Filed under: Google (GOOG), Microsoft (MSFT), Yahoo! (YHOO), Citigroup Inc. (C), Bank of America (BAC)

It seems that I get about five credit card offers per day in my mail (and I can see why many Americans are broke). Actually, a study from Synovate’s Mail Monitor shows that there were 6 billion such offers in 2005, up from 2.7 billion in 1995. Yet, the response rate has gone from 1.4% to 0.3%. In other words, credit card issuers are looking for new channels. And, of course, the internet is the next frontier.

One of the key players in the space is CreditCards.com, which has filed to go public. Basically, with the site, consumers can research, compare, and identify various credit card offers. For each approved application, CreditCards.com receives a fee.

From 2004 to 2006, its revenues surged from $11.5 million to $42.9 million. During this time, adjusted EBITDA went from $5.8 million to $21.4 million.

The largest source of traffic comes from the major search properties, such as Google (NASDAQ: GOOG), Yahoo! (NASDAQ: YHOO), and Microsoft (NASDAQ: MSFT). There is also substantial competition, such as credit card issuers — Bank of America (NYSE: BAC) and Citigroup (NYSE: C) — as well as other websites: CardOffers.com, CardRatings.com, CreditCardGuide.com, and so on.

The lead underwriters on the IPO include Credit Suisse (NYSE: CS) and Citigroup.

You can find the prospectus on the SEC website. Also, if you want to check out more IPOs, click here.

Tom Taulli is the author of various books, including the Complete M&A Handbook and the EDGAR-Online Guide to Decoding Financial Statements.

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Filed under: Products and services, Akamai Technologies (AKAM), Initial public offerings

A fair amount has already been written about the fact that since the recent IPO, content delivery network Limelight (NASDAQ: LLNW) has dropped sharply in price. In about three months, the stock has gone from $24.33 to $7.91.

But, how could something like this happen? In some ways it is, to used an abused phrase, a perfect storm of events.

The market has assumed that content delivery networks are part of the wave of the future. The largest one, Akamai (NASDAQ: AKAM) had been a victim of the internet bubble. In December 1999, the shares were at $345 on the assumption that broadband would open a huge need for storage and moving content around the web. When the market collapsed, Akamai’s shares were as low at $0.70.

But, because Akamai did hold on until the YouTube wave of online video streaming hit, its shares went from $11 in early 2005 to $50 last month.

Limelight, and one of its largest investors, Goldman Sachs (NYSE: GS) decided to cash in on the excitement around Akamai, and took the smaller company public. Certainly the IPO would be popular because of the tremendous excitement around audio and video streaming as companies including the TV networks and studios put their content online.

What Goldman may not have see coming was two things. The first was that the content delivery companies were in a dog fight over business. Prices were being cut, and this would lead to lower gross margins. At the same time, it appears that the amount of video streaming over the internet seems to slowdown.

When Akamai released its Q2 earnings, Wall Street was disappointed. The company’s shares fell from $50 to $33 in three weeks. In sympathy, Limelight moved down as well.

Then, last week, Limelight announced lackluster results itself, and its stock fell even further.

Goldman Sachs and the market had made assumptions about the growth of CDN companies. They were almost completely wrong. Limelight investors paid a huge price.

Douglas A. McIntyre is a partner at 24/7 Wall St.

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Filed under: Earnings reports, Good news, Press releases, Products and services, Trina Solar ADS (TSL)

There are a whole lot of things to like right now about Trina Solar Limited (NYSE: TSL), the Chinese manufacturer of solar modules. The stock opened the year at $18.86 and closed Wednesday, August 8, at $62.08. Not a bad run up. Yes, the company is basically a start up, being in production only since 2004, and investors must be able to tolerate a high level of risk with patience. But the company is expanding on a variety of fronts while still maintaining a healthy enough balance sheet. Trina Solar 1Q 2007 earnings release back in May indicated a very positive investment scenario (the 2Q release is scheduled for August 23).

