Briefing: Initial Public Offerings
Framingham-based IT firm GlassHouse Technologies has withdrawn plans to take the company public through an initial public offering (IPO), it announced this month. Fresh off a change in leadership — Patrick Scannell took over as CEO replacing founder Mark Shirman in November — the company has ended its plans for an IPO, which it has been considering for more than two years. What does this say about the IPO market?
How is the IPO market doing right now?
The market is struggling compared to last year, according to Renaissance Capital, an IPO research and consulting firm in Greenwich, Conn. There have been 117 IPOs this year in the United States, down 20 percent from last year. Those IPOs raised $33.2 billion, down 10 percent from 2010.
How are technology IPOs doing?
The technology industry is leading the IPO market. There have been 41 technology IPOs in the U.S. this year, raising $8.4 billion, the most of any sector, according to Renaissance. The energy market had 23 IPOs worth $7.7 billion while there were 15 IPOs in the health care industry, which raised $5.1 billion.
What does GlassHouse Technologies do?
The company, founded in 2001, provides data center infrastructure consulting services, with a particular focus on cloud computing. The firm’s website says it helps businesses “consolidate, virtualize and manage their IT environments.”
Why did GlassHouse withdraw the IPO plans?
The company cited “market conditions.” It originally unveiled its intentions for an IPO in January 2010, when it hoped to raise $75 million, but the company never executed the plans. This summer, GlassHouse was named to the Inc. 5000’s list of fastest-growing companies, landing at No. 3189.
How has the company performed financially?
The company, which reported this summer that it had 567 employees, has increased revenues in recent years but struggled to become profitable. Service revenues grew from $35.2 million in 2006 to $94.9 in 2010. Through the first half of the year, the company collected $55.6 million in revenue. But it has never made an annual profit. It lost $25.9 million in 2010, and $21 million through the first half of this year. The company has more than $160 million in debt, according to a government filing on its IPO plans this summer.
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