Stock's in big Demand
Mar 16, 2012 (Boston Herald - McClatchy-Tribune Information Services via COMTEX) --
Burlington cloud-based software company Demandware Inc., whose clients include Barneys New York and Columbia Sportswear, soared as much as 63 percent yesterday in its trading debut.
The stock reached a high of $26 per share before closing at $23.59, up almost 48 percent from its IPO price of $16. Demandware sold 6.1 million shares.
"There's been a big move in the industry toward cloud, and the stock market's been on fire, too," IPO analyst Tom Taulli said. "It's a great time to launch an IPO."
In the last three months, four similar companies -- Bazaarvoice, Jive Software, Brightcove and Guidewire Software -- have all had strong IPOs.
Demandware's clients are mainly retailers that want to have their own e-commerce websites. Cloud computing allows them to access information from remote servers instead of their own computers.
For the past three years, Demandware's average growth rate was 70 percent, said James Krapfel, an IPO analyst at Morningstar. This past year, it was more than 50 percent.
The question, analysts say, is whether the company will be able to hold on to its client base and remain profitable, particularly in the face of competition from tech giants such as IBM and Dell.
Demandware's revenue last year grew 54 percent to $56.6 million, while it posted a loss of $1.4 million. The company was founded in 2004 by Stephan Schambach, former CEO of Intershop, which focused on smaller companies and too many dot-coms, Taulli said.
"When the bubble burst, many of these dot-coms went bust," Taulli said. "(Schambach) learned a lot of lessons from that. He made software that's highly customizable. It's always good to have someone who's taken a couple of knocks in the past."
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