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IPO Story
Google Claims Playboy Item No Q.P. Violation Jeffrey R. Hirschkorn, Senior IPO Analyst, Aug. 13, 2004 Another problem has turned up in the road to completing the IPO for Google (proposed: GOOG). As reported yesterday, regulators are looking into an alleged violation of quiet period regulations with regard to the Google IPO. Why? Prior to filing the IPO, as indicated in today�s amended S-1, the Google co-founders granted an interview to Playboy Magazine. However, of grave concern to market analysts, is that the interview was published in the September 2004 edition of Playboy. As such, the Securities and Exchange Commission could be a further delay on this IPO, which, according to well placed sources, should take place next week. Annexed from today�s amendment is a brief paraphrased response to the interview with Playboy Magazine and repercussions if it is determined to be a violation of quiet period regulations. Google does not believe that its involvement in the Playboy Magazine article constitutes a violation of Section 5 of the Securities Act of 1933. However, if its involvement were held by a court to be in violation of the Securities Act of 1933, then Google could be required to repurchase the shares sold to purchasers in this offering at the original purchase price for a period of one year following the date of the violation. And, Three More Postponed IPOs Chock up another three deals in the postponed column. Earlier today, Polypore International (proposed: PPO), a developer of polymer-based membranes, derailed plans for its prospective initial public offering. The company cited adverse market conditions for its decision. Polypore was scheduled to offer 20 million shares at $14-$16. JP Morgan Securities and UBS Investment Bank were joint book runners. Why is this postponed IPO any different? Quite simple: Unlike most companies that complete an initial public offering, Polypore is profitable. In fact, in 2003, it reported sales of $441 million on operating income of nearly $86 million. Net income for the year was a tad over $46 million. So, if a profitable concern has trouble going out in this market, what does that say about ones that lack profits? Bottom line: it looks like we�ve exhausted our unusual run of success in the summer months. The second postponed IPO is no surprise. It comes from Lindows (proposed: LINE), a Linux operating software concern. This latest developments marks several unusual problems tied to the planned sale of shares by the company founded by MP3.com founder Michael Robertson. First off, it filed to go public in a Dutch auction managed by W.R. Hambrecht + Co. But, something happened and that changed the deal�s complete make-up. Now, Lindows anticipated offering 4.4 million shares at $9-$11 through traditional methods managed by Roth Capital Partners and JMP Securities. Certainly, raising eyebrows was the elimination of Hambrecht from the IPO. Calls to W.R. Hambrecht weren�t returned. The indefinite postponement comes after two offering revisions � related to pricing structure. After finding it tough to sell at the original level, bankers lowered talk to $7-$9. When that failed, it went to $5-$7. And, that is where it ended.Proving that his company was a tough sell in this market and that the Lindows IPO may be a throwback to the dot-come frenzy, Michael Robertson indicated that he would buy up to $5 million of stock in the IPO. Why? Part of the IPO proceeds - $10.4 million � was earmarked for a loan repayment to Robertson. Also, playing havoc with an investors� mind was a recent comment by the firm�s auditors. The auditors have indicated that the company�s recurring losses, negative working capital and accumulated deficit �raise substantial doubt about the company�s ability to continue as a going concern.� Don�t fret because the firm�s recent settlement with Microsoft, where it agreed to change its name to Linspire, should give it enough cash to operate for two years. The third postponed IPO comes to us from PRN Corporation (proposed: PRNC). This firm was on the books to price seven million shares at $13-$15. Lehman Brothers was the lead underwriter on the IPO that was a carryover from last week. While Iowa Telecom, a wireless local exchange carrier serving Iowa, set terms for its IDS structured IPO. It anticipates the sale of 36.72 million IDS at talk of $15-$17. No ticker or trading exchange has been selected, to date. CIBC World Markets, Citigroup Global Markets and Lehman Brothers are the book running managers on the IPO. A new filer: FoxHollow Technologies (proposed: FOXH), a medical device technology concern with a principle focus on equipment to treat peripheral artery disease, filed plans for an IPO. It seeks to price nearly $68 million in a deal jointly managed by JP Morgan Securities and Piper Jaffray. E-mail: jeffh@currentofferings.com. |
