NYT: Going Public in the Throes of a Recession

By Lora Kolodny

Since Tom Adams joined Rosetta Stone as chief executive in 2003, the company, which makes self-study language software, has grown from a small, family-owned business with $10 million in annual revenue and 90 full-time employees into a 1,200-employee operation with first-quarter revenue this year of $50.3 million.

Nonetheless, with the economy mired in the worst downturn in recent memory, it took many by surprise when Mr. Adams, 37, chose to take Rosetta Stone public in April. It was only the fourth company to try an initial public offering on an American exchange in 2009, and it was a rousing success, selling out shares priced above the estimated range of $15 to $17 and raising $129 million. Rosetta Stone’s shares have recently traded above $27.

The successful offering was encouraging news for many privately owned companies and small businesses, suggesting, as it did, that strong valuations are still possible, even in such a difficult economy. The Arlington, Va.-based company is living proof, says Bill Tai, a partner at the investment firm, Charles River Ventures in Menlo Park, Calif., that “a company with solid foundations and the ability to ride interesting trends can attract funding, even multiple bidders for their financing, in a time of great uncertainty.” (more)