NetSuite hits the Street

Software as a Service (SaaS) continues to pay off for companies that use the model. NetSuite becomes the third SaaS vendor to go public, raising $161 million in its IPO.

NetSuite Inc. debuted on the New York Stock Exchange this morning after an initial public offering (IPO) that raised $161 million, well above expectations.

The San Mateo, Calif.-based technology vendor provides CRM, ERP and e-commerce software sold as a service over the Internet. It joins RightNow as companies that have taken the on-demand or Software as a Service (SaaS) model public in recent years. All three sell CRM applications.

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Oracle founder and CEO Larry Ellison owns a controlling interest in the company and has set up a family trust. Ellison and the trust own roughly 55% of NetSuite between them, but Ellison has placed his stake in a "lockbox" company that removes his voting power and potential conflicts of interest. NetSuite identified Oracle as a competitor in its filing with the Securities and Exchange Commission (SEC). It also identified Epicor Software Corp., Intuit Inc., Microsoft, the Sage Group plc and Salesforce.com as competitors.

NetSuite sold 6.2 million shares at $26 apiece, according to reports, well above initial estimates. The company first set a forecast range of $13 to $16, which it twice raised, hitting $19 to $22 before closing yesterday at $26.

The company will use the proceeds from the IPO to pay down debt and build a new data center.

NetSuite will trade under the symbol "N" on the NYSE.

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