IPO Calendar Pre-IPO Ratings

April 23, 2020

Market
. Diabetes is the sixth leading casue of death by disease in the U.S.
. Blood glucose self-monitoring market is the largest medical self-test monitoring market
in the world…projected to grow from $3.5 billion in 2000 to $9 billion world-wide in 2005
. The U.S. market size in 2000 was $2 billion
. The current world-wide market is 90% controlled by four companies
Product
. THER’s product is called a ‘FreeStyle System’ kit that retails for a list price of $75
and includes a meter for reading test results, 10 lancets and 10 test strips
. The product is FDA cleared to be used on the thigh, upper arm & hand, and represents the
broadest array of off-finger sites cleared by the FDA
. A primary selling claim is that THER’s product is ‘painless’ relative to the competition
Distribution
. THER’s product is distributed in the U.S by nine of the ten largest retailers, including Walgreens,
Wal-Mart & CVS through wholesalers including McKesson, Cardinal Health & Bergen Brunswig
. THER’s product is in the process of being distributed in the Europe & Japan by the leading
distributors of insulin pumps…Disetronic in Europe & Nipro in Japan
. Diabetics who use insulin pumps are top prospects for the FreeStyle System
Direct to the consumer sales
. During the month of June end-users through telephone & web orders received $12.9 million
in product (all with a 30 day money-back guarantee), not recorded as sales until returns
are counted…we think only a small fraction were returned from June shipments
. On an annualized basis, June end-user gross sales were $155 million (not counting returns),
indicating a very healthy consumer product response
Competition
. Four companies control 90% of the worldwide market for blood glucose self-monitoring systems:
Roche Diagnostics, LifeScan (Johnson & Johnson), Bayer, MediSense (Abbot Labs)
CONTINUOUS GLUCOSE MONITORING SYSTEM
Two products from competing companies are approved by the FDA for continous monitoring
. A physician (not consumer product like Freestyle) product from MiniMed. MiniMed is in the
process of being acquired by Medtronic
. A prescription product from Cygnus, for adults over 18, which is not yet commercially viable
. A successful continuous glucose monitoring system could impact THER’s FreeStyle product
. THER is also developing a continuous glucose monitoring system
OTHER
. THER is 65% owned by venture capitalists pre-IPO
. THER has licenses but no patents, and is not currently involved in any litigation
. Use of proceeds: $50 million for sales & marketing, $10 million for R&D, $10 million for
manufacturing expansion, balance for working capital

IPO price change as of 10/26/01
Week of October 1
-38% Given Imaging 
GIVN, C
products for non-invasive analysis of the gastrointestinal tract
Yoqneam, Israel
1999 yr
2000 yr
June 6 mos
June Qtr Est
IPO Mrkt
Annual-
Revenue (mm)
0.0
0.0
0.0
0.0
Cap (mm)
ized rev.
Gross Profit %
0%
0%
0%
0%
301
multiple
Profit (loss)
-1.9
-7.5
-7.4
-4.00
@$12
n/a
Profit (loss) margin %
n/a
n/a
n/a
n/a
. R&D
2.2
4.1
2.6
. Marketing
0.1
2.9
4.3
. General & Admin
0.4
1.2
0.9
VALUATION RATIOS
Mrkt
Price /
Price /
Price /
Price /
% offered
Given Imaging (GIVN)
Cap (mm)
Sales
Earnings
BookValue
TangibleBV
in IPO
301
no sales
-19
3.8
3.9
20%
SCORECARD
Mgt
Market
Market Do-
Proprie-
Total
1-5, 5 is high
Growth
mination
tary
rating
20 is perfect
1
3
1
2
7
Management — no sales yet — 1
Market Growth — non-invasive analysis of the gastrointestinal tract — 3
Market Domination — no sales yet — 1
Proprietary — application of wireless & software technology to non-invasive analytical procedures — 2

