media operations, directing the launch of LATimes.com, and leading acquisitions such as Hollywood.com. Previously, Mr. Brisco was a consultant with McKinsey & Co. and the Boston Consulting Group, specializing in media and consumer products.

Roger S. Penske, Sr.

Mr. Penske has served as a Director of Internet Brands since May 2000. He has also been Chairman of the Board and CEO of Penske Corporation since 1969. Penske Corporation is a privately-owned diversified transportation services company that holds, through its subsidiaries, interests in a number of businesses. Mr. Penske has also been Chairman of the Board of Penske Truck Leasing Corporation since 1982 and of UnitedAuto Group since 1999. He serves as a member of the Boards of Directors of General Electric Company and Universal Technical Institute, Inc.; and is a director of Detroit Renaissance and a member of The Business Council.

Marcia Goodstein

Marcia Goodstein has been a member of the board of Internet Brands since August 2004. Ms. Goodstein founded Idealab with Bill Gross in March 1996 and serves as the company’s Chief Operating Officer and President. Prior to joining Idealab, Ms. Goodstein worked in business development and marketing for Enfish Corporation, a software development company. Ms. Goodstein was also an early employee of Gemstar Development Corporation and was responsible for media licensing for North America, as well as marketing and distribution in South America.

Gerald Greenwald

Mr. Greenwald has served as a Director of Internet Brands since September 1999. Mr. Greenwald is Chairman Emeritus of United Air Lines and served as the Chairman and CEO of United Air Lines from 1994 to 1999. From 1979 to 1990, Mr. Greenwald was employed by the Chrysler Corporation, where he worked in various positions including Corporate Controller and CFO before being promoted to Vice Chairman, a position in which he shared responsibility with the CEO for the operations of the company. From 1957 to 1979, he was employed by the Ford Motor Company, where he worked in several positions including Controller, Director of Ford’s operations in Europe and as President of Ford of Venezuela. Mr. Greenwald is one of the founders of Greenbriar Equity Group.

Bill Gross

Bill Gross has served as a Director of Internet Brands since its inception. He is the Founder, Chairman and CEO of Idealab, a creator and operator of technology companies. A lifelong entrepreneur, Mr. Gross has launched a number of successful companies, including GNP Development (acquired by Lotus), Knowledge Adventure (acquired by Havas Vivendi) and Overture Services, to name a few. A well-known visionary and entrepreneur, Mr. Gross sits on the Board of Directors of Overture Services (NNM: OVER) and the Board of Trustees of the California Institute of Technology. Mr. Gross received his B.S. in Mechanical Engineering from the California Institute of Technology.

Kenneth Gilman

Kenneth Gilman has been a member of the board of Internet Brands since January 2002. Mr. Gilman joined Asbury Automotive Group following a 25-year career with the Limited Inc. where his most recent assignment was CEO of Lane Bryant. From 1993 to 2001, Mr. Gilman served as Vice Chairman and Chief Administrative Officer of The Limited, Inc. with responsibility for finance, information technology, supply chain management, production, real estate, legal and internal audit. From 1987 to 1993, he was Executive Vice President and CFO. He joined the company’s executive committee in 1987 and was elected to the board of directors in 1990.

Martin Melone

Mr. Melone has served as a Director of Internet Brands since August 2005. Mr. Melone was a partner of Ernst & Young, LLP from 1975 to 2001, where he was responsible for global clients in a wide range of industries. He now serves on the Board of Directors of Countrywide Financial Corporation, where he is Chairman of the Audit and Ethics Committee. Mr. Melone also serves on the Boards of Directors of the California Science Center Foundation and Public Counsel Law Center. He is a member of the American Institute of Certified Public Accountants and the California Society of Certified Public Accountants.

James Ukropina

Mr. Ukropina has served as a Director of Internet Brands since February 2006. He is also a director of Lockheed Martin Corporation, Pacific Life Corp, Trust Company of the West, Central Natural Resources and the Keck Foundation, and is the CEO of Directions, LLC, a management and strategic consulting firm. Mr. Ukropina formerly served as Vice-Chairman of the Board of Trustees of Stanford University and as an advisor and board member of numerous other public, private and non-profit entities, including IndyMac Bancorp, Santa Fe International, Security Pacific Corp., Occidental College, and the California Chamber of Commerce. He has chaired various board committees, including the audit, compensation, nominating and special committees, and has authored a number of articles on corporate governance and executive compensation. He was a partner with the international law firm, O’Melveny & Myers LLP until 2000 and has served as Of Counsel since that time. Mr. Ukropina holds a B.A. and a M.B.A. from Stanford University and a LL.B from the University of Southern California.

