SCIL rates 2 out of 6. Pass on it. Very BAD FINANCIALS.
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I'm posting my opinion about this IPO using a 6-point scale... I
don't claim to be an expert at this. However, I'm trying to improve
my success rate by analyzing whether this company has qualifications
to be winning IPO.
Please post what you know about this company and/or its products.
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1. Industry-related Factors
Does this company operate in a big-ass market?
Are its products or services in "HOT" sectors, e.g., internet
infrastructure, enabling technologies, DSL, wireless internet
communication, B-to-B commerce, verticals, hosted services, etc.?
Your Grade:
(_____) HIGH=1
(___x__) LOW=0
Your explanation:
Relatively small market...even if they penetrate schools. this is not the next Yahoo.
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2. Company-related Factors
Are the company's sales revenues growing exponentially?
Does this company have the "first-mover" advantage over all its
competitors?
Will this company emerge as the category leader in its market?
Does this company have the leading edge in its technology, products
or merchandising model?
Does this company have strong brand recognition (the "branding"
advantage)?
Does this company have a winning merchandising and customer service
strategy?
Does this company attract high-profile clients or consumers?
Does this company have multiple (or blended) revenue sources?
Has the management team demonstrated success in prior public
ventures?
Does the management team hustle?
Does the company have the best people in this field?
Your Grade:
(_____) HIGH=1
(__x___) LOW=0
Your explanation:
I'm especially cautious about stagnant sales growth 1998 to 1999. 1st Q 99 sales equaled 1st Q 98 sales.
Also will sales doubled from $2.5 mm in 97 to $ 5mm 98 in 98, losses increased from $5 to $10mm. That's BAD!
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3. Venture-Capital Backing
Was this company backed early on by leading venture capital firms?
[These venture capitalists are very careful in choosing the companies
they back. It's a good sign when the successful v.c. firms backed
an IPO from its early development.]
Your Grade:
(_____) HIGH=1
(_x____) LOW=0
Your explanation:
Warburg pincus is not a well known vc firm.
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4. Float
Is the float relatively small (3-5 million shares)?
[Here's the float--in millions-- for some recently priced IPOs which
are trading at least 100% above their IPO levels (as of 6/18/99):
BRCD 3.2; CMTN 4.0; CPTH 4.5; EXTR 7.0; MKTW 2.7; MMXI 3.0;
MRBA 4.0; PCLN 10.0; PRSF 8.0; PHCM 4.0; RBAK 2.5; RTHM 9.4;
STRM 7.0; SILK 3.0; VERT 3.5]
Your Grade:
(___x__) HIGH=1
(_____) LOW=0
Your explanation:
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5. Quality of the Lead Underwriter
Is this company being underwritten by at least one of the three
best-performing lead underwriters--Morgan Stanley Dean Witter,
Merrill Lynch, and Goldman Sachs?
[These brokers are very careful in choosing the companies they underwrite
because they need to protect their long-established reputation for
offering quality IPOs and quality investments. If this IPO passes
muster with Morgan Stanley Dean Witter, Merrill Lynch, or Goldman Sachs,
it's usually a good deal.]
Your Grade:
(___x__) HIGH=1
(_____) LOW=0
Your explanation:
Merrill -- I just dont get why ML is in on this one. Maybe it's a sweetheart deal with warburg's ownership of 50% of SCIL stock. Something is missing here.
********************************************************
6. Buzz / Excitement Level
Is there a lot of "BUZZ" about and anticipation for this IPO? One way
to guage this interest is by counting the number of messages about
this IPO on the SI threads.
[The buzz factor can add to the appeal of an issue, but the absence of
buzz does not necessarily detract. Some great stocks generate buzz, and
some great stocks don't, for whatever reason.
Here are some hard figures on this concept: The PCLN SI thread had 598
messages up to the morning of March 30, 1999, when it began trading.
I believe this is the record number of pre-IPO posts for any issue. PCLN
was one of the biggest first-day movers, jumping from $16 to $84.
see techstocks.com
VERT had 69 pre-IPO messages.
On the other hand, an IPO with few pre-IPO messages may still turn out
to be a big winner. Recent examples are RBAK (8 pre-IPO posts), HLTH
(7 pre-IPO posts), CMTN (15 pre-IPO posts), and BRCD (12 pre-IPO posts).]
Your Grade:
(_____) HIGH=1
(____x_) LOW=0
Your explanation:
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Taking these criteria into account, how does this IPO stack up?
Please post your TOTAL SCORE (i.e., on a scale of 1 to 6) on
the first line of your reply message.
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RESOURCES:
Underwriter's performance
quote.com
Management team and their experience
sec.gov
SEC filings and prospectuses
edgar-online.com
sec.gov
"Hot" IPOs list
ostman.com
Free live 24/7 chat channel devoted to IPOs
chat.yahoo.com
Yahoo's list of the top performing IPOs
biz.yahoo.com
General info on the IPO-ing company
smartportfolio.com
ipomaven.com
ipocentral.com
ipo-fund.com
quote.com
ipofinancial.com
Weekly IPO commentary and analysis
ipo-fund.com
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