{"id":248506,"date":"2010-01-29T14:25:00","date_gmt":"2010-01-29T19:25:00","guid":{"rendered":"http:\/\/www.businessinsider.com\/vringo-has-no-and-only-36000-in-revenue-but-its-filing-for-an-ipo-2010-1"},"modified":"2010-01-29T14:25:00","modified_gmt":"2010-01-29T19:25:00","slug":"joke-of-the-week-money-pit-vringo-has-36000-in-revenue-and-massive-losses-but-its-filing-for-an-ipo","status":"publish","type":"post","link":"https:\/\/mereja.media\/index\/248506","title":{"rendered":"JOKE OF THE WEEK: Money Pit Vringo Has $36,000 In Revenue And Massive Losses But It’s Filing For An IPO"},"content":{"rendered":"

\"trader\"<\/p>\n

Two months from now, when your stockbroker calls to get you in on a “hot new IPO called Vringo,” throw down the phone and run away screaming.<\/p>\n

A “video ringtone company” with no profits and just $36,000 in revenue, Vringo just filed<\/a> for an IPO.  This, hands down, is the joke of the week.<\/p>\n

Since its founding four years ago, Vringo has raised $17.5 million…and spent $18.04 million. <\/p>\n

And what does it have to show for this monstrous incineration of shareholder capital?<\/p>\n

$36,000 of 2009 revenue.<\/p>\n

That’s thousands, not millions.  (True, it’s only the first three quarters of the year.  So if the company booked a good Q4, it might crack $50k for the year).  <\/p>\n

Meanwhile, Vringo burned $4 million, or about $500,000 a month.<\/p>\n

So why on earth is it trying to go public?  (Emphasis on trying.  <\/em>There’s almost no chance this thing will get out.  Who would be dumb enough to buy it?)  <\/p>\n

It’s trying to go public, presumably, because its existing investors are tired of pouring millions of dollars down a rat hole.  Vringo just received a $3 million bridge loan, presumably to carry it through to the IPO.  After which, its existing investors will be the ones running away screaming.<\/p>\n

Private equity group Warburg Pincus owns 31% of the company.  Some astute folks work at Warburg, so we suspect the investment hasn’t quite worked out the way they planned.<\/p>\n

Vringo doesn’t have a business right now (ergo, $36,000 of revenue), but it plans to have one eventually–by charging a monthly fee to users to access its video ringtone service. It will also charge for premium content. It allows users to make and download video ringtones. <\/p>\n

In other words, Vringo doesn’t do anything right now except burn money.  But it might do something in the future.<\/p>\n

Here are the gruesome specifics from the S1.<\/p>\n

\"vringo<\/p>\n

By the way, you might reasonably ask, who’s underwriting this disaster?<\/p>\n

ANSWER: The Maxim Group.<\/p>\n

Ever heard of them?<\/p>\n

We have.<\/p>\n

How?<\/p>\n

Because they’re the ones who tried to underwrite the last candidate for worst IPO ever: A New Jersey-based “search engine” called “Accoona.”<\/p>\n

When Accoona filed its IPO prospectus, back in 2007, we had a similar reaction (See: “Accoona Files $81 Million IPO: Run Away Screaming<\/a>“). <\/p>\n

A couple of months later, thankfully, underwriter Maxim thought better of the idea<\/a> and pulled the prospectus.  Then Accoona slunk away and died<\/a>. <\/p>\n

We expect Vringo to go the same route.<\/p>\n

See Also:<\/strong> 15 Hot Tech Companies Ready For An IPO<\/a><\/p>\n

Join the conversation about this story »<\/a><\/p>\n

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