E-Mailbag Monday: Sunrise Telecom, Profits, Permission Marketing
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What looks hot for the IPO market this week?
Reply: Expect IPO sunshine from Sunrise Telecom. The firm develops verification products for the telecom industry. Sunrise will test services such as DSL, ISDN and ADSL. In fact, the company recently launched a product that monitors cable networks. But perhaps the most interesting technology is for fiber optic transmissions.
Sunrise has been running a strong organization. Last year, the company had sales of $61.5 million and net income of $10.9 million. I will write a full analysis of the company for IPO Tracker this week.
The lead underwriter is Chase H&Q and the proposed ticker symbol is SRTI. The price range is $11-$13.
In picking IPOs, should I only focus on profitable companies?
Reply: Definitely not. While the IPO market has favored profitable companies lately, there are still great IPOs that have no profits. Rather, it is critical to find those companies that have superior business models that will result in profitability.
For example, even though Network Engines is not profitable, it should have a strong IPO this week (in the past six months, the company lost $10 million on $10 million in revenues). The company is a leading developer of server appliances. Basically, these help companies integrate Net capabilities within existing networks.
However, the marketplace is potentially huge and profitable. According to International Data Corporation, the server appliances market is expected soar from $50 million in 1998 to $8 billion in 2003.
The lead underwriter is DLJ and the price range is $13-$15. The proposed ticker symbol is NENG.
Permission Marketing: Letting Consumers Decide
What is permission marketing?
Reply: Traditionally, marketing has been "interruption advertising." But with the Web, this need not be the case. In fact, with consumers being inundated with advertising, innovative approaches are sorely needed.
The guru of permission marketing is Seth Godin, who wrote a book on the subject. He was also the chief marketer at Yoyodyne, which Yahoo! purchased.
With permission marketing, you need to give before receiving. For example, a marketer will provide some type of bait, like a free sample or an opinion survey. If a consumer bites, then you can develop a long-run relationship.