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ANSWERED on Sat 11 Jul 2009 - 9:08 am UTC by easterangel

Question: Was INTEL profitable when it went public in 1971?

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Sat 11 Jul 2009 - 3:58 am UTC

Question

bigjosh
Customer

Try to find out if the current trend of tech companies going public before they are profitable predates the tech bubble of 2000.

So, interested in profitability data on tech company IPOs in the 80's and 90's.

Was it common for tech companies to go public without profits back then?


 
 

Sat 11 Jul 2009 - 4:34 am UTC

Request for clarification

easterangel
Former Researcher

Hi Bigjosh!

Are you interested in Intel only or other tech companies  before 2000 should be included as well?

Regards!

 

Sat 11 Jul 2009 - 5:04 am UTC

Question clarification

bigjosh
Customer

Intel *was* the particular company that brought up the more general question.  Historical profitability data for other technology-centric companies at IPO would be welcome, but not mandatory.

 

Sat 11 Jul 2009 - 9:08 am UTC

Answer

easterangel
Former Researcher

Hi Bigjosh,

It seems that based on their Annual Report for 1971, Intel was in recovery mode and made a profit in that year as compared with a net loss the year before.

Net Income (Loss):
1970 - ($969,915)
1971 - $1,015,080

"Intel Annual Report 1971"
http://download.intel.com/museum/archives/pdf/1971_AR.pdf


Apple meanwhile had $117 million in revenues when they went public in 1980. I don't have the data for their Net Income during that time.

"Apple, Incorporated (AAPL)"
http://www.portfolio.com/resources/company-profiles/Apple-Incorporated-874


On this archived article from Wired.com, when Netscape went public in 1995, it still did not have profits.

"Going public as Netscape did, before making a dime in profits, was a revolutionary act. So was Netscape's business model. Andreessen says that both Clark and Barksdale were easily convinced not to charge individual users for Netscape's famous browser."

"Crank It Up"
http://www.wired.com/wired/archive/8.08/loudcloud.html?pg=4


Yahoo also had a net loss of $2,334,000 when it went public in 1996.

"Yahoo 1996 Annual Report"
http://docs.yahoo.com/docs/investor/ar96/fdata.html


As for Microsoft, they had 39 million dollars in net income when they went public in 1986.

"Microsoft Yealy Income Statements"
http://www.microsoft.com/msft/download/Yearly%20Income%20Statements.xls

Based on these findings, it seems the trend for acquiring unprofitable IPOs can be seen faintly even during the 1970s, 80s and 90s.

Regards,
Easterangel

 
 

Sat 11 Jul 2009 - 6:20 pm UTC

Request for clarification

bigjosh
Customer

Unfortunately just knowing the net income for the year in 1971 inn't enough information because the company could have been unprofitable before the October 13, 1971 IPO and then turned profitable after the IPO.

So, specifically, was INTEL profitable when it went public in 1971?

Maybe quarterly reports or the actual prospectus would tell, but I can't find these.

Thanks!

-josh

 

Sun 12 Jul 2009 - 10:57 pm UTC

Answer clarification

easterangel
Former Researcher

Hi Bigjosh!

I will try to find it but it seems that the it will be very difficult since the documents necessary here for your clarification questions is quite old.

In the meantime, I found this tidbit.

"In 1971 Intel became a publicly traded company when it raised, $7,2 million by selling 307,000 shares in an IPO. It lost money in in its first year (it did earn interest and operating income), then began a succession of profitable years that lasted until 1985"

"Value Investing" By Bruce C. N. Greenwald, Judd Kahn, Paul D. Sonkin, Michael Van Biema
http://books.google.com/books?id=gvCzlskpZxoC&pg=PA111&lpg=PA111&dq=intel+1971+IPO+income&source=bl&ots=cVKXwIi5zT&sig=ZApZ6Gtt7ZOKbDMj-U1TiIxzgpU&hl=en&ei=hGRaSpiqJ4eMkAXqjeHTBQ&sa=X&oi=book_result&ct=result&resnum=5


Regards.

 

Mon 13 Jul 2009 - 12:14 am UTC

Answer clarification

easterangel
Former Researcher

It seems that even quarterly reports can't be found as well.. A colleague of mine even looked at the library.

 

Mon 13 Jul 2009 - 12:54 am UTC

Answer clarification

easterangel
Former Researcher

Ok Bigjosh! I found another tidbit.

"By then, Intel was well on its way. The 1103 memory chip was finally in production, and the firm reported revenues of $4.2 million in 1970, $10 million in 1971.

If you read further, the 4004 chip sold better than expected at that time and could have contributed to the revenue pick-up.

"Forbes Greatest Technology Stories" By Jeffrey S. Young
http://books.google.com/books?id=zeKnJilSyx8C&pg=PA143&dq=Intel+1971+revenues&ei=e4BaSvy7DYm8zgSGrZ23Bw&client=firefox-a

 

Mon 13 Jul 2009 - 1:07 am UTC

Answer clarification

easterangel
Former Researcher

Here is another clue that Intel revenues in 1971 areally came from actual sales.

"Production facilities had to increase to accomodate this fast-growing business. A new fab opened in  Santa Clara, south of Fab 1 in the Valley, in June 1971. An assembly plant was built in Penang, Malaysia, and another facility in was being constructed in Livermore, California."

"Sales in 1970 were made to five hundred customers. That number was almost to double in by the end of 1971."

"Andy Grove" By Richard Tedlow
http://books.google.com/books?id=zQamXENAalkC&pg=PA146&dq=Intel+1971+prospectus&lr=&ei=4IVaStDXH4bMkgTi_MWdBw&client=firefox-a

 

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