Now the dust and the name-calling have settled, what does the market think to the NetSuite IPO filing? AMR Research’s Bruce Richardson had some interesting points to make. Inevitably he picks up on the Larry Ellison 'control' issue:

“Mr. Ellison, Oracle’s founder, is the largest shareholder. The S-1 revealed Mr. Ellison controls nearly three quarters of the company’s stock. It’s unclear how much stock he will own after the IPO.”

More interestingly Richardson picks up on how much all this is costing NetSuite:

“Perhaps the most staggering figure in the S-1 is the “accumulated deficit of $193 million.” That is how much the company has spent the past nine years. Between 2002 and 2006, the company reported net losses of $22 million, $22.7m, $28.6m, $38.2m, and $23.4m. For the first quarter of this year, the company had a net loss of $3.7m. (Note: No information was provided for 1998-2001.) Meanwhile, from 2002-2006, revenues grew from $3.1m to $8.3m to $17.7m to $36.4m to $67.2m. For the first quarter of 2007, revenue was $23.2m, putting the company on a nice ramp to break through the $100m sales barrier by the end of this year. Those numbers would look a lot different if they were from sales of perpetual licenses rather than annual subscriptions. Perpetual licences are larger, representing a multi-year investment and the deals are usually recognised upfront. NetSuite is swapping larger deals for a more predictable revenue stream. At the end of March, the company had deferred revenues of $71.6m, a stat that will be closely tracked after it goes public.”

He also notes a disparity between sales and marketing spend and product development:

“Disparity between sales and marketing spending and product development is common in the on-demand world. Last quarter, NetSuite spent 54 per cent of revenue on sales and marketing and 18 per cent on product development. For the same period last year, it invested 75 per cent in sales and marketing and 24 per cent in development. Sales and marketing employees account for more than 40 per cent of the company’s 500-plus headcount. In on demand, it’s all about customer acquisition to fuel the astronomical growth rates. Over the last three years, NetSuite spent 152 per cent of revenue in 2004, 108 per cent in 2005, and 65 per cent last year on sales and marketing. Not that development was denied. Product development represented 45 per cent of revenue in 2004, 36 per cent in 2005, and 21 per cent last year. ”

He concludes that Apple’s iPhone and NetSuite’s alliance with the firm may be a trump card, although others don’t seem so convinced:

“In every presentation I’ve given this year, I’ve stressed that application vendors need to start moving their software to mobile devices. I usually get a blank stare from the audience; they can’t imagine looking at ERP data on their BlackBerry or RAZR. Indeed, when I sent one of my colleagues an email about NetSuite’s new SuitePhone, I got a sarcastic message back saying, “I’m sure that will make a difference for enterprise app buyers.”

Maybe it will, maybe it won’t. NetSuite co-founder Evan Goldberg was upbeat in his claims:

“We have supported Safari for some time, but with limitations. We recently did a few weeks of work upgrading our Safari support, and Apple engineers made themselves available as a resource. Because of this work, few if any changes were required to support iPhone. And the specific features we brought to Safari with this release were some of our more advanced AJAX capabilities (e.g., drop-down menus, in-line editing, etc).”

But Richardson is not entirely convinced as yet:

“Don’t get me wrong. While it would be nice to only have to carry a 4.8 oz. handheld that doesn’t have to come out of your bag at an airport, these devices won’t replace laptops or desktops. As my sceptical colleague rightly points out in a follow up email, ‘the biggest problem is that there is no practical way to interact with the system. The only way to input data is through the touch screen, two-finger keyboard that pops up right over the screen you are looking at’.”