In this year’s busiest week for IPOs, speech-software maker DynaVox standing out from the packBy Tali Arbel, AP
Monday, April 19, 2010
DynaVox is standout in crowded week for IPOs
NEW YORK — Of this week’s jam-packed IPO schedule, only DynaVox Inc., a provider of speech-generating software that helps people with language and cognitive disabilities, is the one company standing out from the rest.
With at least seven initial public offerings in the works, it would be the busiest week this year if all begin trading. Moreover, of the seven offerings expected, six are tentatively scheduled to start trading on Thursday, leaving a slew of IPOs to compete for limited investor funds, said IPO analyst Scott Sweet of IPOBoutique. That’s not a promising harbinger for first-day performance.
“They’re going to be competing for mind-share,” said Francis Gaskins of IPOdesktop.
DynaVox, however, which hopes to raise about $150 million before expenses, is expected to start trading Wednesday, moving it outside the Thursday swarm. It is getting strong buzz on Wall Street, analysts said.
The Pittsburgh company has proprietary technology, says it is the leader in its field, has been increasing profit margins and could get a sales boost from President Barack Obama’s health care initiative.
A smaller deal that could do well is SPS Commerce Inc., which provides online supply chain management software. SPS Commerce expects to raise about $40 million from shares sold by the company and its existing stockholders. It “might be a sleeper,” Sweet said — revenue grew 23 percent last year to $37.7 million despite the recession and it had positive cash flow for the first time since it was founded in 1997. But the Minneapolis company has well-established competitors such as DemandTec Inc., an AT&T Inc. subsidiary and a unit of JDA Software Group Inc.
Also up this week is Global Geophysical Services Inc., based in Missouri City, Texas. The company, which provides seismic data services to oil companies, hopes to raise about $184 million. It’s a nice bet on rising oil prices and increasing energy production, but the company is dependent on a handful of large customers in an extremely competitive sector, Sweet said. In 2009, its three largest clients, Exxon Mobil Corp., Oil and Natural Gas Corp. and BP plc made up nearly two-thirds of its revenue, and a single project provided 30 percent of its revenue.
Three other companies slated to debut this week have all tried and failed to go public before. The largest offering of the three, Mitel Networks Corp., provides telecommunications services to small- and medium-sized businesses. The Canadian company has turned only one annual profit, since it was incorporated in 2001. And Mitel warns in a regulatory filing that several of its competitors have greater financial, research and other resources, more well-established brands and broader customer bases.
The company hopes to raise about $199.5 million, and will use more than half of the IPO proceeds to repay debt.
Alimera Sciences Inc., a biotechnology company developing an implant for retina diseases, and Codexis Inc., a biofuels company backed by oil giant Royal Dutch Shell PLC that also has pharmaceutical customers, also hope to go public this week. Alimera, which hopes to raise $96 million, doesn’t expect to sell its drug before early 2011. It has no revenue. Codexis has a big shareholder in Shell, but has only generated revenue since 2005 and has never turned an annual profit. It expects to raise about $84 million.
Mitel, Alimera and Codexis had filed to go public between 2006 and 2008, but all three withdrew last year as the recession froze investor appetite for IPOs. There’s a better chance of them getting priced now, as the IPO market heats up, said John Fitzgibbon of IPOScoop.com, but he doesn’t “see an awful lot of action.”
Excel Trust Inc., a recently formed San Diego real estate investment trust, also is hoping to raise about $255 million to purchase properties. REIT IPOs have not fared well this year.
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