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InvenSense aims to raise $80 million in IPO

November 15, 2011

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SUNNYVALE, Calif.—InvenSense Inc., whose motion-sensing technology is used in the Nintendo Wii, is planning an initial public offering this week of 10 million shares priced between $7 and $8.50.

At the midpoint of the price range, the company would raise about $70 million after discounts and commissions. The IPO would give it a market capitalization of about $615 million.

InvenSense, founded in 2003, plans to use the proceeds as working capital or for acquisitions, but it said it is not in talks to acquire any company at the moment.

Underwriters led by Goldman Sachs and Morgan Stanley have the option to purchase an extra 1.5 million shares from selling shareholders if there is excess demand.

InvenSense's main client has been Japanese console maker Nintendo Co. Ltd., which accounted 73 percent of the company's revenue in its fiscal year 2011. InvenSense's technology helps power the Nintendo Wii.

The company says its single-chip MotionProcessor combines motion sensors like gyroscopes and accelerometers with integrated circuits on a patented platform. The company said its solution is competitively priced and reliable.

CEO Steven Nasiri is central to the development of the so-called Nasiri-Fabrication platform, the company's main piece of intellectual property, and will own 13.9 percent of the company after the IPO. Directors and executives will control about 61 percent of the stock.

Early investors including Artiman Ventures, Partech International, Sierra Ventures, Qualcomm Inc. and Nasiri plan to sell a total of about 1.5 million shares into the offering if there is excess demand.

The company is aiming to have its technology used in a variety of consumer electronics devices from portable game machines, smartphones, tablets, cameras, 3-D mice, navigation devices, toys, and health and fitness accessories.

In fiscal 2011 it posted net income of $1.6 million, or 8 cents per share, on $96.5 million in revenue.

For the first six months of fiscal 2012 through Oct. 2, it posted net income of $5 million, or 25 cents per share, on revenue of $78.7 million.

The Sunnyvale-based company said it faces the risk of Wii sales declining further, as they have for the last three years. They fell from 20.5 million units in the year to March 2010 to 15 million in the year to March 2011. Annual sales through next March are expected to decline to 13 million.

Although Nintendo has announced plans to make a successor to the Wii, InvenSense said it doesn't know if Nintendo will continue to incorporate its technology in its consoles and may develop a second source for motion-sensing components to reduce its exposure to a single supplier.

InvenSense shares are set to trade on the New York Stock Exchange under the ticker symbol "INVN."