Silver Spring Networks IPO expected on Wednesday


Smart grid networking company Silver Spring Networks is expected to start trading as soon as Wednesday of this week on the New York Stock Exchange under the symbol SSNI, according to the Wall Street Journal, and other media reports. After first filing for an IPO back in the summer of 2011, the smart grid company now plans to sell 3.7 million shares at a price of between $16 and $18 per share, which at the midpoint would raise $63 million for the company.

That’s a pretty modest IPO for the decade-old company, and is less than half of the maximum that Silver Spring originally planned to raise a year and a half ago. If Silver Spring does go public Wednesday morning, expect it to price its shares late in the day on Tuesday. Along with the IPO, longtime investor Foundation Capital also plans to purchase $12 million worth of stock at the IPO price in a private placement.

Silver Spring sells wireless networks and smart meters to utilities that can be used to run power grids more efficiently and offer news types of grid services. The company is increasingly looking to sell software and services, and not just infrastructure, to help it boost its margins.

Silver Spring has a lot of business, and is one of the leaders when it comes to selling smart grid networks to utilities. However the business is inherently slow going (with long sales cycles), and pretty low margin. In 2012, Silver Spring generated $196.74 million in revenue, which was slightly down from its net revenue in 2011 of $237.05 million. The company generated a net loss in 2012 of $89.72 million, which was a smaller loss than its net loss in 2011 of $92.36 million.

Because its sales cycles are so long, its backlog of deals and billings (what it’s billed customers for but hasn’t converted to revenue yet) are more telling of how much momentum the company has. Silver Spring says it had $304.33 million worth of billings in 2012, which was a jump from its $236.13 million worth of billings in 2011. Silver Spring says it has $508.06 million worth of deferred revenue by the end of the 2012.

We’ll keep you updated on potential pricing and the debut of the IPO.



Reverse stock splits hurt employees in a roundabout way. You’re given a number of options as part of your compensation and never told about a reverse split, which they know perfectly well will happen. You calculate your net worth and what you’re willing to receive in salary, and how hard you’re willing to work and how long you’re willing to stick around, based on that number. Then they pull the rug out from under you, and your compensation is 5 or 10 times less than what you were told (implied, lied, take your pick).

If companies wanted to be honest about it they’d be upfront about how many basis points you have, and how they’re being diluted with every round of financing. But they don’t do that because people would leave and/or demand better compensation.

Scottie too Hottie

As a percentage, it’s the same genius. That’s all that matters. Percentages are in Arithmetic 102, so I understand if you didn’t make it that far. Stop being scared of big numbers. Percentages are your friends.


I believe that the overarching point is that the employee grants are worthless in the sense that they cost more to exercise than they will be worth on the open market.

Arithmetic 101.

Scottie too Hottie

Frank – Using your logic, under the original $4 per share options the IPO would have been set at $3.4 per share. Would you have been happier with a $4 per share option on a sub-$4 per share IPO? Would you like to brag to all your friends that SSNI’s stock was worth a whopping $4 per share?

Let me ask you this: Would you rather have 100 shares of SSNI at $3.4/share, or 20 shares of SSNI at $17/share? You need to go join Scott and Vested in Econ 101.

Sol Rosenberg

Looks like Frank Rizzo is an insider…a disgruntled one at that…


Is this 5 – 1 reverse split really in the ipo? Wouldn’t Silver Spring have had to notify the stockholders of this?

Frank Rizzo

“Vested” is correct. Folks that started in 2009 that got $4 per share options now have options at $20, with the company set to IPO at $17…why would anyone be happy with a $20 option on a sub $20 IPO. Not to mentioned those people now have 1/5th of the stock they started with. Don’t even start to talk about the people that got options at $11….with their now smoking hot $55 per share option price.

Scottie too Hottie

No, strike prices are typically adjusted appropriately during a standard/reverse stock splits. C’mon now, you and Scott shouldn’t have skipped Econ 101.


Just that all shares granted to employees since January 2010 are under water.

Scottie too Hottie

That is 1) Irrelevant to this discussion as it has nothing to do with a stock split, 2) so 2010 – 3 years ago in the tech industry which is equivalent to 10 years in any other industry, and 3) over 2M restricted stock units granted ago. I’m unsure what your argument here is other than just stating some arbitrary data.

Thanks for your contribution, vested.

Scottie too Hottie

If you have five apples valued at $100 ($20 each apple), execute a reverse apple split to turn the five apples into one apple, the one apple is in effect worth $100. The sole purpose of a reverse apple split (err stock split) is to increase the value of a share of stock, but the overall market capitalization remains the same (in this case, $100). It’s all about perception. A company with a share price worth $100 appears stronger than if their stock price was $20. This is econ 101 Scott, you must have skipped that class.

Scottie too Hottie

Even my little 10 yr old sister knows that a standard/reverse stock split has no effective impact on the value of a share of stock because it’s all relative Einstein.


If you have five apples and I take four, how many apples do you have left?


It is more like mashing them apples and making an apple preserve out of 5 apples.

Nobody is taking the apples out. It’s all in there, but just not as plump and juicy as you’d expected.


Oh hey, before we all celebrate their victory, it should be pointed out that just a month ago the SSNI BoD instituted a 5 – 1 reverse outstanding stock split, effectively gutting those that worked so hard to make this IPO possible. Not only is this IPO even weaker than initially proposed, it’s now 20% of what it was a short time ago.

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