IPO Spotlight: SoundBite Communications

By Kristen A. Lee

BusinessWeek, Associated Press

New York, October 14, 2007

After a run of success in technology-related initial public offerings in the past month, analysts are betting on SoundBite Communications Inc., a provider of automated voice messaging services, to continue the hot streak.

Through SoundBite's on-demand automated services, businesses can contact their customers by telephone for payment reminders, surveys, billing updates or other messages. SoundBite's clients access the company's services through a web browser and are not required to invest in new hardware or staff.

SoundBite said it increases the productivity of call centers by effectively screening wrong parties and answering machines, as well as by offering "agentless" calls that do not require human interaction.

"It's an emerging growth company with strong financials," said Francis Gaskins, president of research company IPODesktop.com.

The company's IPO follows several hugely successful technology-related debuts.

Shares of Athenahealth Inc., which provides Internet-based business services to medical practices, have more than doubled since the company's IPO priced at $18 per share in mid-September. E-mail marketing company Constant Contact Inc. and network storage provider Compellent Technologies Inc. have also surged since their debuts this month.

SoundBite reported losses of about $400,000 in the first half of the year as revenue surged nearly 50 percent to $18.1 million, compared with the first six months of 2006.

"Their revenue is absolutely exploding," said Scott Sweet, managing director of research firm IPO Boutique.

Gaskins noted that a high percentage of the company's revenue growth comes from existing clients. "That shows that people do like the service and they're using more of it once they sign up."

While the company is a currently among the market's leaders, Sweet noted that increasing competition in the highly fragmented industry will force the company to "keep on the cutting edge" to continue to thrive.

SoundBite's service was used to place nearly 1 billion calls in 2006. The company's clients include more than 200 organizations in a variety of industries, but most of SoundBite's revenue comes from collections businesses.

In the Securities and Exchange Commission filing, SoundBite said it expects the offering of 6 million shares to price between $12 and $14 each.

SoundBite is offering 4.7 million of the shares and a group of stockholders are selling the remaining 1.3 million.

Assuming an offering price of $13 per share, the company expects to raise about $54.8 million after expenses from the IPO, which will be used to repay debt and for general corporate purposes.

Cowen and Co. and Thomas Weisel Partners are serving as the IPO's lead underwriters. Needham & Co., Cantor Fitzgerald and America's Growth Capital are also underwriting the IPO.

SoundBite plans to list its shares on the Nasdaq Stock Market under the symbol "SDBT."