IPO Daily Report
Marimba finally doin' the IPO mambo
A staggering 82 Web IPOs still in backlog for debut
By Bambi Francisco, CBS MarketWatch
Last Update: 12:38 PM ET Apr 30, 1999 Net Stocks
Internet Daily
MOUNTAIN VIEW, Calif. (CBS.MW) -- Wall Street's next rookie stock to come dancing out of the gate on Friday was Marimba, the Internet software specialist founded by Sun Micro alumna Kim Polese.
Marimba (MRBA: news, msgs) priced 4 million shares at $20. The stock opened up 195 percent to 59. It quickly ran up to 64 1/2, bringing the value of the Silicon Valley company to $1.4 billion.
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That's three times the value investment banker Morgan Stanley settled on after weighing the fundamentals that argue for a more conservative valuation against the unknown retail demand that will greet the deal in the secondary market.
Institutional investors' response to the company's road show have driven Marimba's offering price up 43 percent from original expectations -- an indication of a hot issue.
"On average, 10 times the number of shares is a good figure," said David Crowder, with Thomas Weisel Partners, the San Francisco investment banker. "The real strong deals have been between 10 to 40 times oversubscribed.
Why so hot?
Mountain View, Calif.-based Marimba develops tools that allows users to distribute software over the Internet. Marimba's main product is called Castanet, which essentially helps company's distribute software upgrades to everey desktop in the firm from central services. This solution avoids the timely effort of delivering new software packages to every location and installing the software.
The company's client list discount brokerage house Charles Schwab (SCH: news, msgs), Internet service provider Earthlink (ELNK: news, msgs), Home Depot (HD: news, msgs) and Sun Microsystems (SUNW: news, msgs).
Most of its products use the Java programming language by Sun, which makes them more versatile among the gamut of software systems, the company says. Polese helped create the Java computer language while at Sun. Marimba also licenses digital-certificate security software from VeriSign (VRSN: news, msgs).
Among its backers, Marimba has a strong pedigree, including Silicon Valley venture firm Kleiner Perkins Caufield & Buyers. Douglas Mackenzie, a general partner with the investment group, is a director at Marimba.
Already with an accumulated debt of $14.6 million, Marimba says in its prospectus it expects a "significantly increase" in spending on research and development, sales and marketing. "In fact, we may not have any revenue growth, and our revenues could decline," the prospectus says. Last year, it recorded $13.9 million in sales.
Historic run for '.-coms'
It's been an historic run for Internet IPOs in this young year. So far, 41 Internet-related initial offerings have stormed onto Wall Street, raising $3.1 billion in the country. During the same period last year, only 11 Net IPOs went public.
If an investor bought into a basket of the 41 Net IPOs at the offering price, they would be sitting on a 192 percent return. For those who weren't so fortunate and came in the day after, in other words the secondary market, the returns would pale in comparison but would still be up 141 percent.
So willing are investors to embrace the latest Net deal that cyber companies continue to knock on Wall Street's doors. In the pipeline, there are 82 .com deals queuing up for an initial offering. The 31 IPOs that have filed initial terms are expected to raise $1.4 billion. Investment bankers have noted that they had never seen such a backlog of deals before and don't expect it to slowdown any time soon
Regards
Neil |
