{"id":29,"date":"2007-12-13T11:01:19","date_gmt":"2007-12-13T19:01:19","guid":{"rendered":"http:\/\/web2innovations.com\/money\/2007\/12\/13\/no-ipo-for-classmatescom\/"},"modified":"2007-12-13T11:07:02","modified_gmt":"2007-12-13T19:07:02","slug":"no-ipo-for-classmatescom","status":"publish","type":"post","link":"https:\/\/web2innovations.com\/money\/2007\/12\/13\/no-ipo-for-classmatescom\/","title":{"rendered":"No IPO for Classmates.com"},"content":{"rendered":"<p>On November 27, 2007 we have <a href=\"http:\/\/web2innovations.com\/money\/2007\/11\/27\/classmates-prepares-for-an-ipo\/\">reported<\/a> 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.<\/p>\n<p>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.<\/p>\n<p>Today we learned they have canceled their IPO in US. If it did go through it could have been the first pureplay social <a href=\"http:\/\/Classmates.com\"><img loading=\"lazy\" decoding=\"async\" border=\"0\" vspace=\"5\" align=\"left\" width=\"269\" src=\"http:\/\/web2innovations.com\/money\/i\/classmates-logo.png\" hspace=\"5\" height=\"60\" \/><\/a>networking <a href=\"http:\/\/www.linkedwords.com\/business\/investing\/exchanges\/nasdaq\/IPO.php\">IPO<\/a> 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.<\/p>\n<p>United Online (NSDQ: UNTD) has canceled the proposed IPO of its <a href=\"http:\/\/classmates.com\/\">Classmates.com<\/a> social networking unit. By citing the standard \u00e2\u20ac\u0153market conditions,\u00e2\u20ac\u009d the company now says that such a move wouldn\u00e2\u20ac\u2122t be in the interest of stockholders. In other words, the interest wasn\u00e2\u20ac\u2122t there. While there had been some excitement over a <a href=\"http:\/\/www.linkedwords.com\/society\/sociology\/social-integration\/social_networking.php\">social networking<\/a> pure-play IPO, Classmates.com, with its subscription-driven business model and earth-bound growth rates, couldn\u00e2\u20ac\u2122t fully capture the buzz. United Online said it will take a $4.5-$5.5 million charge in Q4 associated with the aborted process.<\/p>\n<p>There could potentially be countless reasons for that decision but certainly several of them are standing out:<\/p>\n<ul>\n<li><a href=\"http:\/\/www.linkedwords.com\/business\/investing\/exchanges\/nasdaq\/IPO.php\">IPO<\/a> market is sort of cooling.<\/li>\n<li>The filing anyway did not appear any serious from the get-go.<\/li>\n<li>Classmates is far beyond the buzz level some other social networking sites are enjoying today.<\/li>\n<li>They have tried but it seems nobody else was buying Classmate&#8217;s story.<\/li>\n<li>The FTC investigation (The company\u00e2\u20ac\u2122s auto-renewal system has come under investigation at the FTC, potentially causing churn to spike).<\/li>\n<li>Hints of self-dealing.<\/li>\n<li>User engagement is 95 percent lower than say on Facebook, suggesting that users see little value in the service they\u00e2\u20ac\u2122re paying for. Classmates has little value for young users, since there\u00e2\u20ac\u2122s no need for them to re-connect; they\u00e2\u20ac\u2122re already connected through other sites.<\/li>\n<li>Facebook is making major inroads into Classmates\u00e2\u20ac\u2122 adult demographic.<\/li>\n<li>Classmates is sort of Web 1.0 company.<\/li>\n<\/ul>\n<p>Taking into consideration some of the above points it is no wonder the investors passed.<\/p>\n<p>An interesting question was asked by Techcrunchers: How is United Online going to get back that $50 million it \u00e2\u20ac\u0153loaned\u00e2\u20ac\u009d to its subsidiary now?<\/p>\n<p>A recent report from Cowen &amp; Co. analyst Jim Friedland spells out exactly why United Online couldn\u00e2\u20ac\u2122t cash in with Classmates. One line sums up his thesis: \u00e2\u20ac\u0153We expect the Classmates.com subscriber base to peak in the first half of 2008, followed by a steady decline to zero by 2012.\u00e2\u20ac\u009d 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.<\/p>\n<p>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.<\/p>\n<p>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.<\/p>\n<p>Via<\/p>\n<p>[ <a href=\"http:\/\/web2innovations.com\/money\/2007\/11\/27\/classmates-prepares-for-an-ipo\/\">http:\/\/web2innovations.com\/money\/2007\/11\/27\/classmates-prepares-for-an-ipo\/<\/a> ]<br \/>\n[ <a href=\"http:\/\/www.techcrunch.com\/2007\/12\/12\/update-classmates-ipo-is-pulled\/\">http:\/\/www.techcrunch.com\/2007\/12\/12\/update-classmates-ipo-is-pulled\/<\/a> ]<br \/>\n[ <a href=\"http:\/\/www.nytimes.com\/paidcontent\/PCORG_317818.html\">http:\/\/www.nytimes.com\/paidcontent\/PCORG_317818.html<\/a> ]<br \/>\n[ <a href=\"http:\/\/www.techcrunch.com\/2007\/11\/26\/classmates-ipo-tries-to-cash-in-on-social-networking-craze\/\">http:\/\/www.techcrunch.com\/2007\/11\/26\/classmates-ipo-tries-to-cash-in-on-social-networking-craze\/<\/a> ]<br \/>\n[ <a href=\"http:\/\/biz.yahoo.com\/ap\/071126\/classmates_media_ipo.html\">http:\/\/biz.yahoo.com\/ap\/071126\/classmates_media_ipo.html<\/a> ]<br \/>\n[ <a href=\"http:\/\/www.sec.gov\/Archives\/edgar\/data\/1409112\/000104746907009507\/a2179839zs-1a.htm\">http:\/\/www.sec.gov\/Archives\/edgar\/data\/1409112\/000104746907009507\/a2179839zs-1a.htm<\/a> ]<\/p>\n","protected":false},"excerpt":{"rendered":"<p>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 [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[34,57,55,53,56,54],"tags":[62,58,63,1384,60,61,59],"class_list":["post-29","post","type-post","status-publish","format-standard","hentry","category-business","category-deutsche-bank-securities","category-goldman-sachs","category-ipo","category-jp-morgan-sercurities","category-social-networking","tag-clas","tag-classmates-media","tag-ftc","tag-ipo","tag-mark-goldstone","tag-nasdaq","tag-social-networking-site"],"_links":{"self":[{"href":"https:\/\/web2innovations.com\/money\/wp-json\/wp\/v2\/posts\/29","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/web2innovations.com\/money\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/web2innovations.com\/money\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/web2innovations.com\/money\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/web2innovations.com\/money\/wp-json\/wp\/v2\/comments?post=29"}],"version-history":[{"count":0,"href":"https:\/\/web2innovations.com\/money\/wp-json\/wp\/v2\/posts\/29\/revisions"}],"wp:attachment":[{"href":"https:\/\/web2innovations.com\/money\/wp-json\/wp\/v2\/media?parent=29"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/web2innovations.com\/money\/wp-json\/wp\/v2\/categories?post=29"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/web2innovations.com\/money\/wp-json\/wp\/v2\/tags?post=29"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}