INDIANAPOLIS (04/14/2000) - After years of reticence, data warehouse vendor SAS Institute Inc. announced plans at its annual user conference in Indianapolis earlier this week to pursue an initial public offering sometime next year.
SAS co-founder and CEO James Goodnight said the firm plans to go public in the next 12 to 18 months and has been working with Goldman, Sachs & Co. in New York towards that goal. SAS expects to offer 15 percent of the company's ownership in the IPO.
Raising cash isn't an issue for Cary, North Carolina-based SAS, which has hundreds of millions of dollars in cash reserves. The IPO is aimed, in part, in helping SAS retain and reward existing employees while helping to attract new ones, said Goodnight.
SAS is the world's largest privately held software company with annual revenues of over $1 billion. According to Goodnight, the company has posted 23 consecutive years of double-digit revenue growth on an annual basis. SAS' revenues grew 17 percent from 1998 to 1999, he said.
Historically, Goodnight, who holds a majority stake in the firm along with co-founder John Sall, expressed reluctance to take the firm public. "One main reason companies go public is they need the money. And we just plain don't need the money," explained Goodnight.
Goodnight said he also wanted to avoid the pressure of meeting earnings expectations on a quarterly basis. "If you have a bad quarter, they rake you over the coals and many companies become less focused on their products and more focused on quarterly results."
Although Goodnight boasts that the company's staff turnover rate is a meager 5 percent, he said an IPO would help retain and reward current employees and make recruiting new talent easier. SAS employs 3,500 worldwide.
"SAS is one of those companies that have been there forever with an extremely large customer base, and justifiably so, but with the perception that they have a closed proprietary system and with only actuaries on the staff," said analyst Mike Schiff of Current Analysis Inc. in Sterling, Virginia. "They've got to break away from that myth."
In addition to offering stock options to employees, Schiff said options would also assist SAS with its acquisition plans. "You need equity for acquisitions," Schiff said. "SAS is not hurting for dollars, but if you're going to keep the staff from a company that gets acquired, you have to give them options to stay."