EQUITIES: InvenSense waits out market volatility
InvenSense, a manufacturer of motion processing solutions used in the Nintendo Wii and other electronic devices, has postponed its initial public offering, citing market conditions. The company is the latest in a growing line of companies to pull their offerings rather than accept a deeply discounted valuation and the risk of poor trading in the aftermarket.
“They didn’t need the money, so there wasn’t a need to go public,” said one investment banker. “The risk you run is that the market implodes and you see panic selling.”
Joint bookrunners Goldman Sachs and Morgan Stanley offered the company a deal to go public, but InvenSense management elected to wait out the current market volatility and re-explore a potential offering later this year. The banks, which communicated the decision yesterday afternoon, one full day ahead of expected pricing, had marketed 10.5m shares at US$8.50–$10.50.
InvenSense viewed the IPO as a branding event as it looks to expand its business beyond its historical reliance on the Nintendo Wii gaming system. The company, which has raised US$58m in venture financing, most recently in 2008, has roughly US$45m in cash and is already profitable, reporting a net profit of US$9.3m on revenue of US$96.5m in fiscal 2011.
Sales to Nintendo accounted for 73% of revenue last year, but fell to just 14% in the quarter ended July 3. The expansion of its technology to smartphone, tablets and other electronic devices was significant in the marketing of the IPO – HTC, LG Electronics and Quanta each accounted for more than 10% of revenue in the most recent quarter.