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Technology Stocks : NetSuite

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From: Valley Girl	12/26/2007 7:59:22 PM
	of 12

News du jour news.moneycentral.msn.com Company got $162 million from the IPO. Bankers took the overallotments of 565k and 365k shares. Down $2.55 today, seems some of the exuberance is waning. Hopefully the mo-mo crowd will give this stock a miss. Traditionally new issues like this would be priced at 8x sales. The company had $76 million in revenues over the last 3 quarters. On that pace they could make over $100 million for the year, which at 8x would give a market cap of $800 million. That's $15/share, right around where they estimated the IPO would price (prior to auction). One could argue that it should be 8x 2008 sales, and if one expects X% revenue growth next year then the share price could be X% higher than $15, e.g. if 40% growth is expected then $21/share could be argued (caveat: just an example, not a prediction about next year's growth). A lot will be riding on their first earnings announcement as a public company.

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