Background
. Development stage (no sales) company incorporated in January, 1998
Product
The Given System
. Disposal imaging capsule that is swallowed by the patient at an out-patient clinic
. Wireless data is transmitted to a portable data recorder the patient carries during the next
seven hours
. Upon return of the portable data recorder, color imaging data is analyzed by proprietary software
on a computer workstation by the physician
Product focus
. Initial focus is on the analysis of the small intestinal tract
. Future gastgrointestinal tract diagnostic areas can include the esophagus,
the stomach and the colon (colonoscopy)
Installation & Payment Challenge
. GIVN’s expected profit is in the sale of disposable capsules
. Therefore, GIVN must widely install its computers & software, plus portable data recorders so that
it can sell disposable capsules (which transmit color images wirelessly to a portable data recorder)
Payment Challenge
. GIVN needs attract ‘early adopter’ physicians who can recommend the new approach
. GIVN also needs to convince third-party payors to pay, including government payors
such as Medicare and Medicaid, HMOs and other private insurers
Market
. The SMG Marketing Group estimates that more than one million procedures to examine
the small intestine will be performed in the U.S. in 2001 utilizing current diagnostic methods
. GIVN plans initially to sell in the U.S., Australia, New Zealand, Germany, France, Spain,
Portugal, Utaly& Belgium
FDA clearance
. In August 2001 GIVN received clearance from the FDA to market the Given System in the U.S.
as an additional tool (“adjunctive use”) in the detection of abnormalities of the small intestine
. GIVN will need to obtain additional FDA clearance before commercially distributing the Given
System for other intended users or for any other new products
Competition
. The current worldwide gastrointestinal endoscopy market is controlled by three companies:
Olympus, Asahi Optical (owner of the Pentax brand), and Fujinon
. GIVN is aware of R&D efforts by some of the above and other companies & individuals
to develo imaging capsules that may be competive to GIVN
Use of proceeds: inventory, R&D, manufacturing operations, capital expenditures, working capital


BloombergTV interview — Skype-hype from eBAY & the IPO Market

April 22, 2020

BloombertTV Interview http://bit.ly/ybtru

based on this blog
Skype-hype from eBAY & the IPO Market
(1) EBAY’s Skype-hype, not seen since Google
Skype-hype message to Wall Street – eBay focuses on core business
. Top line revenue — because of encroachment by Amazon & others.
. Balance sheet — to convert a soft asset into hard dollars
eBay is pre-conditioning the IPO market, very much pre-IPO. Similar to what Google did. That ploy only works for large, heavily branded companies, who can get away with it, not smaller emerging companies.

WHAT DOES SKYPE-HYPE MEAN?
When a well-known force (eBay) starts to pre-condition the IPO market for a division spin-off — in what is basically an IPO vacuum — then that’s a sign of an expected much stronger IPO market.

(2) Three successful IPOs this month, and all are up
ROSETTA STONE
. Popped 40% yesterday, up again today
. Generates good cash flow, public market segment leader
. Understandable growth plan includes overseas expansion – 95% of sales now are in the US
. High branded consumer awareness

BRIDGEPOINT EDUCATION
. 30% haircut in IPO price, rose a little from reduced IPO price
. Lots of sector headwinds in the post-secondary online education market segment
. Questions about the market leader Apollo (APOL) accounting practices sunk the segment since Feb 1
. APOL itself touched almost $90 in early Feb then sank to almost $60 this month.
. The bloom is off the rose in the online post secondary education sector

CHANGYOU
One trick gaming pony from China
Underpriced IPO at 7 times earnings

(3) IPO SIMILARITIES – all three are
. Profitable
. Generate positive cash flow, which means they are not crippled by too much interest and/or overhanging debt re-financing problems
. Computer-related
. Have high gross margins: Changyou (93%), Rosetta Stone (87%), Bridgepoint Education (71%)

(4) IN GENERAL, WHAT DOES IT MEAN?
Investors are now very much aware of IPOs, especially because of Rosetta Stone’s success and because of eBay’s ‘Skype-hype”

Up until sometime in March many investors simply did not want to hear about IPOs. But if investors think they can look forward to getting in on a potentially ‘in demand’ (hot) IPO from Skype then they will also look at other IPOS in the meantime.

