Corsair Postpones IPO, Waits For Better Times
Has the botched Facebook IPO scared off Corsair from going public?
The timing of Corsair's announcement that current market conditions equity market conditions are too "weak" to justify an IPO may be just coincidence, but it is certainly interesting. Facebook's stock appears to have landed at $32 per share, more than 20 percent down from what mortal investors had to pay when the stock became available for trading last week. The hype surrounding Facebook's IPO and the subsequent crash on the floor of reality will have investors looking at upcoming IPO's with much greater scrutiny.
Corsair co-founder and CEO Andy Paul commented briefly on the decision to pull back and said that Corsair's "business is growing, and is generating increasing profitability and cash flow." He added: "We have decided that we will re-launch when equity market conditions are more favorable. While we do intend to expand our capital base through public capital markets, our existing capital structure and balance sheet provides sufficient capital to enable continued investment in our brand strength, products and people.”
Corsair did not indicate when it might consider to file for an IPO. The company was founded in 1994, employs 383 people and has annual revenues of about $326 million.
Corsair will probably file for an IPO after the US elections. because the stock market hates the uncertainty. I'll buy some stock that day, just because I've got a bunch of Corsair products and they all work
The securities fraud case sounds pretty solid too.
Why can't we blame both Facebook and the morons?
I ask this because there was a time when the idea behind a public offering of a company on the stock market was done solely because you need the cash flow to build your business. It was an option afforded to companies who had leveraged as much private funding as they could and need more investment to help grow their business. Facebook had plenty of money. Very little of the money they made from their IPO, their $16B, seems to be actually targeted towards in any way doing something Facebook couldn't do before. In fact it seems more like they're trying to find ways to build themselves to justify the IPO. They had tons of cash already, so their IPO at the very least was flawed in its justification, IMHO.
Now, I don't know about Corsair's finances, but they make great products. I would hope, for their sake and for the sake of our system of economics, Corsair and any other company looking to make an IPO does so based on the idea that they need to leverage plans they have for expansion, not for the sake of just piling money as high as they please and decide afterwards they need to justify it for their newfound investors. That is the lesson that should be learned here. Because Facebook has no stated plans on the horizon that will noticeably change their situation. And with no such plans, I don't foresee their stock price getting back to that $38 price (really $42.50 was the first actual trades) from the day it launched.
It shows they are doing something right.
Myspace is still going and is actually making a small comeback.
The real problem is over-valuing the stock at IPO time. As long as they don't over-value the share price upon IPO, they shouldn't have any issue.
Well just a few reasons they might have to go public: Liquidity. All those "insiders" that actually made some money, that also includes all the employees that where either given stock or offered stock in the company for last few years, their stocks were basically worth nothing till they went public. In general, stock in a public company is much more liquid than stock in a private enterprise and has a result easier to sell and buy.
This in turn can lead to Motivation and/or loyalty. A lot of employees are given or offered stock options before a company goes public, sometimes years before, so when they finally do they usually make a good profit which can connect an employee’s financial future to the company’s success.
Just a few reasons why. Mostly Facebook lost out in mho because well they really do not offer any real product or service as of yet anyway; and the market value when the ipo hit reflected that. Reality is reality.
It was hard to come up with an initial share price for Facebook, because they do offer a service that's hard to really quantify - keeping people connected while shoving advertising in your face. It's like a TV station which operates based on advertising, but rather than programming, you're offered a social experience. The hard thing is quantifying this because even though social networks have existed for years now, they are pretty new from the standpoint of the stock market.
Corsair, on the other hand, shouldn't have this type of problem.