Despite the fact that the 1Q figures pertained to the winter quarter, generally a slow time for solar technology companies, Trina Solar posted a 10% increase in net revenues, to $42.5 million, from the previous quarter, but a staggering 194% (not a typo) increase from 1Q 2006. Gross profits from the quarter increased 5.3% to $9.5 million, and net income increased 7.3% to $4.7 million. Bear in mind Trina Solar posted these figures despite higher prices for raw materials and a decline in per unit price. Demand for solar technology continues unabated. Trina Solar shipped 17% more units by volume in 1Q 2007 than in 4Q 2006. That increase in volume meant Trina Solar produced and shipped 300% more solar watts in 1Q 2007 than 1Q 2006, and has plans to accelerate increases in both unit and watt volume.

Trina Solar is still in a rapid expansion phase, as is only to be expected from a company dealing in newer forms of technology. The company recently completed testing on its new line of increasing efficient solar modules and plans to market these modules to new and existing customers in Germany, Spain and Italy. At full manufacturing capacity, Trina Solar expects to produce 50 million solar watts with this product line. CEO Jifan Gao forecasts that Trina Solar will ship 87-80 million watts worth of solar modules in FY 2008, generating net revenues in the $270-$300 million range. Perhaps the wider investment community will hear of Trina Solar during the 2008 Olympics in Beijing.

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Filed under: Getting started, Comfort Zone Investing

Ted Allrich is the founder of The Online Investor and author of the just released book: Comfort Zone Investing: Build Wealth And Sleep Well At Night. In this weekly column, he’ll offer advice to investors who are just getting started.

I read the other day that according to a survey taken by a prestigious investment firm, most investors have two or three stocks. That’s a frightening statistic. Why? Because if you have the wrong two or three stocks, you’re in for a very difficult time.

Since the content of this column is for non-professional investors, it’s very important to realize that diversification is the key to happiness when it comes to investing. (Professionals will often concentrate in one industry, but they know it’s much riskier with commensurate rewards and are trained for that investing niche.) While diversification won’t make you rich fast, it won’t make you poor fast either.

You aren’t running a sprint when you invest. You’re in a marathon which at times feels like a triathlon. You don’t care about next week; you care about 10, 20 or 30 years from now. you want a large amount of money when you retire. Diversification will give you better odds of having that than a concentration of a few stocks.

The problem with owning one, two or three stocks is that the odds are against you having the right stocks, especially if all of them are in the same industry. If you owned three of the homebuilding stocks a year ago, and still own them, you don’t feel so good right now. Or if you owned three biotech companies, you’re feeling kind of sick. Many other industries also qualify for illness inducing investing. So the way to stay healthy and wealthy is to make sure your portfolio is filled with all kinds of stocks, not just one or two from one industry. And not just any stocks.

You need to buy non-correlated stocks, ones that move for different reasons. For example, financial service stocks are affected by interest rates. If you own a bank, a thrift, a credit card company, an insurance stock and a mortgage company, you have several stocks but no diversification. Every one of these is going to feel it when interest rates go up (bad), or down (good). What you want are several stocks and mutual funds that aren’t dancing to the same music.

For example, if you owned a gambling stock, a financial services company, a consumer stock, a drug stock, a biotech, a mutual fund specializing in foreign investments, a gold stock, an oil stock, and a toy manufacturer, you’d have good diversification. Some of those will move together, especially if there is a general economic slowdown. But they all won’t move downward at the same pace. The ones with better earnings will, in fact, go up. And that’s what you’re looking for: Stocks that will move up or down at different parts in an economic cycle.

So if interest rates go higher, the financial services stock will not increase earnings as business slows. But rates will have no effect on the drug stock, the biotech, the mutual fund with foreign holdings, or the consumer stock. Rates may dampen the oil stock a little but not much.

There are many combinations of stocks that qualify for a well diversified portfolio. To pick the right ones, keep in mind what will affect each industry. Interest rates are the biggest factor. Think about what will happen when rates go up or down and how your stocks will change when that happens. Think about where the economy is in cycle. Are we near the end of an expansion period, the beginning of a boom, or is there a recession looming?

As you make your best guess as to where we are economically, you’ll begin to fill your portfolio with some stocks that will prosper during the next several months or years based on your forecast as to what the economy will do. Then you’ll add stocks that aren’t going to move as much as those stocks because they won’t be affected as much by where the economy is or where it’s going. So first, get a good macro-economic scenario, then start putting together a well diversified portfolio. As I said above: You’ll get richer slower, but you won’t get poor faster. And you’ll sleep better.

