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DivX shares climb post-offering
DivX, maker of a popular digital video format, went public Thursday - at a price above market estimates - and then saw its shares rise Friday. The IPO amounts to a vindication for the grassroots outfit that has thrived despite a lack of support from the major Hollywood studios and daunting competition from Apple's proprietary video format as well as Adobe's Flash video.

PaidContent.org reports that the company floated 9.1 million shares which hit $19.50 Friday before closing at $18.70 - an increase of 16.9 percent over the $16 offering price. The impressive performance has generated buzz for the largely under-hyped company, and also some skepticism.

"DivX's stock is far from cheap," writes the Motley Fool. "Assuming that the company posts revenues of $70 million and profits of $15 million this year, the stock would be trading at nine times sales, with a P/E of 41. That's a lot to pay in light of the various risks."
Posted by Oliver Ryan 10:18 AM 0 Comments comment | Add a Comment

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