The IPO Buzz: Dream Machine

The electric car manufacturer, Tesla Motors, plans to offer 11.1 million shares at $14 to $16 each to raise $166.5 million.

 

The Palo Alto-based auto company has sold 1,063 cars in 22 countries since its inception in 2003, according to its prospectus. For the three months ended March 31, 2010, Tesla reported revenues of $20.8 million, a loss of $29.5 million and an accumulated deficit of $290.2 million.  

 

To date, Tesla has one model on the road, the Tesla Roadster, which sells from $109,000 to $128,500 each. However, the company plans to introduce its Model S car in 2012 to sell for only $49,000.

 

Reports are the Roadster handles very well and can accelerate from zero to 60 miles per hour in less than four seconds. Nevertheless, a car is a car and subject to the routine problems and headaches that plague owners of any make or model.

 

One thing not mentioned in today’s hype is Tesla Motors will not be the first U.S.-based electric car manufacturer to go public. That honor belongs to an Austin-based company whose name faded away years ago into the “Directory of Obsolete Securities.”

 

In 1981, yours truly was senior vice present and syndicate manager of Sanyo Securities America, the U.S. affiliate of one of Japan’s giant second-tier investment bankers.

 

A group of syndicate people went on a junket to Texas to see the company. Admittedly, it wasn’t exactly what we expected. The company was located in the middle of nowhere and its “factory” looked like a roadside gas station with an auto repair shop. Inside there were a few Ford cars (Ford Motor Company (F)was a partner in the project) and a production line of about six people were removing their motors and replacing them with huge batteries.

 

I got to road test the only electric car available. It handled like a battleship – heavy. It took about a half mile to get it up to speed and another half a mile to stop – rolled right through the stop sign at the deserted crossroads. The offering did get out the door, but nothing more was heard.

 

Tesla expects to price its offering on Monday evening to trade Tuesday, June 29, 2010.

 

This week’s calendar includes a Chinese company going public.

 

AutoNavi Holdings Limited (AMAP – propose), the Chinese Garmin Ltd. (GRMN), plans to offer 8.63 million shares at $10.50 to $12.50 each to raise $99 million. 

 

The company was formed in 2002. It has experienced rapid growth, but hit a speed bump in “net income attributable to shareholders.” For the three-month period ended March 31, 2010. the company reported income of $897,000, down from $1.56 million for the same period a year ago.

 

For the 12-month period, AutoNavi reported earnings of 24 cents per share.

 

In comparison, Garmin reported earnings of $3.63 per share over the last 12 months, according of Thomson One. Its stock closed on Friday, June 25, 2010, at $32.02.

 

AutoNavi expects to price its offering Tuesday evening to trade on Wednesday, June 30, 2010.

 

 

Worth noting: The IPO Buzz will not be published next week. Have a happy July 4^th holiday. We’ll be back on July 12.