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Bozeman tech company, RightNow Technologies will test IPO market soon

Montana’s roster of companies whose shares are publicly traded, now just five names long, is expected to grow this week.

An initial public offering of shares in RightNow Technologies, scheduled for Thursday, will make the Bozeman-based company the sixth name on the public-company list. RightNow, which sells customer service software, is expected to raise about $55 million with the IPO.

By JAMES E. LARCOMBE

http://www.greatfallstribune.com/news/stories/20040801/localnews/956092.html

The company, in a stock prospectus, said it intends to use the money for general corporate purposes, including working capital and possibly to fund acquisitions. RightNow officials declined to discuss details of the offering, citing Securities and Exchange Commission rules that require "a quiet period" before such stock offerings.

"There is nothing we can discuss because of the quiet period," said Jason Troy, a company spokesman.

RightNow, founded in Bozeman in 1997, first planned to go public in 2000 but delayed the IPO after the market for technology and Internet companies soured.

After being "pretty much dead" the last couple of years, "there is a lot of renewed interest in the IPO market right now," said Tom Madden, a co-founder of the IPO Monitor, which publishes a newsletter and a Web site about stock offerings. "It would be hard to describe it as robust but it’s getting healthier and healthier."

Madden said news surrounding the Google IPO, the Internet search engine, has sparked interest on the part of investors and companies seeking to raise money.

Unlike the tech-boom days of the late 1990s, current offerings tend to involve more conventional companies, such as Domino’s Pizza or energy companies.

"It’s a much different world out there than in the Internet days," Madden noted.

Underwriters of the offering are Morgan Stanley, Thomas Weisel Partners and Adams, Harkness & Hill and D.A. Davidson & Co., the Great Falls-based investment firm. The underwriters will buy the company shares and resell them to investors. They, along with company officials, determine the initial share price.

Officials at D.A. Davidson said they also are subject to the quietperiod restrictions.

"We can’t comment on that," said company spokesman Jacquie Burchard, when asked about the RightNow deal.

According to the prospectus, RightNow will sell 6 million shares, at a price of between $9 and $11 per share. Additionally, Greg Gianforte, the company’s founder and chief executive, is expected to sell 600,000 shares.

After paying underwriters and other expenses, the company is expected to net about $54.5 million from the offering, based on a $10 per share price. Gianforte could receive a payout of at least $5.6 million for his shares.

After the offering, Gianforte still will control almost 45 percent of the company’s stock. Add in other company officers and directors and insiders will control nearly 69 percent of the 28.4 million outstanding shares in RightNow.

The company has 354 employees, 228 in Bozeman. Its principal product is a software package that works to improve customer service by integrating Internet, computer and telephone services.

The company, in the prospectus, has seen revenue grow from slightly above $2 million in 1999 to more than $35 million in 2003. Research, sales and marketing expenses have been significant and have kept the company from posting profits until the first two quarters of 2004. RightNow recorded a net loss of $4.1 million in 2003.

The company has no plans to pay shareholders a dividend, according to the prospectus.

Unlike some companies that went public in the Internet boom, "it’s a real business," Madden said of RightNow.

It’s difficult to predict how investors will react to the IPO offering. Of the 30 most recent initial offerings, the share prices in 12 are trading below the initial offering price, Madden noted.

"I would expect this one will do OK," he said.

The deal, if completed, will the first IPO of a Montana company since 1999, when Jore Corp., a Ronan toolmaker, sold shares publicly. Jore filed for bankruptcy protection in 2001 and has since been sold to a private owner and its shares are not publicly traded.

Montana’s principal public companies include Glacier Bancorp. and Semitool Inc., both based in Kalispell, Stillwater Mining, the platinum and palladium operation in Columbus, and United Financial Corp. and Energy West, both based in Great Falls.

Shares in RightNow Technologies will trade on the Nasdaq stock market under the symbol RNOW.

Larcombe can be reached by e-mail at [email protected], or by phone at (406) 791-1463 or (800) 438-6600.

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