Even though we are waiting for most prized IPO of the decade (yet), smaller start-up continues their march and momentum towards IPOs.. making it close to dot.com boom time..
Which is good and can be seen in local economy. This is one of the best example, what rest of the US should be doing.. Innovate!!! and just create atmosphere for Innovation.. rest of the things will fall in place automatically..
That is much more easier said than done though. Many countries/states have tried to replicate and boot strap their local silicon valley or its equivalent.. but with hardly any major success But this doesn't mean that they should stop.. Ultimately, it is going to benefit them and rest of the world.. It will never backfire for sure..
So another question.. what is next big thing for silicon valley or high tech. Currently, it is era of Cloud, mobile, Social Collaboration (almost peaked, or may be not), Big Data and "Internet of Things" are most hot commodities in Valley.. What is next?
Valley IPOs exceed expectations
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| Hot but Kwel Silicon Valley!! |
Investors show faith in profitability of emerging startups
By Jeremy C. Owens
jowens@mercurynews.com
Two Silicon Valley companies found success on Wall Street in their initial public offerings Thursday, with a Mountain View-based company that makes processors for Apple’s iconic iPhone bringing in the most capital.
Audience, a 12-year-old company that makes processors that improve audio quality on mobile devices, priced its initial offering of shares higher than expected, but still found investors willing to pay more for the stock. Meanwhile, San Mateo-based WageWorks priced its stock lower than expected, then saw the price bounce above the range it expected to reap. Audience derives a large part of its business from Cupertino tech giant Apple, which uses the company’s technology in its popular mobile products. In Securities and Exchange Commission filings ahead of its IPO, the company said that 85 percent of its revenue in 2010 came from Apple; that percentage dropped to 75 percent in 2011, when Samsung stepped up its purchases from the company and accounted for 20 percent of its business. Many recent Silicon Valley IPOs have found success on Wall Street despite failing to post profits, with investors betting that revenue growth can push the startups to profitability. Audience, however, has shown revenue growth and profit recently. The company posted profits of $4.8 million and $8.3 million in 2010 and 2011, respectively, and made $4.2 million in the first three months of 2012. Annual revenue grew from $5.7 million in 2009 to $47.9 million in 2010 to $97.7 million in 2011, the company reported, and revenue for the first quarter of 2012 was $31.1 million.
The company sold 5 million shares at $17 apiece after initially filing at a range of $14 to $16 a share; existing shareholders sold another 270,000 shares at the same price. The sale netted a total of $89.6 million, with $85 million of that going to the company, before expenses, which it will use for general business purposes, according to the SEC filing.
Once the stock reached the Nasdaq under the ticker symbol ADNC, investors pushed the price up higher. Shares began selling Thursday morning for $19 apiece and never fell lower than $18.96 on the open market while rising as high as $20.20. The stock closed its first day of action at $19.08, 12.2 percent higher than the IPO price.
“Audience is really alone out there within a very good market niche and that’s what has been required in past tech offerings that have really worked well,” Scott Sweet, senior managing partner at IPO research firm IPO Boutique, told Reuters on Wednesday.
San Mateo-based software company WageWorks also had a strong first day of trading Thursday, with its stock rising 40 percent from the IPO price after the company dropped the price just before the offering. The company had planned to go public more than a year ago, but put off the process due to market uncertainty.
WageWorks, which offers cloud software to manage employee benefits, sold 6.5 million shares at $9 apiece after originally aiming for a range of $10 to $12, bringing in $58.5 million before expenses. The stock then debuted Thursday on the New York Stock Exchange under the ticker symbol WAGE for $9.99 and began to rise. Shares traded in a range from $9.75 to $12.60, with that high price coming at the very end of the session and representing the closing price.
While the stock closed at $12.60, a 40 percent increase from the IPO price, it was trading for less than $11 a share just 5 minutes before the market closed and dipped back sharply in after-hours trading, when shares were selling for closer to $11.
The two successful IPOs continue a strong run for Silicon Valley stock debuts in the run-up to Facebook’s highly anticipated public stock launch, expected May 18.
An official with the Nasdaq stock exchange said Thursday that he doesn’t expect the rate of successful Silicon Valley IPOs to end any time soon.
“Facebook is obviously the most anticipated IPO in history and once that IPO comes out, I’m sure we’ll see several companies look to take advantage of that market,” Bruce Aust, executive vice president of Nasdaq’s Global Corporate Client Group, said in a New York presentation to analysts, according to Reuters.
“I go (to Silicon Valley) pretty much every other week because it is a huge opportunity when we look at what’s going on with social media, what’s going on with Apple and the applications and the ecosystem that is being created by that, and the gaming industry that is being created by social media. There is just tremendous opportunity and we’re meeting with 20 or 30 companies a week,” he said.
Contact Jeremy C. Owens at 408-920-5876; follow him at Twitter.com/mercbizbreak.
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