More

http://www.internetbrands.com
http://finance.google.com/finance?q=INET
http://www.paidcontent.org/entry/419-idealab-backed-holding-firm-internet-brands-files-for-100-million-ipo
http://www.sec.gov/Archives/edgar/data/1080131/000104746907008138/a2179214zs-1a.htm
http://mashable.com/2007/10/31/internet-brands-ipo/
http://www.paidcontent.org/entry/419-internet-brands-to-raise-up-to-45-million-in-ipo/
http://mashable.com/2007/07/10/vbulletin-acquired-by-internet-brands/
http://www.paidcontent.org/entry/419-internet-brands-acquires-real-estate-community-site-apartmentratings
http://www.paidcontent.org/entry/419-message-board-software-vbulletin-bought-by-internet-brands
http://www.techcoastreview.com/2007/11/internet-brands-goes-public.html
http://stocks.us.reuters.com/stocks/fullDescription.asp?rpc=66&symbol=INET.O
http://www.hoovers.com/internet-brands/–ID__59923–/free-co-factsheet.xhtml
http://www.pehub.com/article/articledetail.php?articlepostid=8919
http://www.thestreet.com/s/internet-brands-ipo-suggests-return-to-normalcy/newsanalysis/techstockupdate/10391500.html
http://www.sec.gov/Archives/edgar/data/1080131/000104746907008138/a2179214zs-1a.htm#toc_dk79101_1
http://www.techdirt.com/articles/20060808/1526256.shtml
http://www.techdirt.com/articles/20060727/0843233.shtml
http://www.vbulletin.com/forum/showthread.php?p=1383883#post1383883
http://en.wikipedia.org/wiki/Internet_Brands
http://news.moneycentral.msn.com/provider/providerarticle.aspx?feed=BCOM&date=20080111&id=8025636

No IPO for Classmates.com

On November 27, 2007 we have reported that Classmates Media has just filed to go public at a valuation of $600 to $700 million. It then appeared that Classmates is trying to cash in on the social networking market craze.

Classmates Media Corp., which operates the online social networking site Classmates.com, (when the company started they did not call themselves social networking site) expects its planned initial public offering to total 12 million Class A shares and price between $10 and $12 each.

Today we learned they have canceled their IPO in US. If it did go through it could have been the first pureplay social networking IPO in the country. And probably Facebook could have gathered some vital market information on how far they could eventually go to with their planned IPO in 2008 or 2009. But as it seems things did not work out.

United Online (NSDQ: UNTD) has canceled the proposed IPO of its Classmates.com social networking unit. By citing the standard “market conditions,” the company now says that such a move wouldn’t be in the interest of stockholders. In other words, the interest wasn’t there. While there had been some excitement over a social networking pure-play IPO, Classmates.com, with its subscription-driven business model and earth-bound growth rates, couldn’t fully capture the buzz. United Online said it will take a $4.5-$5.5 million charge in Q4 associated with the aborted process.

There could potentially be countless reasons for that decision but certainly several of them are standing out:

  • IPO market is sort of cooling.
  • The filing anyway did not appear any serious from the get-go.
  • Classmates is far beyond the buzz level some other social networking sites are enjoying today.
  • They have tried but it seems nobody else was buying Classmate’s story.
  • The FTC investigation (The company’s auto-renewal system has come under investigation at the FTC, potentially causing churn to spike).
  • Hints of self-dealing.
  • User engagement is 95 percent lower than say on Facebook, suggesting that users see little value in the service they’re paying for. Classmates has little value for young users, since there’s no need for them to re-connect; they’re already connected through other sites.
  • Facebook is making major inroads into Classmates’ adult demographic.
  • Classmates is sort of Web 1.0 company.

Taking into consideration some of the above points it is no wonder the investors passed.

An interesting question was asked by Techcrunchers: How is United Online going to get back that $50 million it “loaned” to its subsidiary now?

A recent report from Cowen & Co. analyst Jim Friedland spells out exactly why United Online couldn’t cash in with Classmates. One line sums up his thesis: “We expect the Classmates.com subscriber base to peak in the first half of 2008, followed by a steady decline to zero by 2012.” Much of the report hones in on the fact that Classmates is no Facebook. The biggest difference is that Facebook is free and offers far more robust features.

While we do not take the Facebook reason for a valid point, since Facebook itself is most likely going to become paid in some parts at some point in the future, we think the problem with Classmates is more on the aspect of the fact it is generally declining business rather than rapidly growing with viable future as for example some of the newer social networking players, including but not limited to, MySapce, Facebook, Bebo and a countless number of market-niche specific social networking sites and community sites of new type and breed.

