Henry Blodget lays out a detailed and alluring case for Mozilla to cash in on the astounding success of the Firefox browser by taking their merry open-source bandwagon out for a stock-market spin.
Would be worth billions, he writes on Silicon Alley Insider, sketching out all the numbers back-of-a-napkin style.
Just one problem: Mozilla says – in terms that can only be described as unequivocal – that Blodget’s dream IPO is just that: a pipe dream, as in it ain’t happening.
Still fascinating to consider, though.
Blodget writes:
Bottom line: That adds up to costs of about $50 million a year, leaving Mozilla with annual profit of $50 million-$150 million on a $100-$200 million run-rate. Yes, if/when the company decided to go public, costs would rise and profits would drop (Sarbanes Oxley alone would burn $5 million), but revenue would rise, too. So suffice it say that this is already a pretty nice business.
Valuation: How much is the current business worth? Let’s tax that profit range and apply multiples: $50-$150 million pre-tax gets you about $35 million – $100 million after tax. A business this exciting would probably trade for at least 30X-50X current profits, which would put you at $1.5 billion to $4 billion using the mid-point of the multiple range. Based on the valuations of other companies–$200 billion for Google, $7.5 billion for Facebook (discount that crazy Microsoft investment by at least 50% to get to fair-market value)–this seems very conservative, and it’s still a boatload of money.
Blodget goes on to address what he rightly anticipates would be the objections from Mozilla leaders and fans, arguing that no matter what the former say in public they will eventually come around and that the latter will just have to get used to the idea of a commercialized operation.
This is a neat rhetorical trick, by the way: Anticipate and articulate the opposing point of view, then reassure your audience that those holding it do so without firm conviction.
However, Mozilla COO John Lilly would appear to have a firm grip. He writes:
There’s been a bit of speculation today about Mozilla on Silicon Alley Insider (and NYT blog), and I’d like to set the record straight.
Irrespective of financials, Blodget is wrong about the desire and intent of Mozilla to do any public offering of stock. Mitchell’s written about this many times at great length: the work we do in the Mozilla project is a public asset. It’s the wrong thing to do ethically, but aside from that, selling shares of Mozilla would make it hard (or maybe impossible) to pursue our mission and goals.
I’m guessing Blodget would argue that Lilly typed his reply with one hand while the other was behind his back with fingers crossed.
As a subtext to the IPO talk, there are numerous voices calling on Mozilla to rescue the Netscape brand from the scrap heap of history.
Writes one such advocate:
I personally miss the original branding elements that made Netscape special, namely the Captain’s Wheel splash screen and meteor shower throbber. When I try to get users/clients to switch to Firefox from I.E. or an older version of Netscape I get strange looks as if Firefox is not something “official” but then I go into a story about Netscape and Firefox and basically I make them feel better when I say Firefox in like a generic brand of Netscape.
Meanwhile, Firefox continues to collect converts at a rate that will only fuel the fantasies of pundits and investors alike.
Welcome regulars and passersby. Here are a few more recent Buzzblog items. And, if you’d like to receive Buzzblog via e-mail newsletter, here’s where to sign up.
Top 10 Buzzblog posts for ’07: Verizon’s there, of course, along with Gates, Wikipedia and the guy who lost a girlfriend to Blackberry’s blackout.
A to Z on what doesn’t matter in tech anymore: As in AOL to Zune, naturally.
8 can’t-miss tech predictions … for 1998
My brush with Mr. Phone-In-His-Ear.
Why phone-record thieves laugh at the law.
Gates on education: Knowledge is good.
Average Joe asks Bill Gates a priceless question.
Can the geek press handle a Microsoft sex scandal?
This year’s “25 Geekiest 25th Anniversaries.”
Cell phone jamming on the rise.
