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IPOs: Bazaarvoice Loses Money; Proto Lab Faces Competition

Stocks in this article: PRLB BV

NEW YORK (TheStreet) -- Bazaarvoice (BV)bills itself as turning social media into measurable social commerce; unfortunately it hasn't turned itself into a profitable company.

The company is looking to raise $85.4 million in its IPO expected to price this week. It plans to sell 9.5 million shares with pricing seen ranging from $8 to $10 each.

The problem is that while the Austin, Texas-based provider of online customer review technology has been able to grow revenue, losses have increased as well.

Bazaarvoice says that it serves more than 30% of the world's leading global brands. Users of its software share ratings and reviews as well as stories about products and brands. Bazaarvoice spends lots to get customers, but does manage to hold onto them with a 76% retention rate. Revenue rose to $64.5 million in 2011 from $38.6 million in 2010, but losses widened as well, more than doubling to $20.1 million last year from $8 million in 2010.

"At this point in their trajectory and with their customer base, BV should be on a much clearer path to profitability, which they are not based on looking at the last six quarters," said IPO Desktop President Francis Gaskins.

He thinks new investors should stay on the sidelines and wait for the company to have more clarity about how it's going to get in the black.

Meantime, Proto Lab (PRLB) looks to be in good shape leading up to its offering. Protolab creates three-dimensional models of parts or products in a quick time-frame, and is looking to raise $60.2 million through an offering of 4.3 million shares at $13 to $15 each.

The company uses resin, aluminum and plastic injection molding to help designers see their products come to life. Designers of medical devices, electronics, automobiles and consumer products all use these services. In 2011, the Maple Plain, Minn.-based company posted net income of $18 million on revenue of $98.9 million vs. net income of $11 million on revenue of $65 million in 2010.

Gaskins' main concern with Proto Labs is the competition. Autodesk (ADSK) is a leader in 3-D design for architects and engineers and the stock is down 11% for the past year. 3D Systems (DDD), though is up 6% for the year and has seen its revenue grow 39% over the past quarter. Stratasys (SSYS) is another maker of 3-D printers and its revenue was up 28% in the fourth quarter. Unfortunately the stock is down 18% for the past year. That's just a small selection of publicly traded 3-D technology companies.

Gaskins points out that as 3-D printers drop in price, more customers are able to purchase these machines and can make 3-D prototypes themselves, rather than sending the drawings to Proto Labs and wait for the results.

He also notes that sales and profits in the December quarter declined sequentially for Proto Labs. Not a great sign ahead of its pricing.

-- Written by Debra Borchardt in New York.

>To contact the writer of this article, click here: Debra Borchardt.

Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.

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