(5) IPO CRITERIA
Right now (and this applies to Skype, also) a successful IPO appears to need
. High gross margins
. Top line revenue increases going into the IPO, with a believable growth plan for top line revenue
. Profits
. Positive cash flow
. Very little overhanging debt

In other words, back to basic investing principles. Because ‘pie in the sky’ dreamy prognostications.have no credibility in this market.

(6) IPO PIPELINE
. Not too much in the pipeline right now
. However, there are many companies standing outside & looking into the IPO window. Those that have a good March quarter and meet the above criteria (#5 above) may be able to step through the window and actually IPO
. If their March quarter numbers good and if they push it, it is possible qualified companies can IPO by the end of the second quarter, June 30, 2009 or shortly thereafter.
. The summer IPO season ends the second week in August, so I expect to see some interesting IPO filings in the next month or so.

Disclosure: no positions

url: https://ipodesktop.blogspot.com/


IP Telephony Profits Under Fire

April 15, 2020

Forecasts:
IDC (International Data Corp), based in Framingham, MA, says that broadband demand is increasing at 1000% per year (broadband carries video, voice, data, fax).
Yankee Group, based in Boston, believes that “the (fiber-optic backbone for the) carrier business is an extremely viable, lucrative business. The scarcity of fiber in the backbone is making this business very attractive,” according to Sanjay Mewada, a telecommunications analyst.

Although fiber-optic cables currently carry less than 1% of total voice traffic, in four years market researchers believe that fiber could carry 13% of total voice traffic.
Fiber-optic growth “really challenges the fundamental foundation of the industry. By the beginning of the year 2000, value-added services on top of voice-over-IP will be the new battleground, with multimedia and universal messaging functions coming into play as priorities to customers,” said Mark Winther, International Data Corp.’s group vice-president for worldwide telecom.

“Today {data} is about a twelfth of the size of the voice market, in five years it will be half the size of the voice market,” said Matthew Kovar, senior analyst at the Yankee Group.

Estimated to be worth almost $30 billion in revenues by 2000, broadband data transmission, including video, voice, text, and Internet, is the fastest growing portion of the telecommunications market.

But is Level 3 worth 1/3 the value of Sprint, or 1/10 the value at AT&T? Around Thanksgiving Level 3 was selling at $20, cash value. Four months later it’s around $75 (4/1/98).

Yes, younger companies have high sales multiples because they are blazing new ground. Bigger companies, however, are very much aware of the looming opportunities.

Competition

Level 3(LVLT)
Plans to lease, construct and own both long distance fiber-optic backbones and metropolitan fiber systems, to provide end-to-end fiber-optic, converged IP packet services to businesses.

Recently leased an 8500 mile network from Frontier to resell capacity while building its own fiber-optic network.

Also provides web/Internet-related consulting to businesses and generates about $100 million per year from consulting.
$3 billion in cash. Management team considered very strong.

Metromedia Fiber (MFNX)

Development stage company. Constructs and owns fiber networks in metropolitan areas. 26 employees when it filed for IPO in August 1997. IPOed October 29, 1997.
Qwest/Lci (QWST & LCI – companies are merging)

After the merger, the fourth largest long distance company in the U.S., after AT&T, Worldcom/MCI and Sprint. Also building a nationwide fiber-optic system for IP packet switching.

Ahead of Level 3 in long distance fiber-optic construction and implementation. Increases business and retail revenue through acquisitions. Qwest IPOed June 24, 1997.

Sprint (FON)

“We’ve been migrating toward packet technology and asynchronous transfer mode [ATM] switching for some time now.

