From our friends at Cnet.
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WatchMojo NewsletterInteresting article in Business Week on NetSuite’s potential IPO. NetSuite is a Larry Ellison-backed software company that is like Salesforce.com in the sense that it’s web based, but unlike Salesforce.com which focuses on sales planning and account management, NetSuite helps small and medium sized businesses with accounting and financial statements, the “underpinning of a business,” according to Oracle’s Ellison.
For one thing, it’s odd that Oracle’s board has not raised an issue with Ellison owning well over 50% of a company (after a potential IPO, he owns much more now, having invested the bulk of the $100M NetSuite has raised) that is technically competing in a space that Oracle should have a foothold in, but alas…
Second, the article has an interesting stat that is explained partially by Sarbanes Oxley making it more expensive for companies to go public, and by the fact that Google and MSFT have continued to scoop most companies early on before they scale enough to file for an IPO.
Anyway, the stat: in 1999, there were 323 IPOs which raised $31.6 billion, compared to a paltry $4.9 billion raised in 2006 through a mere 32 IPOs.
Of course, there’s also much less VC money being invested, and 1999 was the beginning of the before the Nasdaq bubble… but still; that’s 90% less IPOs a mere seven years later.
The company’s 2006 revenues were in the $70M range, backing what I have been saying for some time, when it comes to IPOs, $50M is the new $100M (at least for online companies).
Last year, CNET was being hailed as a likely acquisition target for an amount flirting close to $2B. The company was trading northwards of $1.5B. I held a position in the stock because the macro and micro markets were positive and indeed there was a premium placed on the stock over a potential sale to Viacom, Google, News Corp., Yahoo! - you know, the usual suspects.
But then those rumors went nowhere and it was clear that CEO Shelby Bonnie was in no mood to sell. He was one of those CEOs who probably needed an additional premium to give up control. I think that - and not the $2B price tag CNET wanted - killed any deal, really.
People matter more in business and M&A in particular than we like to think. That’s certainly not a knock against CNET or Mr. Bonnie.
Anyway, this year, a perfect storm hit CNET:
- it missed out on the video craze by not opening up Webshots to video sharing,
- blogs began to eat away at its market share in all things tech,
- it did not diversify away from tech into lifestyle quick enough,
- an options pricing scandal led to Bonnie’s resignation,
- Yahoo!’s stock fell 40% (killing its pricey acquisition appetite),
- Viacom’s stock plunked (ditto),
- News Corp. closed its cash register and acquisition guru Ross Levinsohn resigned…
All to say, the acquisition premium vanished, CNET now is stuck in that $8-10 range, it’s up from the $7 rut it hit in August, (incidentally, I wrote this in July, when it was at $7 bucks, you should have listened, it’s up to almost $9 now) but will it strike the $12-15 range it crossed last year? Probably not.
Valleywag is now reporting that the company might be broken up and sold in pieces. I think that is somewhat drastic, it’s still a nice collection of assets and a helluva strong brand. In other words, there is a world outside of blogosphere.
