Social business software! Collaboration! Online communities! Cloud-based! An apps market!
Sporting an array of tantalizing buzz phrases -- and fueled by the transparent but typically effective underwriter pump-priming ploys -- Jive Software on Tuesday went public with a splash as shares jumped 37.5% above the $12 offer price, enabling it to raise $161 million.
The Palo Alto, Calif.-based company's going to need the cash, too, because losses are increasing and it doesn't expect to be profitable in "the foreseeable future."
Underwriters Morgan Stanley and Goldman Sachs Group Inc. trotted out the usual Wall Street tricks to stoke investor interest in an IPO -- moving up pricing by a day, bumping up the offer price (to $12 from $8 to $10) and increasing the number of shares sold (to 13.4 million from 11.7 million) because demand for a piece of this action is so high!
Ask first-day investors of Groupon, LinkedIn and Pandora about demand for shares of those companies these days.
Jive may very well have a good product. Its cloud-based Jive Engage Platform -- which can be accessed via mobile devices -- is designed to enable 1) enterprise employees to communicate and collaborate, and 2) customers to connect socially with each other and business partners, among other things.
Further, taking a page from Apple and Google, Jive has created an apps marketplace for customers and developers.
(And I have to admit this pitch on Jive's apps page is right up my alley: "Who made the rule that business apps have to be complex, soul-sucking, require ten layers of approval to purchase, and an army of consultants to deploy?")
All good stuff for enterprises -- including Jive customers such as HP, UnitedHealth Group, The World Bank and SAP -- and developers. But from an investor standpoint, Jive has challenges: Despite impressive revenue growth (sales soared 73% in the first nine months of this year to $54.8 million from 2010), the red ink is flowing, with the company reporting a net loss of $38 million in the first nine months of 2011, up from $21 million last year.
Further, Jive has some company in the social business software space, as detailed in its S-1 filing:
Our primary competition currently comes from large well-established enterprise software vendors such as Microsoft Corporation and IBM Corporation, both of which are significantly larger than we are, have greater name recognition, larger customer bases, much longer operating histories, significantly greater financial, technical, sales, marketing and other resources, and are able to provide comprehensive business solutions that are broader in scope than the solution we offer.
Well, sure, but besides all that, Jive has those dinosaurs right where it wants them!
This week will see 11 initial public offerings, the busiest IPO week since March. One of those is Zynga, which is scheduled to make its ticker debut on Friday.