“We’ve been building a long-distance backbone network that is both more survivable and more robust than the others. For instance, our entire network as of early next year will all be Sonets: synchronous optical network,” the company says.

Worldcom/MCI (WCOM & MCIC – merging)

“WorldCom’s recent series of acquisitions combined with its expanding network of fiber across the U.S. and Europe make it one of the largest providers of network infrastructure in the world,”said John Sidgmore, WorldCom’s chief operating officer.

“They (Qwest, Level 3) haven’t created the formula for cold fusion. They can’t buy equipment we can’t buy,” says Brian A. Brewer, senior vice-president at MCI Communications Corp.

AT&T (T)

AT&T plans to offer a version of IP voice through its WorldNet Internet-access business this spring. By year end, the company expects to complete a new network of 55 fiber-optic rings throughout the country. While the rings carry mostly traditional voice traffic now, they will be able to carry data packets with the installation of new electronics and photonics. Advances in technology will exponential and the capacity of those rings should grow fivefold by next year, the company says.

Baby Bells

The Baby Bells think the technology could jump-start their push into the long-distance business and several, including U S West Communications Group and SBC Communications Inc., are asking the Federal Communications Commission for the right to build converged networks.

News: April 1, 1998: Bell Atlantic Plans $1.5 Billion Upgrade.

In one of its largest phone system upgrades ever, Bell Atlantic plans to pay $1.5 billion for high-capacity fiber-optic switching equipment and software to sell business users more data and Internet services.

GTE (GTE)

GTE thinks it’s inevitable that all the traffic eventually will flow over a converged network. ”We’re not upgrading–we’re putting in brand-new technology from the get-go,” says George H. Conrades, executive vice-president at GTE.
GTE is reportedly the largest customer for “dark fiber” provided by Qwest (see definitions below).

Background/Glossary

PHYSICAL LAYER
Copper Wire: old, slow (unless enhanced with xDSL), provides the famous “last mile” from the local telco Central Office to your computer/telephone.
Fiber-Optic Cable: newer, much faster, supports voice, data, fax, video (converged broadband) applications. Used for long distance backbones, “rings” around metropolitan areas and cable TV/Internet to the home.

“Dark” versus “Lit” Fiber
Dark Fiber: is installed but not equipped with transceivers at either end and can’t carry traffic. It’s often deployed for future use or expansion.
Lit Fiber: has transceivers at either end, carries traffic and often refers to a building that has a fiber optic connection for tenant use.
Because fiber optics utilize light as the transmission vehicle, the terms “dark” and “lit” are appropriate.

CIRCUIT SWITCHING versus PACKET SWITCHING

Circuit Switching: old, supports voice. Like reserving for the entire trip… a freeway lane from San Francisco to Los Angeles. High quality voice and doesn’t require compression.

Packet Switching: Each packet is a like a car on the freeway. Each car zips along with a piece of data or voice or fax or video. Pieces are reassembled at the destination. It’s a more efficient, less costly system than old-fashioned circuit switching.

INTERNET PROTOCOL (IP) SWITCHING
Packet switching (Internet Protocol, IP) over fiber-optic cable: can provide broadband end-to-end service at perhaps 3% the cost of old fashioned circuit switching.
IP Telephony: voice over the public Internet and over private broadband networks that use Internet Protocols.

CONVERGED NETWORK
A “converged” IP packet switched network can carry voice, video, data, fax traffic, is considered a data network and is not subject to the 4 cents per minute local access fee.
In other words, voice over converged (data) networks enjoys an automatic 4 cents per minute cost advantage over circuit-switched long distance calls.

Tiered Pricing:
Because of the access fee differential, there is “rate arbitrage” in the current market between circuit-switched voice and IP telephony (voice over the Internet).
Old-fashioned circuit switching:
10-15 cents plus per minute
Voice over IP (Internet Protocol packet switched data networks):
5-8 cents per minute
Voice over the Internet:
5 cents and less