NetSuite Raises $185.4 Million In IPO - InformationWeek

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Software // Enterprise Applications

NetSuite Raises $185.4 Million In IPO

Based on its IPO price, NetSuite's market capitalization is about $1.5 billion. Oracle chief executive Larry Ellison remains the majority stockholder.

NetSuite, which is controlled by Oracle chief executive Larry Ellison, said Wednesday it raised $185.4 million in its recent initial public offering.

The company, which offers business applications over the Internet, said it sold 6.2 million shares of common stock for $26 a share. In addition, underwriters exercised their option to buy an additional 930,000 shares -- 565,000 from the company and 365,000 shares from stockholders.

The total amount raised from the IPO was $185.4 million, before the deduction of underwriting discounts and estimated expenses paid by NetSuite, the company said. Underwriters were led by Credit Suisse Securities, and W.R. Hambrecht acted as co-manager.

Based on its IPO price, NetSuite's market capitalization is about $1.5 billion, according to the Reuters news agency. About 10% of the company's outstanding shares were offered in the IPO.

Ellison remains the majority stockholder. The company plans to use money from the public offering to pay down a line of credit from an Ellison-controlled company and for capital expenditures, including a second data center, Reuters said. The line of credit had a balance of $8 million as of Sept. 30.

Ellison co-founded NetSuite in 1998 to test the market for business applications offered through a software-as-a-service model. NetSuite offers accounting, payroll, order management, and customer-relationship management software.

NetSuite has never posted a profit. The company reported a net loss of $35.7 million for 2006, and $20.6 million for the first nine months of this year. While SaaS vendors can offer a much more affordable option to licensed software, they also face the challenge of turning a profit on an annual subscription model where revenues trickle in at a rate oftentimes outpaced by operational costs.

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