Great Plains to file for IPO
The accounting software maker decides to take its chances on Wall Street.
The maker of packaged accounting software has registered with the Securities and Exchange Commission to offer up to $33 million in common shares in an initial public offering this spring. The company will use the proceeds for working capital, operating expenditures, and general corporate purposes, Great Plains said in the SEC document filed yesterday.
Great Plains plans to float out 3 million shares.
David Menlow, president of IPO Financial Network, a service which tracks initial offerings, said the company will face a rather uncertain Wall Street climate that has already derailed more than a few high-tech IPOs.
Yet Menlow said he has seen "a hint of a resurgence" in technology stock activity recently, which may benefit Great Plains, especially if the company delays the offering until late April, when market conditions may be more favorable.
Robert Kugel, an analyst with First Albany said Great Plains and other packaged business applications makers that develop on Microsoft's Windows NT operating system, are looking at enormous market opportunity between now and the end of the decade.
"Most of the software that used to be available only to the big boys will now be available to any company with revenues over $10 million," Kugel said.
While he stressed that companies will continue to find customers at the market's high end, Kugel likened the emerging opportunity to rapid growth seen in sales of the high-end applications running on Unix systems in the early 1990s.
Until recently, only large corporations had the resources and technical staff to install systems like Great Plains' accounting packages. But today Kugel said it is precisely this midrange marketplace that will fuel rapid sales in the next few years, propelling revenues for client-server packaged applications running on the Windows OS from less than $100 million last year to $1.2 billion by 2000, Kugel estimates.
Great Plains has seen its sales grow modestly in recent years. The company generated revenues of $42.3 million in fiscal 1996, which ended last May, compared with $37.9 million the previous year.
And in the six months ending November 30, Great Plains said it generated revenues of $24.8 million on net income of $1.2 million, compared with revenues of $19.2 million on net income of $1.4 million for the same period of 1995, according to the company filings.
The offering is being underwritten by the brokerage firms Goldman, Sachs and Hambrecht & Quist and Piper Jaffray.