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September 21, 2006

DivX IPO Prices at $16.

posted by MR WAVETHEORY at 9/21/2006 05:55:00 PM
According to Reuters, the DivX IPO has priced at $16 per share which is above the range of $12-14 per share. As I speculated previously, there would be euphoria on the deal, but for the average investor, it may trade so wildly out of range of true value that chasing it would be hazardous to your financial health. There are still issues about its business model.

I believe that much of the strong pricing has to do with online video sharing and YouTube. After all, it was no coincidence that an article was planted in the New York Post today saying YouTube was forth sale for $1.5 billion on the same that the IPO would be priced. Any financial professional who read that article would have bought any video related deal! For those you who are lucky to get an allocation, I expect this issue will trade strongly. However, price has nothing to do with value. If you get a good price, it may be a good time to sell at the open.

NEW YORK, Sept 21 (Reuters) - Media software maker DivX Inc. on Thursday raised $145.6 million with an initial public offering that priced above its forecast range, according to an underwriter.

The 9.1-million-share offering, which represents about a 27 percent stake in the company, sold for $16 per share compared with a $12 to $14 forecast.

Existing stockholders sold about 1.6 million shares while the company sold about 7.5 million shares, according to a filing with the U.S. Securities and Exchange Commission.

The offering price gives the company an initial market capitalization of about $535 million.


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