Today: Amid a record-breaking climate on Wall Street, Silver Spring Networks is Silicon Valley's second cleantech company to find clamoring investors in 2013. Also: Netflix (NFLX) and VMware move higher as Dow sets yet another record, Android creator steps aside at Google (GOOG).
Silver Spring Networks continues string of wins for IPOs, cleantech
Cleantech was in the dumps in 2012, with the death of Solyndra and falling prices for solar panels hurting the solar sector, and a lack of profitable exits causing doubts about venture capitalists' belief in companies that strive for green energy solutions. Silicon Valley seems to have become the hero, however, as Silver Spring Networks belied its doubters and executed a successful initial public offering, the second from a Bay Area cleantech company in a matter of months after none managed the feat in 2012.
Silver Spring Networks, a Redwood City-based company that focuses on improving the nation's power grid through a variety of "smart" offerings, is a perfect allegory for the boom-bust-boom cycle of cleantech
However, in the wake of SolarCity's successful IPO in December, SolarCity found enough enthusiasm for its offering to boost the number of shares it offered by 1 million Wednesday, raking in $81 million from initial investors at a $17 share price, the middle of its initial proposed range. That price may have even been cheap for the offering, as the stock careened as much as 32.3 percent higher in its debut on the New York Stock Exchange before closing with a first-day pop of 29.4 percent, at $22 exactly.
"By pricing at the middle of its range, upward movement was likely," said Dallas Kachan, managing partner of cleantech research firm Kachan & Co., who also called the Silver Spring offering "one of the most highly anticipated U.S. cleantech IPOs ever" in an interview with Mercury News reporter Dana Hull.
Still, some analysts believe Silver Spring got lucky, coming to market as hopes for cleantech begin to rebound, Wall Street enjoys record-breaking gains, and the IPO market seems fully healed from the Facebook debacle. PrivCo founder and CEO Sam Hamadeh said "Silver Spring Networks' IPO has more red flags than a communist party military parade," and released a scathing indictment of the company's prospects that includes pointing out that Silver Spring's revenues have been in decline since it originally filed for an IPO midway through 2011.
Silver Spring has acknowledged the declining revenues, saying that declines in government spending on infrastructure has hurt their short-term results, but that the need to upgrade the power grid with SmartMeters and other advanced hardware and software will not go away.
"Our investors see the size of this market," CEO Scott Lang said Wednesday.
Investors also now see that the IPO market has returned to health, as even a sector as recently maligned as cleantech can find multiple successes, with SolarCity trading at more than twice its IPO price. In 2013, IPOs have raised $6.6 billion before the end of the first quarter, according to Bloomberg News, and Silicon Valley could have several in the pipeline. Software firms Marin and Model N have both filed their paperwork in the past weeks, and Violin Memory and Marketo Software are expected to follow, to say nothing of the beast waiting in the wings, Twitter.
Even Hamadeh had to admit that Silver Spring's success was good news for the IPO market.
"The fact that the market was open to investing in this IPO despite its not 'checking off all the right IPO boxes' augurs well for IPOs in the pipeline this year from companies that don't have Silver Spring's obstacles but have high-profile names, bankers, and are in hot sectors," Hamadeh said in an email. "If the more out-of-favor IPOs can pull it off as Silver Spring did today, it's a healthy sign for the IPO market as a whole."
VMware and Netflix enjoy strong gains, Oracle and PayPal go shopping
While Silver Spring Networks struck gold, the major indexes continued their hot streaks as the Dow Jones increased for a ninth consecutive day -- its longest such streak since the month of Bill Clinton's re-election -- boosted by a government report on retail sales that showed payroll taxes did not seem to have an effect on consumer spending in February.
Silicon Valley stocks were not as fortunate, as the SV150 index of the region's largest technology companies dropped 0.1 percent, but individual performance varied widely on a day when news flowed fast and furious. Netflix, which has been the top performer on the broad-based Standard & Poor's 500 index this year, gained 5.6 percent after legal changes took effect that allowed it to connect with Facebook for more social features; Facebook, however, dropped 2.7 percent after the FTC said it would crack down on social advertisers.
VMware soared even higher, gaining 8.1 percent as it announced a new venture with parent company EMC at an investor meeting, a move that the Palo Alto software company said would help boost revenues as much as 20 percent in coming years. VMware's private cloud could see more competition from Oracle (ORCL), which agreed to acquire Mountain View startup Nimbula, which operates in the same field; Oracle gained 0.4 percent on the day. Both companies have a rival in IBM, which hit an all-time high price Wednesday.
PayPal also went shopping for a Bay Area acquisition Wednesday, announcing that it has agreed to buy Sunnyvale mobile app developer Duff Research for an undisclosed amount. PayPal parent eBay (EBAY) lost 3.7 percent despite a Forrester forecast that sees 10 percent annual growth in online shopping through 2017. Yelp, which has been volatile on Wall Street amid rumors that Yahoo (YHOO) could consider it an acquisition target, shot 5.4 percent higher Wednesday. Cisco (CSCO) also dropped, losing 0.6 percent as it was accused of stealing thousands of files from a Swiss rival, but CEO John Chambers could still smile as he prepared to receive an honorary doctorate from San Jose State.
Apple (AAPL) stayed relatively flat in Wednesday trading, which must have seemed like a huge gain after its extreme downward trajectory of late, but still faced trouble on the legal front as CEO Tim Cook was ordered to testify in the government's lawsuit involving price-fixing in the e-book market. The company's battle with Samsung also continued on one of many fronts, as the Asian tech giant prepared to unveil the newest model of its iPhone killer, the Samsung Galaxy S IV, which prompted an anti-Android and -Samsung screed from Apple executive Phil Schiller.
Google loses Android creator, has search ads dissed by eBay
Google continued to lose steam after its recent record-setting run, losing 0.3 percent as an important executive abdicated his throne and eBay doubted the efficacy of the Mountain View search giant's advertising.
Andy Rubin, who oversaw the development of Google's Android mobile operating system, stepped down from that perch Wednesday and handed the reins over to Sundar Pichai, who already leads Google's Chrome business. Rubin nurtured Android from his own startup through its acquisition by Google and all the way to the most used smartphone operating system in the world, with tablet dominance reportedly arriving this year.
"He believed that aligning standards around an open-source operating system would drive innovation across the mobile industry. Most people thought he was nuts," Google co-founder and CEO Larry Page wrote in a blog post announcing the change. The post did not say what Rubin's new duties would be, though he will stay at Google.
While Google could plan the announcement of Rubin's change in position, it may have been blindsided by a Reuters story late Monday that doubted its search advertising. San Jose e-tailer eBay told the news organization that an internal study had concluded that search ads purchased through Google were largely ineffective.
"Incremental revenue from paid search was far smaller than expected," eBay spokeswoman Johnna Hoff said. Online search expert Oren Etzioni said, "This has to be a major concern for Google."
Google shares declined 0.3 percent to $825.31.
Silicon Valley tech stocks
The tech-heavy Nasdaq composite index: Up 2.8, or 0.09 percent, to 3,245.12
The blue chip Dow Jones industrial average: Up 5.22, or 0.04 percent, to 14,455.28
And the widely watched Standard & Poor's 500 index: Up 2.04, or 0.13 percent, to 1,554.52
Check in weekday afternoons for the 60-Second Business Break, a summary of news from Mercury News staff writers, The Associated Press, Bloomberg News and other wire services. Contact Jeremy C. Owens at 408-920-5876; follow him at Twitter.com/mercbizbreak.