SAN FRANCISCO (AP) ? Jive Software Inc., a company trying to build a corporate networking clone of Facebook, is seeking to raise at least $100 million in the latest initial public offering to test the level of investor enthusiasm for promising but unprofitable Internet companies.
By filing its IPO papers Wednesday, Jive Software signaled it believes its business plan is compelling enough to overcome the recent market turmoil that has caused other startups to back off their plans to go public. So far in August, at least 17 pending IPOs have been canceled or postponed, according to research firm Dealogic. The second thoughts emerged as the stock market whipsawed through its wildest swings since 2008.
It won’t be clear what price Jive Software will seek for its IPO shares until bankers can gauge demand. That usually takes three to four months, meaning Jive Software won’t make its stock market debut until late this year if it can navigate through the recent turbulence that has reduced investors’ tolerance for risk.
This is an IPO that may require a leap of faith, given that Jive Software’s losses are widening as it pursues an aggressive expansion that has more than doubled its work force to 360 employees during the past year.
Jive Software’s business is tied to connecting people with common interests on the Internet ? an endeavor that has looked promising enough to entice investors to pay high prices for a stake in companies involved in the field.
Jive Software, which is based in Palo Alto, creates websites and other tools for companies looking for better ways to share information among their employees, customers and partners. It’s similar to how Facebook, also based in Palo Alto, creates online communities of friends and families.
Facebook has become a cultural phenomenon with 750 million users worldwide. The concept is so hot that an investment led by banker Goldman Sachs Group Inc. valued Facebook at $50 billion earlier this year. That lofty appraisal has simultaneously stirred a debate about whether Internet companies are being overvalued as the excitement builds for an anticipated IPO by Facebook next year.
Jive Software is tiny compared to Facebook, whose revenue is expected to reach about $4 billion this year, according to the research firm eMarketer Inc.
Through the first half of this year, Jive Software lost $30.6 million on revenue of $34 million, according to the documents filed Wednesday. That followed losses of more than $49 million in the previous five years. The company said it expects to keep losing money for the “foreseeable future.”
What’s more, Jive doesn’t have the reach of Facebook. It had 635 business customers using its Internet platform as of June 30, up by 22 percent from the previous year.
Jive Software made it clear it hopes to piggyback on the stock market’s intrigue with social networking by invoking Facebook’s name in its IPO filing. The documents also mention online messaging service Twitter, which remains privately held, and LinkedIn Corp., an online professional networking company that completed one of the hottest IPOs in years four months ago. Since their market debut, LinkedIn’s shares have climbed 65 percent from their IPO price of $45. Unlike Jive Software, LinkedIn is profitable.
The pedigree of Jive Software’s management and major financial backers could attract some investors. The company’s CEO is Tony Zingale, who ran Mercury Interactive Corp. before that software maker was sold to Hewlett-Packard for $4.8 billion in 2006.
Two of Jive Software’s biggest stockholders are two venture capital firms, Sequoia Capital and Kleiner Perkins Caufield & Byers. Those firms got rich off the IPO of Internet search leader Google Inc. seven years ago.