Common knowledge on Wall Street posits that now, post tech bust, companies need to show sustainable profitability before filing for an IPO. Going public on eyeballs alone is a tragedy of yore. There are six high profile tech IPOs on deck: Vonage (VG), Riverbed (RVBD), Clearwire (CLWR), Alien (RFID), GoDaddy, and DivX (DIVX). How many of them are profitable? DivX alone. Fortune's Adam Lashinsky asks if the tech bubble days are back:
Some of the IPO filings are like bad jokes being played on investors. Vonage seems to be trying to see how much money it can lose before asking for an infusion from the public. The company, which sells an Internet calling service, lost $28 million on operations in 2003, $72 million in 2004 and $265 million last year...
The rest of the crop isn't much better. Clearwire, a massive wireless adventure founded by industry pioneer Craig McCaw, hopes to raise $400 million to fund its network. It's a true show-me story. Service revenue totaled $8 million last year. The company spent $106 million on selling, general and administrative expenses, managing to rack up an operating loss of $127 million. And it wants your money.
Alien Technology is an RFID company. In its most recent fiscal year it recorded a whopping $13 million in product revenue. Operating losses totaled $53 million, up from $27 million the year before. But Alien's ready to go public. It hopes to snag as much as $138 million...
Perhaps the best proof that Google (Research) is the exception to the rule that we're stuck again in bad bubble behavior is that the only profitable company of the bunch, DivX, relies heavily on Google for its success. DivX makes video compression-decompression software, commonly called a codec, and Google accounted for 15% of the company's revenues last year. But it has other major customers. What's more, its revenues have been doubling yearly and DivX is profitable, making $3 million in operating profits last year on revenue of $27 million. That's certainly small compared to Vonage. But which company would you rather own?
It remains to be seen what the reception will be for these IPOs, but discussions on SeekingAlpha surrounding Vonage's filing have been tepid at best.
