Here's an interesting interview to check out: The Ottawa Business Journal talked with Mitel CEO Don Smith and CFO Steve Spooner about the company's recent IPO.At the time, the IPO seemed underwhelming: Mitel raised considerably less than they'd hoped, and their stock price fell more than 21% in the 2-3 weeks after the April 22 IPO--from $14 to below $11--though it's been on the rebound, closing over $11.50 yesterday.
The lower IPO price was attributed to a spate of IPOs coming out at the same time as Mitel's and competing for investor dollars. In the OBJ interview, Smith and Spooner argue there just wasn't any way to foresee this competitive IPO environment in advance.
They also made an interesting case when the OBJ reporter asked them about the fact that Mitel has had "several quarters of losses recently." Spooner responded:
If you look historically at Mitel's financial statements, you need to look as to why Mitel was posting losses. We had the commitment of our investors and the vision to invest in Internet protocol technologies well in advance of what our peer companies were doing...and also we viewed that there was beginning to be a global market opportunity. Therefore, Mitel needed to build the sales and service capability around the world so that when the markets started to move towards IP, Mitel was ready. So we very much employed contrarian investment strategy.
As a private company, we had the luxury of doing that. As a result, roughly 95 per cent of what Mitel sells today is IP-based solutions, while only about 60 per cent of our competitors' ship is IP communications. We've made the transition to become a software company...and that heavy lifting was done while private.
As a private company, we had the luxury of doing that. As a result, roughly 95 per cent of what Mitel sells today is IP-based solutions, while only about 60 per cent of our competitors' ship is IP communications. We've made the transition to become a software company...and that heavy lifting was done while private.
What's interesting is that this is the basic argument that the industry's two largest privately-held vendors--Avaya and Siemens--have made: Going private will let us invest and gear up for the next generation of technology. Mitel claims the formula worked for them, and offers some numbers to back it up. I'd be interested to hear what similar kinds of metrics Avaya and Siemens can produce in this area.
