Contact: Brenon Daly
It’s been exactly a year since SolarWinds put in its paperwork to go public. In that time, capitalism has been beaten and bloodied. To underscore that, consider that the late-great Lehman Brothers was one of the original underwriters of the proposed offering. Obviously, that bank has been erased – both on prospectus and elsewhere. Morgan Stanley now serves as the other major bulge-bracket underwriter on SolarWinds’ ticket.
As we noted earlier this month, the tech IPO market has had nothing to offer since the debut of Rackspace in the middle of last year. Last week, Omneon Video Networks pulled its planned IPO, two years after initially filing the paperwork. That withdraw came less than two weeks after GlassHouse Technologies also scrapped its planned debut.
But a funny thing happened after we declared the IPO market dead: We began to see some signs of life. Chinese online game developer Changeyou.com is set to hit the Nasdaq next week. We would guess that planned debut has much to do with the rebound in the Nasdaq, where Changeyou.com intends to trade. Since finishing a month-long slide on March 9, the Nasdaq has gained some 17%. The index has risen from below 1,300 (close to where it bottomed out in October 2002, after the tech wreck) to above 1,500 during Monday’s Treasury-inspired rally.
We wonder if SolarWinds, which has already amended its original prospectus six times, won’t also look to take advantage of this slim opening of the IPO window to go public. Of course, we’ve always thought that SolarWinds could go public in just about any market, given the fact that it mints money. Last year, the company continued to run at an EBITDA margin of more than 50%, even as revenue hit $93m, up from just $38m in 2006 and $59m in 2007.