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"I see this stock offering as a bellwether for the market at large," wrote the financial columnist. "If [this company], with its timely service and excellent leader board...can't make it in a public market, I'm fearful for the IPO prospects for many [tech] companies next year."
The writer was yours truly, the company in question was LoudCloud (now Opsware), and the future was 2001 (I wrote the column in October 2000). The stock was indeed a bellwether: It opened in March 2001, when people thought the Nasdaq had hit bottom (it stood at 2,000 at the time), promptly headed south, and was the only tech-related IPO of the entire year.
The above passage could just as well have been written this week, except this time Crystal Decisions would take the place of LoudCloud/Opsware. The Palo Alto-based enterprise software firm has filed papers declaring its intention to go public "at such time as market conditions permit."
And, sure enough, news reports hailed the announcement as "signaling a market opening" and "a light at the end of the IPO tunnel." Even though the Nasdaq is lower now than when LoudCloud went public, it has been rising steadily, and every day, it seems, another article proclaims that tech is back. Seems like a great time to make a go of it.
What a difference a couple of years makes. Or does it? I believe that the technology sector is experiencing legitimate growth and that -- barring an unforeseen calamity, such as another war or terrorist attack on the United States -- its worst days are behind it.
But I don't think the Crystal Decisions IPO really is a bellwether event. The company's recent earnings are strong (net income of $23.5 million for the nine months that ended March 28, on revenue of $209.2 million), and it will be interesting to see how it fares when it eventually debuts.
But it's hardly a canary in a coal mine for the scores of tech companies eagerly awaiting the perfect moment to hit the markets and raise some capital.
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There are a couple of reasons for this. Here's one: The people behind Crystal Decisions are the same folks behind Seagate -- another recent tech IPO. In fact, Crystal was once wholly owned by Seagate. After Seagate was privatized, Silver Lake and Texas Pacific -- two of Seagate's major backers -- spun Crystal Decisions off as its own company.
Many people decried Seagate's IPO before it occurred, saying it was more an opportunity for Silver Lake to cash out than a legitimate capital-raising event for the company.
The same, in theory, could be said of Crystal Decisions. Though the six-month ban on stock sales by insiders is about to lift for Silver Lake on its Seagate IPO, some people I spoke with believe that Silver Lake pushed Seagate to the market so it could cash out its investment in the firm. Since Seagate has performed decently, some think Silver Lake wants to replicate the deal with the Crystal Decisions IPO.
The second reason is that a handful of technology companies have already debuted in recent months. iPayment and the aforementioned Seagate have both done reasonably well since hitting the markets. Rather than being a signal event for the tech industry, a Crystal Decisions IPO would serve more as a valuable domino -- adding momentum and hopefully coaxing the bigger players onto the field.
Which am I talking about? A few contenders include Salesforce.com, Netgear, and, of course, the granddaddy of them all, Google. "If you see somebody like Crystal Decisions with a successful IPO, you are going to see other people doing it," Salesforce.com CEO Marc Benioff told the Wall Street Journal last week.
My colleague Paul LaMonica recently wrote about the prospects for a Google IPO. I, too, am eager to see that happen, because it would be a bellwether for us market-watchers. Its management claims it is profitable, it has a fantastic business model, and it is cut from the same cultural cloth as Valley stalwarts eBay (EBAY: Research, Estimates) and Yahoo! (YHOO: Research, Estimates).
While "waiting for Google" rolls off the tongue in a similar fashion to Beckett's Waiting for Godot, I think these smaller, less consequential offerings will help push companies like Google into IPO mode as well.
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