February 16, 1999 12:00 PM PST

Marimba files for initial public offering

Marimba's long-awaited IPO is finally headed to market.

Marimba, mainstay of the once-hyped "push" software industry, has focused its business on providing software updating and management solutions to large firms. Its flagship and so far sole product is called Castanet.

In an "S-1" document filed Friday with the Securities and Exchange Commission, Marimba did not disclose how many shares it plans to issue or at what price. But based on the filing fee, the company is looking to raise about $56.4 million in the IPO.

The stock will trade on the Nasdaq index under the symbol "MRBA."

With the filing, Marimba gave the public its first detailed look at the company's financial performance. For the year ended December 31, 1998, Marimba had a net loss of $5.7 million or 59 cents per share on revenue of $17.1 million. In 1997, the company had a net loss of $7.7 million or $1.57 per share on revenue of $5.6 million.

As of December 31, 1998, Marimba's accumulated deficit was $14.6 million.

Marimba is not the first push firm to declare its intentions to go public. PointCast, whose focus is on consumer media distribution rather than software management, filed for an IPO in May 1998, only to scuttle those plans a few months later, citing its negotiations over potential strategic alliances.

In outlining the risks facing it, Marimba acknowledged the hazard of doing business with a single product: Castanet. Though Marimba said it expected to continue to earn the lion's share of its revenue from Castanet, the firm also said it is considering the development of new products.

"We are currently developing new product features, and in the future we may expand our operations by promoting new or complementary products and services," Marimba stated.

Another risk facing the company is a patent infringement lawsuit filed against it by Novadigm. A failure to prevail in that dispute could result in Marimba's having to pay fines and licensing fees. The company also could face an injunction to stop selling Castanet pending a redesign that wouldn't infringe on the patent, according to the "S-1."

Marimba said it would target foreign markets with increased spending on its sales force and operations abroad. The company received about 7 percent of its 1998 revenue from customers outside North America, down from 22 percent of revenue in 1997.

Chief executive Kim Polese and other Marimba officers stand to gain immense wealth from a successful IPO. Polese, currently paid $130,000 per year, owns 13 percent of the company with nearly 2.5 million shares.

The offering is underwritten by Morgan Stanley Dean Witter, Credit Suisse First Boston, BT Alex Brown, and Hambrecht & Quist.

 

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