While we are not sure how profitable Classmates is the revenues for the full year of 2006 were $139 million and 2005 revenues were $85 million. 2007 is expected to bring in more than $140M.

Via

[ https://web2innovations.com/money/2007/11/27/classmates-prepares-for-an-ipo/ ]
[ http://www.techcrunch.com/2007/12/12/update-classmates-ipo-is-pulled/ ]
[ http://www.nytimes.com/paidcontent/PCORG_317818.html ]
[ http://www.techcrunch.com/2007/11/26/classmates-ipo-tries-to-cash-in-on-social-networking-craze/ ]
[ http://biz.yahoo.com/ap/071126/classmates_media_ipo.html ]
[ http://www.sec.gov/Archives/edgar/data/1409112/000104746907009507/a2179839zs-1a.htm ]

Classmates prepares for an IPO

Classmates Media has just filed to go public at a valuation of $600 to $700 million. Compared to Facebook’s $15 Billion valuation, which the company took as a private entity, it ranks the company more in the bottom level of the Internet sector rather than within the top 100. It appears that Classmates is trying to cash in on the social netwrking market craze.

Classmates Media Corp., which operates the online social networking site Classmates.com, (when the company started they did not call themselves social networking site) expects its planned initial public offering to total 12 million Class A shares and price between $10 and $12 each.

Based on the anticipated price range, Classmates would have a market capitalization of $600 million to $720 million. Assuming an offering price of $11 per share, the company expects to raise net proceeds of about $117.7 million after fees and expenses from the IPO. Mark Goldstone will be the CEO of Classmates Media, and he is personally getting 2.8 million options at the IPO price.

Here are some facts at a glance as taken from the Security Exchange Commission:

—Revenues the first nine months of 2007 weer $140 million. (Full-year 2006 revenues weer $139 million; 2005 revenues were $85 million).
—Net income the first nine months was $1.6 million. ($1.9 million loss in 2006; $8.2 million loss in 2005).
—50 million registered users as of September, 2007. Only 12.8 million of which are active and 3 million of which pay on average $3.33 a month to email and connect with old friends directly.
—Monthly churn of 4.6 percent

Classmates makes money primarily from subscriptions. It also relies on MyPoints, which is a loyalty program. The company also owns a French based social network, Trombi, and Sweden’s Stayfriends.

Goldman Sachs and JP Morgan Sercurities are serving as joint book-running managers for the IPO. Deutsche Bank Securities is also underwriting the offering. The underwriters have an option to buy up to 1.8 million shares from the company to cover any overallotments.

The company plans to list its shares on the Nasdaq Global Market under the symbol “CLAS”.

In an another story the FTC is investigating Classmates membership subscription auto-renewal policy, where it just keeps charging your credit card until you tell it to stop, reports Techcrunch’s Erick Schonfeld.

comScore’s October 2007 social networking numbers reveal Classmates had 14.4 million U.S. visitors, which represents a one percent year-over-year decline.

The company’s overview:

We operate leading online social networking and loyalty marketing services under our Classmates and MyPoints brands. Our leadership position is based on a number of factors, including the number of unique visitors to our Web sites, brand awareness and the number of registered members. Our success is driven by our expertise in growing and monetizing large online audiences in a cost-effective manner and enabling advertisers to reach relevant online consumers effectively. Revenues from our social networking services are derived from subscription and advertising fees, and revenues from our loyalty marketing services are derived from advertising fees.

On our social networking sites, we enable users to locate and interact with acquaintances from school, work and the military. Led by our flagship Classmates Web site, our social networking properties are comprised of a large and diverse group of users, with over 50 million registered accounts as of September 30, 2007. Social networking pay accounts at December 31, 2005 and 2006, and at September 30, 2007, were approximately 1.8 million, 2.2 million and 3.0 million, respectively. Using our interactive tools and features, our members have contributed to our social networking Web sites a substantial number of distinct, relevant pieces of content, such as names, school affiliations, profiles, biographies, interests and photos.

MyPoints, our online loyalty marketing service, provides advertisers with an effective means to reach a large online audience with targeted marketing campaigns, while also enabling consumers to earn points-based rewards by responding to email offers, completing online surveys, shopping online and engaging in other online activities. During the last year, we marketed the products and services of over 400 advertisers to our MyPoints members, including NetQuote, Inc., Office Depot, Inc., VistaPrint Limited and Waterfront Media, Inc. As of September 30, 2007, over 8.8 million members were registered with MyPoints, over 6.0 million of whom were registered to receive email marketing messages from us.

From all this it becomes clear for us that calling yourself a social networking site might be profitable these days.

[ via Techcrunch ]

[via Yahoo Biz ]

[ via SEC ]