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Filed under: Consumer experience, Competitive strategy, Sprint Nextel Corp (S)

Back in early July, there was a brouhaha over Sprint’s (NYSE: S) decision to terminate roughly 1,000 subscribers because of persistent calls to customer service (the average was about 40 to 50 calls per month).

But isn’t the customer king?

Maybe so, but there are some customers that can wreak havoc on your business. For example, there always seem to be customers that pay late (or not at all). At the same time, they keep demanding more services and changes. It can eat up lots of resources and drag the performance of your business.

True, with some customers it might be smart to take a loss. This would be the case when trying to land a marquee name. In this situation, the customer can be a credibility booster and a reference for future business.

But this is the exception. Basically, to run a profitable business, it’s critical to be rigorous on the return on each customer. Simply put, there are some customers that are not worth it.

Perhaps the best way to deal with this is to screen potential customers. Although, this is not easy — and does take some experience (each industry has its own nuances). Yet, it’s common for business owners to ignore obvious warning signs because they have a hard time turning down customers.

Also, if you are extending credit, you should have a credit application. This means actually checking credit information, job information, bank information, and so on.

To get some more perspective on all this, I recently talked to Michelle Dunn, who is a recovering bill collector (more than 20 years in the business) and the author of books like Ultimate Credit and Collections Handbook.

According to her, it’s smart to — once a year — spend time finding customers to fire.

She says: “When I work with business owners, I tell them that each year when they ‘fire’ their top 5 or top 10 ‘trouble’ customers, a good way to fire them is to tell them that since you cannot provide the service that they need, it will be better if they go somewhere else. This way, you are not burning any bridges and you are being honest without going into detail about how this customer may drain your time, and cause you stress with their troubles.”

Or, another approach to is to increase your fees. This is likely to spur the customer to go elsewhere.

No doubt, all this sounds brutal. But then again, bad customers can be frustrating — making things difficult for employees, wasting time, and taking away from your bottom line. In fact, firing a customer can be extremely helpful for your business.

Tom Taulli is the author of various books, including the Complete M&A Handbook and the EDGAR-Online Guide to Decoding Financial Statements. He also operates DealProfiles.com.

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Filed under: Bad news, Competitive strategy, Market matters, Goldman Sachs Group (GS)

Barron’s [subscription required] revealed some scary statistics about this week’s carnage. The smartest of the smart are finding that their computer models are telling them to do the wrong things at the moment of maximum peril. As a result, The Goldman Sachs Group’s (NYSE: GS) $8 billion Global Alpha hedge fund is down 26% so far this year and the $26 billion Renaissance Institutional Equities Fund — run by the $1.7 billion (2006 compensation) man, James Simons — has fallen 8.7% so far this month.

What is going on? The computer models that run these funds don’t model what is happening now — a simultaneous dash to liquidate by all their peers. Statistical factor-based quantitative models — which weight dozens of valuation, growth, and momentum variables to create long/short portfolios — have attracted many competitors.

Their models broke in recent weeks as volatility surged, leverage was cut back, heavily shorted stocks went up and statistically cheaper shares cracked. One anonymous manager said “There is this unknown risk, when there are enough people doing what you do, that when some of them have to unwind and they start unwinding — you are just going to get crushed. And that’s not in the model anywhere.”

Models that break when markets go haywire are nothing new. This is what happened in 1998 when Long Term Capital Management, a hedge fund run by a Nobel prize winning economist, lost $4.6 billion in in four months and closed in 2000. But with this background, model builders should also have incorporated the market dynamics from previous such periods — 1987, 1998, 2001, and 2002. All these model failures grew from volatility storms, and after big losses, gave way to forceful rebounds and recoveries in quant efficacy.

The bottom line is that these quant jocks will be tested as they try to cope with the failure of their models, even as investors are clamoring to get out and banks are asking for their money back. Other shoes will drop, but thanks to the lack of hedge fund disclosure requirements, nobody knows the number or magnitude of the dropping shoes.

Peter Cohan is President of Peter S. Cohan & Associates, a management consulting and venture capital firm. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in Goldman Sachs.

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