Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.

MediaMind Tech (MDMD) IPO -- competitors circling including MSFT & GOOG

|Includes: GOOG, MediaMind Technologies (MDMD), MSFT

MediaMind Tech (NASDAQ:MDMD) $270mm market cap at price range mid-point of $15
Scheduled for Wednesday, August 11

See IPOreport for financials & valuation summary

SUMMARY
Found a niche & developed a profitable digital ad agency business
Microsoft is the biggest client & also a competitor.
. MSFT is well known as a very intense competitor that shows no mercy
. MDMD has reduced its price to Microsoft, which will hurt sales & margins.
Google is a competitor as well.
. 95% gross margins invites competition (see above)
. Priced at 40 times annualized earnings (see financials below) for the period ended June 30, 2010 MDMD seems expensive

BUSINESS
Digital ad agency

MICROSOFT – CUSTOMER & COMPETITOR
Revenues from Microsoft accounted for 22%, 28% and 19% of total revenues for fiscal 2009, 2008 and 2007, respectively, in two primary ways.
. First, MDMD was engaged by Microsoft’s internal advertising group to provide solutions for specific campaigns, consistent with how MDMD provides solutions to other customers. This accounted for $8.5 million, or 13%, of MDMD’s revenues in 2009.
. In addition, MDMD also provides solutions to advertising agency and advertiser customers that advertise on Microsoft online properties.
. Microsoft’s internal advertising group does not partner with MDMD exclusively and has not committed to provide MDMD a minimum level of business.
. MDMD faces significant competition for Microsoft’s business from other campaign management service providers, including Atlas, which was acquired by Microsoft in May 2007.
Microsoft is continuing to expand its relationships with other campaign management service providers and, as a result, MDMD cannot provide any assurance that MDMD will succeed in maintaining or growing this portion of our revenues from Microsoft. In addition, MDMD has reduced, and may continue, to reduce the cost per thousand

MDMD reduces rates to Microsoft
. MDMD reduced and may continue to reduce the cost per thousand impressions (“CPM”) rate for ads
. A decline in the volume of impressions or the CPM rate, whether generally or from one or more major customers (including Microsoft), could materially and adversely affect MDMD’s revenues and profitability.

COMPETITION
Significant competition from Google and Microsoft
. Primary competitors are DoubleClick and Atlas, a technology and service division of aQuantive.
. In March 2008, Google acquired DoubleClick
. In May 2007, Microsoft acquired aQuantive.
DoubleClick and Atlas offer solutions and services similar to ours and compete directly with MDMD.
Among MDM’s competitors are rich-media solutions companies (such as Pointroll, owned by Gannett, Eyewonder, which was acquired by Limelight Networks in December 2009, Unicast, which is owned by DG FastChannel, and Flashtalking) and ad serving companies (such as MediaPlex, a division of ValueClick).
MDMD may experience competition from companies that provide web analytics or web intelligence. Other companies are also developing campaign management solutions

USE OF IPO PROCEEDS
$68mm
General corporate purposes, including working capital and capital expenditures.

See IPOreport for financials & valuation summary



Disclosure: none