Good Evening. More IPOs For You...Including a Mapping Giant...
April 20, 2004
Salesforce seems to be finally going ahead, an amended filing is here. They apparently had to deal with a bunch of SEC stuff, but it's on again. Lead banker: Morgan. Revs in 2003: Close to $100 million. Profits around $3.5mm.
And Navteq filed while I was at MSFT, the docs are here. Navteq, you say? Who the f*** are they? Well, the provide the mapping info for Yahoo, auto nav systems, et al. The CDDB of maps! OK, revs in 2003...ready? $237 million. HOLY SHITE! But wait, they have operating income of nearly $65 million. And some odd tax stuff (any CPAs out there?) which put their net income at ... $235 millon! Oh my goodness....Bankers Credit Suisse and Merrill.
Comments
Not a tax pro here but the tax stuff in general comes from deferred taxes, which arrises from differences in your published accounts and those that the taxes are paid on. Some things might not be deductable for taxes but might be for general accounts.
You can for example carry losses forward for tax purposes and could potentially if I understand it correctly, add them back in later to smooth out your earnings figures.
I presume that Navteq has carried considerable losses forward but instead of putting them against future payments of taxes, they are now just putting them in the books.
This sounds like fudging the numbers a bit here, but at least would be fully legal and actually not wrong. It would probably even be wise if they presume that profits will rise considerably in the future and they will not be able to use that tax shield very well anymore for whatever reason.
But I would be interested to hear a real tax pro get it 100% right :)
Oliver
Navteq is Navigation Technologies. They've been around for a very long time and provide the map databases for several online products as well as the majority of in-car navigation systems.
I wrote a story about them and GIS ("Ground Truth") for Wired back in 1995.
NAVTEQ has done what any database company must do which is to invest heavily into the building of their data, which is not cheap. Philips too over the debt that NAVTEQ had in exchange for shares, which they now seem ready to sell on the market, hence the IPO.
Revenues have been increasing in doubles for the last 4 years. I am excited for this one....
Phillips is going to make cash and needs a "fair" price for the stock. Competitor Tele Atlas (one major stockholder is the biggest german automotive supplier Robert Bosch GmbH)lacks poor turnover but they expect to improve shortly. I guess Tele Atlas stocks ( TA6, listed at Frankfurt, Germany ) are a pretty "hot" option when the Navteq bookbuilding starts and Investor will check out the peer-group ! Especially after the takeover of U.S. based GDT ...
The tax loss is not fudging the numbers. According to accounting standards, until you make money you cannot claim the tax carryforward as having any value. Then when you assess that they do have value you have to put them on the balance sheet, and hence a profit.
tony, why would they need to invest heavily? they have been steadily increasing revenues, all the while increasing their data base coverage of the world. So they could still continue as business as usual. It is more of a case that Phillips wants to recoup their investment and then some.
They invested heavily in map making since the late 1980's when there was no market, and when there were no technology tools to aid them. The initial investment is relatively high because all the maps were digitized manually. Good automated tools (other than their inhouse tools) weren't available until the late 1990's.
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