Wall Street has little patience for technology public offerings, and is forcing many good and fast growing companies such as Force 10 Networks to find alternative sources for their money needs. Still, that doesn’t stop tech company CEOs to dream about an IPO. Aruba Wireless Networks, which makes wireless LAN gear is planning to go public, reports Light Reading. CEO Dominic Orr says, that while they don’t have a pressing need to go IPO, Aruba could IPO “within months.” Why? Because he has margins similar to Cisco and Juniper – over 65% gross profit margins and 18% operating profit margins. Will that be enough to get past the IPO line? But we do applaud Orr for his optimism.
By the numbers, Aruba should be a good candidate for a public company, but I don’t know if Wall Street has any stomach for a player with such a narrow focus. There is also the related lingering question of why Aruba hasn’t been bought by a big infrastructure player, if they are so great? I guess I’d like to hear what Aruba would do with the money raised from an IPO. If they have a good strategy for spending the money, why not go public?
The notion that young companies with hot technology should necessarily be acquisition candidates for big companies (and, if not, they must not have hot technology) is somewhat dated. Most, but not all, recent M&A activity has been big buying big and is all about reducing underlying cost, not fueling growth. Cisco remains the exception but they obviously have little use for Aruba.