Comments on: Here come the bleeding red IPOs http://gigaom.com/2007/03/23/here-come-the-bleeding-red-ipos/ The Business of Technology Wed, 03 Dec 2008 06:21:01 +0000 http://wordpress.org/?v=MU hourly 1 By: El Mike’s Blog » Blog Archive » Just Being In A Hot Industry Isn’t Enough For Public Market Success http://gigaom.com/2007/03/23/here-come-the-bleeding-red-ipos/#comment-93703 El Mike’s Blog » Blog Archive » Just Being In A Hot Industry Isn’t Enough For Public Market Success Wed, 02 May 2007 10:08:01 +0000 http://gigaom.wordpress.com/2007/03/23/here-come-the-bleeding-red-ipos/#comment-93703 <p>[...] the prospects of some of these companies. Clearwire, which faces significant hurdles, has certainly not been a star performer on the market. Last week, Ocean Power Technologies, a company that turns ocean waves into [...]</p> [...] the prospects of some of these companies. Clearwire, which faces significant hurdles, has certainly not been a star performer on the market. Last week, Ocean Power Technologies, a company that turns ocean waves into [...]

]]> By: JDsBlog » Blog Archive » Mind Sparks http://gigaom.com/2007/03/23/here-come-the-bleeding-red-ipos/#comment-93702 JDsBlog » Blog Archive » Mind Sparks Mon, 26 Mar 2007 19:57:37 +0000 http://gigaom.wordpress.com/2007/03/23/here-come-the-bleeding-red-ipos/#comment-93702 <p>[...] IPO’s?? If you enjoyed this post, get free updates by RSS! Read more about: [...]</p> [...] IPO’s?? If you enjoyed this post, get free updates by RSS! Read more about: [...]

]]> By: Bruce http://gigaom.com/2007/03/23/here-come-the-bleeding-red-ipos/#comment-93701 Bruce Sat, 24 Mar 2007 17:57:23 +0000 http://gigaom.wordpress.com/2007/03/23/here-come-the-bleeding-red-ipos/#comment-93701 <p>Re: Daniel Golding</p> <p>It is one thing to say that LLNW's growth will get them to the point that they can become profitable, but that doesn't change Om's point that they are not -- and that they are dependent on additional investments (not just the IPO, but probably more beyond that) to keep running.</p> <p>Being EBITDA or operating cash flow positive is a good step (and no company that isn't should be considered a serious IPO candidate), but it the same as actually being profitable, either on a GAAP basis or a FCF basis.</p> <p>More important, I'm not sure what it means to say, "the only thing keeping them from FCF positive is their heavy capital spend." They run a network. They're entire business is dependent on that heavy capital spend. If that spending rate declines and they generate sufficient operating profitability to fund the capital spend (and debt), they might one day generate a return for shareholders.</p> <p>The key point for now is that these companies (as many did in the late 90s) are going public long before that point is reached, and with no guarantees it will ever be reached.</p> Re: Daniel Golding

It is one thing to say that LLNW’s growth will get them to the point that they can become profitable, but that doesn’t change Om’s point that they are not — and that they are dependent on additional investments (not just the IPO, but probably more beyond that) to keep running.

Being EBITDA or operating cash flow positive is a good step (and no company that isn’t should be considered a serious IPO candidate), but it the same as actually being profitable, either on a GAAP basis or a FCF basis.

More important, I’m not sure what it means to say, “the only thing keeping them from FCF positive is their heavy capital spend.” They run a network. They’re entire business is dependent on that heavy capital spend. If that spending rate declines and they generate sufficient operating profitability to fund the capital spend (and debt), they might one day generate a return for shareholders.

The key point for now is that these companies (as many did in the late 90s) are going public long before that point is reached, and with no guarantees it will ever be reached.

]]> By: pwb http://gigaom.com/2007/03/23/here-come-the-bleeding-red-ipos/#comment-93698 pwb Fri, 23 Mar 2007 18:29:52 +0000 http://gigaom.wordpress.com/2007/03/23/here-come-the-bleeding-red-ipos/#comment-93698 <p>ARUN only spent $850k in the 6 months ending 3/31/07. I suspect we will be content with its April quarter earnings release.</p> ARUN only spent $850k in the 6 months ending 3/31/07. I suspect we will be content with its April quarter earnings release.

]]> By: Daniel Golding http://gigaom.com/2007/03/23/here-come-the-bleeding-red-ipos/#comment-93700 Daniel Golding Fri, 23 Mar 2007 18:02:27 +0000 http://gigaom.wordpress.com/2007/03/23/here-come-the-bleeding-red-ipos/#comment-93700 <p>Om, a read of the S1 indicates that LLNW, while losing money by GAAP standards, is not exactly hemorrhaging. They are operating cash flow and EBITDA positive, and the only thing keeping them from FCF positive is their heavy capital spend. LLNW's revenue's are ramping very nicely, and their aggressive peering strategy means they can unload a reasonable amount of their traffic without settlement. LLNW will be GAAP profitable again fairly soon. FCF may take a bit longer.</p> Om, a read of the S1 indicates that LLNW, while losing money by GAAP standards, is not exactly hemorrhaging. They are operating cash flow and EBITDA positive, and the only thing keeping them from FCF positive is their heavy capital spend. LLNW’s revenue’s are ramping very nicely, and their aggressive peering strategy means they can unload a reasonable amount of their traffic without settlement. LLNW will be GAAP profitable again fairly soon. FCF may take a bit longer.

]]> By: mark http://gigaom.com/2007/03/23/here-come-the-bleeding-red-ipos/#comment-93699 mark Fri, 23 Mar 2007 17:11:38 +0000 http://gigaom.wordpress.com/2007/03/23/here-come-the-bleeding-red-ipos/#comment-93699 <p>isilon has been getting hammered too</p> isilon has been getting hammered too

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