Posts by Aaron Pressman
- The Exchange1 day ago
Setting aside all the crazy caterwauling about the alleged new tech bubble, the tech IPO market is suddenly getting a lot more interesting. Recall that it took two weeks into 2014 before the first tech-related initial public offering, babysitting site Care.com (CRCM), hit the market, and then almost another two months for the second. Care.com was a bit of a snoozer, too, rising just below 43% in its first day of trade. But that second IPO, a $220 million deal for data-management firm Varonis Systems (VRNS), was a doozy, as shares nearly doubled on day one. And so was the third tech IPO of the year, last Friday’s $168 million Coupons.com (COUP), also a near double by the close that day. Shares today are basically flat. There was some irony in the first-day success. Coupons.com CEO Steven Boal founded the company in 1998 in the midst of the first Internet bubble and planned to go public way before 2014. But the company only reached $100 million in revenue in 2012 and just turned profitable in the fourth quarter of 2013. Varonis was founded in 2005, in the post-bubble era, and is inching toward profitability itself as revenues grow wildly. But expenses, especially marketing spending, are also skyrocketing. And the stock has sold off about 10% on Monday on no obvious news (but amid a broader market pullback). Two hot deals do not equal a bubble But two hot deals do not a bubble make. Back in 1999 and 2000, tech companies going public were only 5 years old on average, and three-quarters had sales under $50 million, two warning signs in the academic literature on IPOs. Varonis and Coupons.com both came in above those bubble levels. And it wasn't just two IPOs doubling that signaled a bubble -- more like 163 in 1999 and early 2000. This week comes Castlight Health, a cloud services company focused on the healthcare industry. And next week should see three more-specialized cloud companies come public. Paylocity Holdings does payroll and benefits, Q2 Holdings does banking and Amber Road focuses on international trade. Admittedly, Castlight looks considerably frothier – revenue last year totaled less than $13 million, which was dwarfed by $34 million of marketing expenses and $15 million needed for R&D, leading to a net loss of $62 million. Still, the company talks big, with claims it can “dramatically” improve efficiency in the $3.1 trillion U.S. healthcare market. Aim high, I guess? It will list on the New York Stock Exchange with the symbol CSLT. Paylocity, listing as PCTY, is aiming for a smaller market – providing payroll, time tracking and benefits software over the Internet to businesses with 100 employees on average. It’s above the $50 million revenue level ($77 million last year) and operating at just about breakeven with a profit of $617,000. That makes last year’s 40% revenue growth all the more impressive. Q2 is also a small-market play – aiming to give better apps and Internet services to
- The Exchange5 days ago
It seems new BlackBerry (BBRY) chief executive John Chen can give as good as he gets, adding a breath of fresh air in an era when too many corporate leaders stick to bland talking points.
Chen, who got into a tiff with famously outspoken T-Mobile (TMUS) CEO John Legere last month, was at it again at the Oasis Montgomery conference in Santa Monica, California, on Thursday.
Asked about Apple’s (AAPL) popularity, Chen belittled iPhone users whose batteries run down before the end of the end of the day, forcing them to search for power outlets. “I call you guys wall huggers,” he quipped.
He was also in a joking mood when asked why he left private equity firm Silver Lake to take the difficult turnaround job at BlackBerry. “I wanted to do something where I could wake up every day and worry,” he answered, adding “and I have fulfilled my dream,” as the room burst into laughter
- The Exchange5 days ago
As the era of cloud computing begins, Paul Maritz, CEO of Pivotal, wants to see a more open outcome than the information technology industry is used to. In fact, he’s betting on it.
Pivotal, a spinoff from EMC (EMC) and VMWare (VMW), where Maritz served as CEO for four years, is building an open cloud computing platform that can run on top of many kinds of underlying cloud servers.
“We’re coming to the end of a 30- or 40-year era in the IT industry,” Martiz said on Wednesday, speaking at the Oasis Montgomery Summit in Santa Monica, California. “This really is a very profound shift that’s happening.”
That may not be what the biggest cloud providers, Microsoft (MSFT), Google (GOOG) and particularly Amazon (AMZN), are seeking. They’re battling for dominance comparable to Windows on the PC or IBM (IBM) in mainframes, Maritz says.
- The Exchange11 days ago
The long-anticipated 2014 tech IPO bubble is having some problems getting inflated. So far this year, there had been almost no activity – just one small deal for babysitter website Care.com (CRCM). And, on Friday, data security firm Varonis Systems (VRNS) hit.
That’s a bit surprising given the hype coming out of 2013. The super successful debuts of tech companies including Twitter (TWTR), cybersecurity firm FireEye (FEYE) and 3D printer maker ExOne (XONE) came amidst 222 companies in all sectors going public raising $55 billion in total, the best year for IPOs since 2000.
