The IPO Buzz: Tech IPO Fireworks

Here’s what makes the LogMeIn deal a “hot issue.” The company has a proven business model. Its finances show the model is working. The stock market’s technology sector has been strong this year and 2009’s technology IPOs have been soaring.
LogMeIn’s business model, based on its financials, has proven to be sound. Based in Woburn, Massachusetts, the company was formed in 2003 to provide on-demand, remote-connectivity solutions to small and medium-sized businesses, IT service providers and consumers.
LogMeIn has turned in what every investment banker likes to see in bringing a company public –- growing revenues and a series of increasing, profitable, back-to-back quarters. Buried deep in the company’s prospectus (“Quarterly Results of Operations” – page 53) are the following financials:
  • For the three months ending June 30, 2008, LogMeIn reported a net loss of $3 million on revenues of $10 million.
  • For the three months ending Sept. 30, 2008, LogMeIn reported net income of $9,000 on revenues of $14.4 million.
  • For the three months ending Dec. 31, 2008, LogMeIn reported net income of $1.2 million on revenues of $16 million.
  • For the three months ending March 30, 2009, LogMeIn reported net income of $2.1 million on revenues of $17.2 million.
There you have it. And who knows what’s in the can to be reported for the three months ending June 30, 2009?
The Stock Market
The Dow Jones U.S. Technology Index (DJUSTC) closed Friday, June 26, at 460.83, UP 45.5 percent from 316.83, its close on March 9. That beats all three major U.S. stock market indexes:
  • The Dow Jones Industrial Average (^DJI) was UP 28.9 percent over that time span.
  • The Nasdaq Composite Index (^IXIC) was UP 44.9 percent.
  • The S&P 500 Index (^GDPC) was UP 35.8 percent.
2009’s Hot Technology IPOs ( 2009 Pricings)
Bankers have priced 14 IPOs so far this year, according to the U.S. Securities and Exchange Commission’s filings. As of Friday, June 26, six were technology issues. Their average gain stood at 57.9 percent, compared with an average gain of 18.6 percent for this year’s remaining  eight IPOs.
And heerrrees’ the Deal
LogMeIn plans to price 6.7 million shares at $14 to $16 each on Tuesday evening, June 30, for trading on Wednesday morning, July 1.
In closing:
One other notable factor: Separately, each of LogMeIn’s joint-lead managers, J.P. Morgan and Barclay Capital, could do the deal as a block trade.
The Wall Street consensus of opening premiums or SCOOP ratings gives the deal a 3-Star rating.
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