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IPO - Tuesday, November 20, 2007

Mixed IPO Bag: SuccessFactors Swims; Internet Brands & CreditCards.com Sink

SuccessFactors Inc (SFSF.O) had a killer day, a day after its IPO that raised $108M, at the top of expectations.

Shares opened today at $13 per share, 30% higher than its $10 IPO price, By end of today, the shares stood at $13.25, up 32.5%. Based on its opening price, the company has an initial market capitalization of about $650M.

No doubts, SuccessFactors is a money loser. For the nine months ended Sept. 30, the company saw a net loss of $49M on revenue of $44M. That compared to a net loss of $22.9M on revenue of $21.2M for the same period a year ago. That is a killer burn-rate but at least the company's revenues are headed in the right direction. SuccessFactors sells Web-based performance management software and perhaps the Street feels it may have a buyout candidate on its hands given the crazy amount of consolidation in enterprise software.

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We had a sinking feeling about Internet Brands when it filed its IPO and wondered why the company would push its IPO timing when its numbers clearly failed to impress even the most casual observer. The firm had to cut the size and expected price of its IPO to an $8 offering price, which would value Internet Brands at a market cap of about $334.1M. Previously, Internet Brands expected the offering to total about 9.6M shares and price between $10 and $12 per share.

Read this synopses and go figure why Internet Brands decided to IPO:
"For the nine months ended Sept. 30, Internet Brands swung to a loss of $2.5 million, after paying preferred dividends, compared with earnings of $6.3 million in the first nine months of 2006. During the same period, the company's revenue dipped to about $65 million from $65.2 million."

InternetBrands operates a number of consumer-facing Web sites that earn revenues off of advertising. Given how well others in this space are doing, InternetBrands financial performance may lead people to believe that management has not figured it out.

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Finally, CreditCards.com pulled its planned IPO.