IPO Filing: Monotype Imaging, One To Watch

Monotype Imaging Solutions has filed to come public via an IPO under the NASDAQ ticker "TYPE."  Monotype has filed to sell up to $135 million in shares of common stock with Banc of America as the lead underwriter as of now; and syndicate members include Jefferies, William Blair, Needham, and Canaccord Adams.

Here is how the company describes itself:  We are a leading global provider of text imaging solutions. Our technologies and fonts enable the display and printing of high quality digital text. Our software technologies have been widely deployed across and embedded in a range of consumer electronic, or CE, devices, including laser printers, digital copiers, mobile phones, digital televisions, set-top boxes and digital cameras, as well as in numerous software applications and operating systems. We also license our typefaces to creative and business professionals through custom font design services, direct sales and our e-commerce websites fonts.com, itcfonts.com, linotype.com and faces.co.uk, which attracted more than 20 million visits in 2006 from over 200 countries. Here is its customer base listed: Nokia, Motorola, Ericsson, Pioneer, JVC, Cisco, Sony, Sanyo, H-P, Kyocera Mita, Canon, Microsoft, Apple, Symbian, Qualcomm, Palmsource, Agilent, British Air, and Barclays.

For the 9-months ended September 30, 2006 it posted revenues of $60.756 million and net income is $3.8 million after a provision for income taxes of just over $2.92 million (otherwise income would have been $7.743 million).  The company is based in Woburn, Massachusetts and it is the result of an acquisition.

This is one that doesn’t sound all that exciting on the surface in the description, but in reality it looks like it may be a great operation for several reasons:  1) a solid business that is 2) already entrenched with a large base of solid customers 3) in a segment that may have at least some barriers to entry 4) because of the times required to develop relationships with such large players; 5) and also operates in 6 global operating subsidiaries: US-based are Monotype Imaging and International Typeface; EU-based is Monotype Imaging Ltd. and Linotype GmbH; ASIA-based Monotype Imaging KK (Japan) and China Type Design Limited (China)….. 6) Based on the diversity already listed, it sounds like they already effictively have their insurance policy against "Chindia Outsourcing Business Risks" in place.  This sounds like one to put on your radar screens.

More details on the company can be found at the company’s website.

Jon C. Ogg
January 26, 2007