Consonus IPO Has Too Many Cons
IPO investors who didn't like Rackspace (RAX) should take a close look at its rival Consonus Technologies.
It may make them feel better about Rackspace.
Consonus was expected to debut on the Nasdaq two weeks ago, but a turbulent stock market and a rocky listing for rival Rackspace gave underwriters pause. The company is now looking to list its stock in the next couple of weeks with the ticker DCTI.
It's been a long road for Consonus. The Cary, N.C.-based company first filed for an IPO back in May 2007, aiming for a fall offering of 6 million shares priced between $7 and $9 each. In June 2008, it revised its offering down to 3 million shares priced between $8 and $10. The overall amount raised in the offering would be reduced to a midpoint of $27 million from the originally hoped-for $48 million.Like Rackspace, Consonus is in a thriving area. The market for Web-hosting of IT services is seeing strong growth, as is the technology consulting that Consonus also offers. The breadth of Consonus' services is broad enough to compete with giants like IBM (IBM), Hewlett-Packard (HPQ) and EDS (EDS). Unlike those giants, Consonus focuses on companies with 300 to 2,000 people as well as universities. Its clients include shipping company Maersk, software company Red Hat (RHT), Blue Cross Blue Shield Association and Johns Hopkins University. Over the past year, while Consonus has languished in the IPO queue, its valuation seems to have shrunk dramatically. Last September, Consonus said an offering would leave 10.5 million shares outstanding. At the proposed $8 a share, that's a valuation of $84 million. After a reverse stock split in January, Consonus will have only 6.2 million shares outstanding after an IPO. At $9 a share, the company is now valued at $55 million.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV