Friday, March 30, 2012

A Tale of two IPOs

In 2010 pay-to-publish company hoped to do an IPO (initial public offering), selling $50 million in stock to pay off debts. On this blog, I've pointed out that the company's sloppy printing, bad customer service, bad website, uncompetititively high prices and strong competitors were not indicators of future success with either the IPO or business in general.

Lulu founder Bob Young said, “We publish a huge number of really bad books.” If Bob knows they're really bad books, he shouldn't publish them! Bob also misspelled "misspell" and confused "less" and "fewer." A publisher should know better.

Lulu is based in North Carolina but planned to go public on the Toronto Stock Exchange, because that would be less expensive than going public in the USA.

Lulu reduced its  proposed stock price to about $7 per share, from $8 to $9.50 each -- but the bargain price was still too high to impress potential investors. Lulu lost $1.9 million on sales of $32.6 million the year before the IPO.

Lulu's stock underwriters stated, “Due to current market conditions, at this time Lulu Ltd. has decided to postpone the financing until further notice.” (According to, Lulu "will continue to work on expanding the company and try to revive IPO plans within 12 months, Young said. But it could be even sooner if the stock market cooperates."

Two years later, market conditions seem to have improved considerably -- but Lulu's potential has not.

Despite a name that might imply that it prints books, California-based CafePress is not a direct competitor of Lulu. It provides -- on demand -- a wide range of user-designed products including t-shirts, mugs, iPad cases, business cards, tote bags and much more.

The company says that about 135,000 new designs are added each week, it ships over 6 million products annually, and has over 11 million unique visitors to its website each month.

From 2010 to 2011, company sales rose 37% to $175.5 million.

CafePress went public yesterday and sold 4.5 million shares in its IPO at $19 each, above its expected price of between $16 and $18 apiece. Market value was about $322.6 million.

Lulu has a lot to learn if it wants to go public, or stay in business.


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