- Daily Ticker12 days ago
Separating T-Mobile's (TMUS) great CEO from a less great stock, No. 4 U.S. carrier T-Mobile has been on a tear lately, adding 4.4 million customers in 2013, more than any other U.S. carrier. And CEO John Legere’s price-cutting, pro-consumer “uncarrier” strategy has just dominated the attention and coverage of the industry. Related: T-Mobile's Blunt-Talking CEO Shakes Up the Mobile Industry But this week, the company reported fourth quarter financial results and it didn’t look so alluring to stock investors. As I discuss in the above video with Yahoo Finance Editor in Chief Aaron Task, investors are in for a bumpy ride, at least in the short term. The stock dropped 5% and is now off about 10% year-to-date after having a great 2013. T-Mobile’s fourth quarter revenue of $6.83 billion was up 10% from last year but about 2% less than Wall Street expected. On the highly adjusted earnings basis, T-Mobile's adjusted profit was $1.2 billion, slightly above what Wall Street expected due to lower spending on building its network. And on a GAAP basis, T-Mobile lost $20 million. The bigger carriers, Verizon (VZ) and AT&T (T), are reacting more and more quickly to Legere’s moves to cut prices and improve the customer value equation. Related: T-Mobile Drops Long-Term Contracts and Phone Subsidies: More than Just a Gimmick? Both have cut prices for their best customers and partially copied Legere’s efforts. The brash T-Mobile CEO dismisses the reactions and belittles them on Twitter but the larger carriers are sacrificing real revenue as they attempt to stave off the uncarrier strategy. AT&T announced it was cancelling international texting fees to many countries, a once highly lucrative income stream, after T-Mobile initiated such a move for its customers. And Verizon offered to slash $20 per line off bills for some of its customers. Related: T-Mobile offers new bank-by-phone program So the question is growing whether T-Mobile can sustain its success and at what cost. Farhad Manjoo, the New York Times personal tech columnist, praised Legere on Wednesday but his words may be chilling for T-Mobile investors: “Nobody knows if T-Mobile’s aggressive pricing will lead to a permanent change in the way cellular service is sold. But I, for one, am happy to see it die trying.” Die trying? That’s not what T-Mobile’s investors want to hear. Follow The Daily Ticker on Facebook and Twitter (@DailyTicker)! More from The Daily Ticker:
- The Exchange14 days ago
The price of the virtual currency bitcoin plummeted this week after a leading bitcoin exchange, Mt.Gox, shut its doors. The Tokyo-based firm already suspended customer withdrawals two weeks ago, citing a possible flaw in the system. But on Monday Mt.Gox suddenly closed its website and disappeared.The site is now blank aside from a brief message from owner Mark Karpeles and a statement explaining: "In light of recent news reports and the potential repercussions on MtGox's operations and the market, a decision was taken to close all transactions for the time being in order to protect the site and our users. We will be closely monitoring the situation and will react accordingly."
Just what is going on with Mt.Gox, and is this the end of the line for the controversial and volatile Internet-born currency?
Remind me again, what the heck is a bitcoin?
- The Exchange19 days ago
Facebook (FB) is paying $16 billion for mega messaging service WhatsApp, plus another $3 billion in employee retention deals — say what?
But while the price tag is drawing sneers, it’s not so far off the mark – WhatsApp has grown faster and has a larger active user base than Twitter (TWTR), now worth $30 billion. And Facebook CEO Mark Zuckerberg is paying for most of the deal with shares of his company’s hyper-inflated stock, a move right out of Warren Buffett’s playbook.
No, the real problem with the deal is the flawed underlying strategy. Buying WhatsApp doesn't solve Facebook's real problems, which involve building a bigger audience to attract more advertisers, learning its audience’s wants and desires to attract more advertisers, and keeping its audience engaged to — you guessed it — attract more advertisers.
WhatsApp’s whole appeal is based on being ad-free, data-free and pro-privacy. Its only revenue stream is a 99-cent subscription fee users in some countries pay after using the service for a year.
- Daily Ticker21 days ago
If I had a nickel for everybody I saw playing that annoyingly addictive phone game, Candy Crush Saga, I’d have…$2 billion, it turns out.
King Digital Entertainment, publisher of Candy Crush and a bunch of similar games, filed to go public on Tuesday, disclosing $1.9 billion of revenue and net income of $568 million for 2013. With 124 million people playing per day on average, King says it’s bringing in 5.6 cents a day from each.
The question for investors, of course, is whether King owns a one-hit wonder or a more dependable hit factory.
Many see King as the next Zynga (ZNGA) or Groupon (GRPN) -- faddish companies that went public at the height of their popularity only to burn investors when the inevitable fade arrived. On the other hand, Hollywood studios and Las Vegas casinos have developed more reliable formulas for making steady profits.
As I discuss in the above video with Henry Blodget and Jeff Macke, there are already some warning signs in the King filing.
- The Exchange25 days ago
Borders is long gone, Barnes & Noble (BKS) is on the ropes, and total sales at U.S. bookstores have fallen 22% over the past five years. Is every book lover’s nightmare coming true? Is the publishing industry somehow being destroyed by a combination of Amazon (AMZN) price cutting and a wave of Netflix (NFLX) watching, iPhone gaming and tweeting?
Definitely not, though you might come away with that ridiculously pessimistic view from some recent coverage trashing Amazon's role in the industry. Actually, book sales have risen strongly since 2008, not coincidentally since ebooks came on the scene. There’s more than ever to read — thus people are reading more than ever.
- The Exchange26 days ago
New Microsoft (MSFT) CEO Satya Nadella is just settling in but he’s already getting plenty of advice about how to save the company. One idea is to dump the flailing Windows Phone operating system and shift to a version of Google’s (GOOG) Android that substitutes Microsoft services for Google’s.
It's a useful thought exercise given Microsoft's predicament, but ultimately such a shift wouldn't solve enough of the company's mobile problems and would leave Nadella dangerously dependent on a top rival.