As 2007 comes to a close, wrapping up a healthy year for initial public offerings, another firm has filed to test the public markets. This new entrant is mobile-data-solutions developer Danger, a Palo Alto firm that designs software embedded on mobile devices popular with young demographics. No details of the pricing of the IPO were given, though the firm does hope to raise roughly $100 million and use $7.2 million to pay off debt.
Danger builds the software and mobile data services integrated into the popular Sidekick devices sold by Deutsche Telekom's
The company may prove to be a minefield for investors, though. While it earned $56.4 million in revenue in the most recent 12 months, the company shows $11.8 million in operating losses.
There's more to be concerned about with Danger than just financials, though. The company specifically mentioned the Google-led
These future uncertainties are in addition to current competition from RIM, which is making a big push into Danger's consumer space. Even Nokia
Taken together, Danger will have to spend a lot of money to just keep up with the intense competition in the mobile data market. As such, I expect the company to incur substantial losses for at least a few years, and I give it a low probability of success if it chooses to go it alone. Investors beware; the company's name should serve as your warning.
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Fool contributor Dave Mock always obeys danger signs, but the mild warning signs are optional. Dave is the author of The Qualcomm Equation. Vodafone is a former Inside Value pick. The Fool's disclosure policy protects and serves.