Raleigh-based online book publisher Lulu has postponed plans for an initial public offering because it ran into weak demand among investors.
CEO and founder Bob Young and the company's investment bankers had wanted to go public on the Toronto Stock Exchange this week, but weren't able to get the price they wanted.
The company on Wednesday reduced the proposed price of its IPO to about $7 per share, from $8 to $9.50 each. But that still wasn't enough to lure prospective investors worried about Lulu's financial future and the shaky stock market.
"It is a minor disappointment, but only a minor one because we've only delayed it," Young said in a phone interview today. "We pulled the IPO simply because the valuations that we were being offered was just not where we believed the value of the company is."
Lulu is one of this region's small but fast-growing technology companies that continue to hire and drive the Triangle's economy. An IPO would have given Lulu more money to pay for further expansion.
Lulu's more than 100 employees, mostly in Raleigh, will continue to work on expanding the company and look to revive IPO plans within 12 months, Young said.
"We're in good shape and we have a very health growth rate going this year," he said. "If we have a couple of quarters where we can show that to investors," it will help improve demand for Lulu shares.
Young said the company does not plan to make any cost cuts after postponing the IPO.
"We're strongly cash-flow positive," he said. "We were in a fortunate position to turn down the offer we received form the capital markets because it wasn't generous enough."
Lulu first filed plans for a Canadian IPO in March, partly because going public in Canada is cheaper than in the U.S. Investors in this country would have been allowed to buy the shares.
Young, who founded the company in 2002, grew up in Canada and has strong ties among investors there. Young previously helped run Red Hat, the publicly traded Raleigh software company.
Lulu continued to lose money last year, reporting a net loss of $1.9 million. But the company made money in the final quarter of 2009, earning $140,000 and reversing a loss of $4.6 million a year earlier.
And the company continues to add content and services. On Wednesday, Lulu announced it has added more than 700,000 traditionally published books to its Web site, including best sellers such as "The Big Short" by Michael Lewis and "Going Rogue" by Sarah Palin.
The company also signed a distribution deal to make some of its book titles available on Apple's new iPad.
Most of Lulu's revenue comes from helping authors self-publish books.