Cheap Calls and Credit Cards: A Quick Look at This Week's IPOs

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Includes: CLUB, LUNA, MA, MWA, VG
by: Evelyn Rubin

There are five IPOs on deck for this week, including oft discussed Vonage (NYSE:VG) and Mastercard (NYSE:MA). Highlights of IPOs set to price this week:

Vonage Holdings (VG)

Opinion: No shortage of opinion on Vonage; in blogsphere it's mostly negative. See John Ogg's Quick Preview, The Stalwart's post, Vonage IPO Gets Uglier and Uglier and Carl Howe's Mr. Vonage IPO, You Are No Google for a taste, and visit Seeking Alpha's Vonage page for the full spectrum.

Business (From the S1): "We are a leading provider of broadband telephone services with over 1.6 million subscriber lines as of April 1, 2006. Utilizing our innovative Voice over Internet Protocol, or VoIP, technology platform, we offer feature-rich, low-cost communications services that offer users an experience similar to traditional telephone services. While customers in the United States currently represent over 95% of our subscriber lines, we continue to expand internationally, having launched our service in Canada in November 2004 and in the United Kingdom in May 2005. "

Underwriters:
Citi, DeutscheBank, UBS

Raise:
$16-18 range, number of shares 31.3 million translating to mid-range raise of $531 million.

P&L Highlights: $79.7 million in 2004 up to $269 million in 05. First three months of 06 revenues were $119 million, up from $41 million same period last year. Net loss of $70 million in 04, up to $261 million loss in 05. For first 3 months of 05, net loss was $60 million; same period in 06 was $85 million.

MasterCard (MA)

Opinion: From John Ogg's Quick Preview

With this almost a week away and our crystal ball in the repair shop, we can’t automatically give you a Cramer “buy, buy, buy!”. But, in a static world without seeing what the markets will do in the three trading sessions before the pricing we would say that if you can get any shares allocated at the IPO price it would be worth taking a shot at.

See additional opinion on SeekingAlpha's MasterCard (MA) Page

Business (From the S-1):

MasterCard is a leading global payment solutions company that provides a variety of services in support of the credit, debit and related payment programs of nearly 25,000 financial institutions. We manage a family of well-known, widely accepted payment card brands, including MasterCard®, MasterCard Electronic™, Maestro® and Cirrus®, which we license to these financial institutions. As part of managing these brands, we also provide our financial institution customers with a sophisticated set of information and transaction processing services and establish and enforce rules and standards surrounding the use of our payment card system. We generate revenues from the fees that we charge our customers for providing these transaction processing and other payment-related services (operations fees) and by assessing our customers based on the dollar volume of activity on the cards that carry our brands (assessments).


Underwriters:
Goldman Sachs, CITI, HSBC....

Raise: $40-43 range, number of shares 61.5 million translating to mid-range raise of $2.553 billion.

P&L Highlights: 2005 net income of $266.7 million on total revenues of $2.94 billion; 2004 numbers were with net income of $238.1 million on total revenues of $2.59 billion. Net income of $126.7 million on total revenue of $783.5 million for first three months of 06; same period in 05 recorded net income of $93.3 million on total revenue of $658.2 million.

Luna Inovations (NASDAQ:LUNA):

Opinion (From Clearfish Research, after the filing): "I bet this offer gets pulled before ever making it to market. I would like nothing better than to invest in a Ph.D. heavy, optics research outfit, but wow have these guys not made the case." (see the full piece for detailed analysis)

Business (from S1): "We research, develop and commercialize innovative technologies in two primary areas: molecular technology solutions and sensing solutions. We have a disciplined and integrated business model that is designed to accelerate the process of bringing new and innovative products to market."

Underwriters:
ThinkEquity Partners, WR Hambrecht, Merriman Curhan, Ford

Raise: $11-13 range, number of shares 4 million translating to mid-range raise of $48 million.

P&L Highlights: Revenue dropped from $22.6 million in 04 to $16.4 million in 05; First 3 months 06 revenue up from $3.3 million in 05 to $4.5 million in 06. Net income of 4.056 million in 04, and loss of $2 million in 05. First three months of 05 net loss was $200k, and up to $2.1 million in first three months of 06.

Town Sports International Holdings (NASDAQ:CLUB):

Business (From S-1):

We are one of the two leading owners and operators of fitness clubs in the Northeast and Mid-Atlantic regions of the United States and the third largest fitness club operator in the United States, in each case as measured by number of clubs. As of March 31, 2006, we owned and operated 143 fitness clubs and partly owned and operated two fitness clubs. These 145 clubs collectively served approximately 438,000 members. We have developed and refined our fitness club model through our clustering strategy, offering fitness clubs close to our members’ work and home. Our club model targets the “upper value” market segment, comprising individuals aged between 21 and 50 with income levels between $50,000 and $150,000 per year. We believe that the upper value segment is not only the broadest segment of the market, but also the segment with the greatest growth opportunities.

Underwriters: Credit Suisse, DeutscheBank, William Blair

Raise: $16-18 range, number of shares 10 million translating to mid-range raise of $170 million.

P&L Highlights:
2004 revenues of $353 million, up to $388 in 05. Revenue for twelve months ended March 2006 was $399 million. Net loss of $3.9 million in 04, and net income of $1.8 million in 05. Net income for twelve months ended March 06 of $8.5 million.

Mueller Water Products (NYSE:MWA)

Opinion: Market Participant writes that "Water has become the hottest investment since Texas Tea, that is, Oil — black gold!" See his full coverage on MWA.

Business (From the S-1):

We are a leading North American manufacturer of a broad range of water infrastructure and flow control products for use in water distribution networks, water and wastewater treatment facilities, gas distribution systems and fire protection piping systems. We believe we have the most comprehensive water infrastructure and flow control product line in our industry and enjoy leading market positions based on the estimated market share of our key products, broad brand recognition and a strong reputation for quality and service within the markets we serve. We maintain one of the largest installed bases of products in the United States, including, as of March 31, 2006, approximately three million fire hydrants and approximately nine million iron gate valves. Our products are specified for use in all of the top fifty metropolitan areas in the United States.

Underwriters: Bank of America, Morgan Stanley, Lehman Brothers

Raise: $16-18 range, number of shares 23.5 million translating to mid-range raise of $400 million.

P&L Highlights: For year ended Sept. 30 2004, Net Sales were $1.05 billion and net income $33 million. For the same period 2005, net sales were $1.15 billion and net income $49.6 million.