Real and virtual crisis
The PIIGS (Portugal, Ireland, Italy, Greek and Spain) crisis scares global financial markets and European governments are preparing to take new measures to prevent the worst (for Italy, we talk about a maneuver that, between spending cuts and new taxes, will weigh 25 billion euros over three years in the pockets of Italians). Collapse worldwide quotes of companies of the most diverse sectors, first of all those of high-tech industries, grew considerably in the preceding months. How this has reflected on companies like Linden Lab engaged in the business of virtual worlds, but not yet listed? It’s clear that a decline in market delays any possible listing, while the economic crisis tends to diminish income and requires to be very careful with costs.
Some projects like There.com closed, others attempt to take the opportunity to increase their users with new offers or improving their products (Linden Lab has already indicated that this quarter will finally give the ability to import meshes, ie 3D objects created with software such as Maya or 3D Studio Max, and that there will transition to the new physics engine Havok 7, already being tested in beta grid). In more strictly financial terms on Sharepost (http://www.sharespost.com) you notice since a few days a proliferation of proposals for sale of shares in companies active in the web2.0 like Facebook, LinkedIn, Playdom and the same Linden Lab, of which are currently are for sale up to 114,000 ordinary shares (approximately 0.18% of capital) at prices from 4 to $ 7.25 each, and just under 110,000 preference shares of Class B (at $ 5 each).
At these prices the implicit evaluation of Linden Lab oscillates from 256.8 to 465.45 milion dollars, compared with a nominal capital of 64.2 million fully diluted (including 28.8 million paid in three financing rounds by some venture capitalfunds) but also compared to $ 1.1 billion representing the estimated value of the company in April 2008, at the arrival of new Ceo Mark Kingdon, aka M Linden (http://www.businessinsider.com/companies/linden-lab), although it has increased over the regions connected to the grid (31,286 May 7, 2010, of which 24,793 leased to private users, against 14,597 of May 5, 2008) and the monthly fees collected (currently about 6.25 million U.S. dollars compared with about 5 million two years ago).
So what happened? Actually are declining sales of Linden dollar (particularly through LindenX) in the first quarter should have brought into the Californian company’s cash just over one million compared to about $ 1.6 million two years ago, but above all no one would now dream of applying multiples of 10-15 times the revenue estimate for the value of a company as it was 2 years ago, at least with these financial uncertainties. A problem that still does not seem to relate to whom, among the employees of Linden Lab, has been entitled (in 2000) to subscribe stock options at 9 cents per title and now tries to discard at prices from 45 to 80 times higher.
If they can do for them the virtual worlds will nevertheless be the best possible way, but remains to be seen whether it will become for those who buy their shares now that the growing competition from other virtual worlds as Blue Mars (developed by Avatar Reality, a company who took over as chief financial officer John Zdanowski, which already covered the same role at Linden Lab, where he was also known as Z Linden) or IMVU (who has recruited another former Linden, David Fleck, vice president of marketing with the role) makes it uncertain the earning prospects of each company.ShareThis