Testing the IPO waters
Where you are in terms of your revenue growth
and profitability?
We are tracking along at a growth rate which is very comparable, I think,
to what other public new media companies have experienced during their
first year or so of existence. So I don't have any sort of worries in the
context of whether or not we can create revenue and, therefore, revenue
momentum.
What has your revenue growth been?
We had very good sequential growth throughout 1997, and sort of nominally,
we're looking to double revenues between 1997 and 1998. That's sort of the
ballpark of what we expect to do.
Was your quarter-to-quarter revenue growth in the 30-percent range?
It was probably a little bit more than that when you start looking at
toward the end of the year. Obviously, the fourth quarter for media
companies is sort of a seasonally high quarter. But if you tracked us and
looked at the publicly traded new media companies--the search engines, for
example--I think we tracked pretty well in terms of our growth with those
kinds of folks. We're the largest private new media company, no doubt about
that. There are so many companies, as you know, that are traffic companies
that don't have any revenue.
And profitability?
At this point I won't make any sort of predictions, but we're not looking
four years from now to be profitable. We may not achieve that in '98, but
we'll get pretty darn close in terms of break-even. We think that those
kinds of results are what's expected by the market--and it gives us a lot
of choice of whether to go public or to continue to rely on private
financing.
Are you still looking to do an IPO in '98?
I wouldn't rule it out. It's just that I can't say for certain at this
point. Right now, the market is sort of attractive and you have to look at
the timing of this, and who can see the market from day-to-day that
accurately?
I don't think we've got any problems generating interest on Wall Street. I
have been visited personally by senior partners of every banking firm you
can think of. In fact, I challenge you to name one that has not been here.
Most people in the investment community believe that PointCast has a very
sellable story.
You want to be in a position to do an IPO when it makes sense to do that
for your business and for your shareholders. What I'm trying to communicate
is that we've got choices.... Back in November, when I got here, the market
was pretty choppy for IPOs. Most of them that came out in the fourth
quarter sort of traded around their opening price and maybe went down a
little bit. Well, now here we are in the first quarter, and it's Yee-ha!
time again. It's sort of difficult, when a
market's got that kind of volatility, to be spot-on and picking the right
time to go, but we are seriously reviewing our alternatives and thinking
about that all the time. Right now we just completed a round of private
financing about a month ago. So we have ample cash reserves to be able to
finance the business, and what we want to do in the near term. But that
doesn't say that because the market's great we wouldn't want to go out and
do an IPO, either.
Are you going to wait until you release one quarter of profits before
you do an IPO?
Personally speaking, I think that's great, if you can, but I don't think
it's requisite. I think, from my point-of-view, knowing when it's going to
occur and feeling comfortable that you can achieve profitability on the
plan that you have--it's important to be able to do that. And when you go
public you need to be able to see it and know it's there and be committed
to delivering it. I think you'd have to do that to be able to get people
invested in your business.
In addition to having the bankers come by, what about buyers?
We represent a fairly unique set of assets, both in terms of our
intellectual property, our customer base and its traffic, and the
demographic we
represent with that customer base. It's very difficult to reach business
people in their office with media--very difficult. So when you start asking
yourself what
universe of companies might be interested in a PointCast, it's pretty darn
broad, from large media companies to new media companies to technology
companies. It's a pretty big universe of possibilities. So I think I'd be
surprised if we aren't attractive to a lot of people. Because there was so
much hype associated with our launch and coming into being, I think the
expectations have been set early by hype--very, very high. I told someone
the other day it's as if this whole expectation for our company was like we
were going to be the next Microsoft or something. Clearly, this is a
business that's going to be successful, it's going to be a good business, a
good platform to build new businesses off of, but we have to be
realistic about what the business is. It's a media opportunity that can expand
pretty nicely, but I don't have distorted visions of what this is going to
end up being. It's a value-creating opportunity, either as a standalone
company expanding and doing new things, or as a part of something else. My
job, as the steward of the shareholder, is to determine what the maximum
value-creation for the shareholder is. Is it doing what we're doing on a
standalone basis--acquiring others, being acquired? All those kinds of
things have to be fitted into the mix. I can't really say beyond that
general statement.
NEXT: Meeting the demands of the use