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Look, Up in the Sky: It’s a Bird, it’s a Plane, it’s the WorldSpace IPOWorldSpace raised the target price for its initial public offering (IPO) as XM Satellite Radio (XM) bought stock for US$25 million. Both companies anticipate that first profitable quarter.
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WorldSpace Seeks Partners to Bring Satellite Radio to Europe The Bird's The Word EC Says Rights Are in the Hand of the Holder Mel is Sirius! US DJ Moves to Satellite Radio in $500m deal |
Satellite radio gets a mean share of press coverage, mostly in the US business press. And IPOs are always great fodder, mostly because they are rare. PriceWaterhouseCoopers (PWC) reported IPOs up in the second quarter from the first but still lower than last year. A year ago PWC expressed surprise that IPOs in Europe’s media sector had gone nowhere.
XM and chief US competitor Sirius have big fans among stock traders. XM trumps Sirius with three times more subscribers. But Sirius has the National Football League (NFL), former Viacom President Mel Karmazin and, coming next year, shock jock Howard Stern, all very popular with stock traders.
WorldSpace is a different animal. It has two birds and 63,000 subscribers, mostly in the developing world but capable of reaching most of Western Europe and Australia. It also has licenses to operate in “emerging economies” like South Africa and India. And it has proprietary technology that was licensed to XM it first got off the ground.
XM sold nearly 10 million shares in June to raise $300 million to launch its 4th satellite and build its 5th. Worldspace’ plans to launch a satellite for South America are on hold.
The assets Worldspace has are 15 years experience, licenses to operate in many countries and that special proprietary technology to turn receivers into cash registers. Newer technology is certainly in the pipeline but not on-line. By some appearances WorldSpace needs to raise cash for operations. XM insiders suggest the in-house zeitgeist sounds like early Steve Ballmer at Microsoft: “World Domination.” The last thing XM needs, with Sirius, Mel and Howard breathing down their necks, is an asset sale at WorldSpace to somebody like Steve Ballmer at Microsoft.
WorldSpace IPO lead manager USB Investment Bank aggressively raised the initial price to $21 per share for the Thursday (August 4) offering. Stock traders gobbled it up. The first days trading opened at $24.10, bounced to $26 and closed at $22.36. The company also raised by more than 3 million the number of shares offered to 11.9 million.
By the close of trading Friday (August 5) the stock price had settled down to $20 per share.
Both the Washington Post and Associated Press (AP) carried stories about the “unusual disclosure made to the US Securities and Exchange Commission” as WorldSpace distanced itself from long time Saudi backers, Salah Idris and Khalid Bin Mahfouz, alleged to be backers of Osama bin Ladin.
The Washington Business Journal reported that the WorldSpace IPO raised $241 million, which nets $211.5 million.
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WorldSpace filed for listing on the US NASDAQ exchange in April, looking to sell on the public market 8.8 million shares to raise cash for operating expenses and business development in India, China and Western Europe. The filing was amended July 19th, raising the target price to $18-$20 per share from $16-$18 and raising about $167 million, less about $20 million for the underwriters. The same day XM bought 1.56 million shares in WorldSpace at $16.02 per share. Underwriters UBS Investment Bank and SG Cowen are expected to set the WorldSpace IPO share price on August 4th, nearly ten years to the day since Netscape issued its IPO beginning the dot com boom which made half of all investors very rich, half very poor and all very crazy.