Tuesday, July 03, 2007

NetSuite Files IPO, Reports Losses

According to Channel Web Networks newsletter:

"...NetSuite Monday filed for an IPO intended to raise up to $75 million. The registration statement offers the first detailed look at NetSuite's finances, shining light on its history of losses and on the deep hold Oracle CEO Larry Ellison retains on NetSuite.

"NetSuite, based in San Mateo, Calif., reported revenue of $67.2 million for 2006, an 85 percent increase on the $36.4 million it took in a year earlier. Its net loss in 2006 was $23.4 million. Founded in 1998, NetSuite has operated at a loss since its inception.

"As of March 31, the end of its first fiscal quarter of 2007, NetSuite had 5,300 active customers. It did not disclose how many end-user subscribers it currently supports.

"...NetSuite's ongoing losses were ... unexpected. NetSuite has for years implied in the press that it is profitable or very close to it, and partners were getting the same message...

"The vast majority of NetSuite's shares are owned by Ellison, who financed the company's creation in late 1998 to develop on-demand ERP and CRM services. The ties between NetSuite and Oracle run deep: Ellison and his private investment group, Tako Ventures, currently control 74 percent of the company, and NetSuite's two top executives, CEO Zach Nelson and CTO/Chairman Evan Goldberg, spent time in Oracle's executive ranks.

"The ownership overlap between NetSuite and Oracle could cause conflict-of-interest issues between the potential rivals. Like the rest of the ERP field, Oracle would like to deepen its footprint in the small- and midsize business market in which NetSuite specializes. It also now owns Siebel CRM OnDemand, a NetSuite competitor."

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