Jive Software IPO Still Overvalued
Jive Software finally had its first full day as a publicly traded company today. On Monday, Jive sold 13.4 million shares at a price of $12 per share, raising $161 million. The stock shot up to $15 a share throughout the trading day Tuesday. But, are the results of this IPO are merely a reflection on the potential of the market category not the strength of Jive Software?
Jive has been losing money as a reason it might be seeking public funding. In the first three quarters of the year, Jive spent 55% more on sales and marketing and lost $38 million. Jive is a true reflection of the tech bubble in the fact they are chasing market share at a loss instead of focusing on achieving profitability.
Because many of Jive’s competitors are private companies it makes this claim difficult to see as valid in the social space as most innovation comes from private groups first. They have stated that they are “two years ahead of the nearest competitor” in the sophistication of its technology, but how much validity is there to this claim?
Jive is essentially a maker of on-premises software, even though they are now riding a wave of interest in cloud software. Of course, this is a matter of definitions over what constitutes “true” cloud computing. Jive’s core products were designed as enterprise software, but it now offers them in both on-premises and hosted configurations. The whole market segment uses the cloud; it is just a matter of public cloud versus private cloud.
Jive currently has a strong niche as one of the few social-software specialists to support both internal corporate collaboration and public-facing social communities. But, IBM (IBM Connections) and Microsoft should be counted as part of the market and therefore pose a serious threat the Jive in the future.
I am still not a believer in Jive Software for many reasons, pricing, market uniqueness, perceived innovation and mostly their ability to sell against better sales forces that have cheaper solutions. Jive will trade lower in less than a week. They will be faced with mounting competition and pressure from overseas competitors in the very near future.
