NetSuite preps ground for IPO

NetSuite executives have confirmed plans to prepare for an IPO later this year, hinting at a valuation close to the $2 billion achieved by Salesforce.com at its IPO in 2004.

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In interviews with the San Francisco Business Times, NetSuite executives have confirmed plans to prepare for an IPO later this year. "We're hoping to see something in the ballpark of what Salesforce got in terms of valuation," NetSuite CEO Zach Nelson told the paper — which would value his company at close to $2 billion, based on Salesforce.com's closing price the day of its IPO in June 2004.

NetSuite is one of the largest — and probably the best known — of established on-demand vendors not yet listed on Nasdaq (I wrote about the company's ecosystem play back in January). Any moves towards an IPO will be closely watched, as it is likely to rival those of Salesforce.com in 2004 and RightNow Technologies of August that year. Other significant IPOs by on-demand vendors include WebSideStory in September 2004 and Taleo last October. 

The company isn't under pressure to raise money. Annual revenue has doubled in each of the past three years and is expected to repeat the feat this year. And Oracle boss Larry Ellison still owns a 60% stake. "Larry Ellison doesn't need the money to get rich and retire early," NetSuite's CFO Jim McGeever told the SF Business Times. But the rising valuations of Salesforce.com and RightNow, along with increasing respectability for the SaaS model make NetSuite a popular prospect for would-be IPO underwriters. "Every single bank on the planet has probably called here," McGeever said.

The paper reports that NetSuite has started recruiting staff to help prepare its IPO and "plans to file IPO papers with the Securities and Exchange Commission in the second half of 2006, when the company expects to reach profitability."

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