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Mobile services

Japan's Line Sends a Positive Message as It Preps $1.3B IPO

Communications industry IPOs have been few and far between in 2016 but Japanese mobile messaging specialist Line is set to join the Tokyo and New York Stock Exchanges at the end of this week with an initial offering that, including over-allotments, is set to raise US$1.3 billion and value the company at about $6.9 billion.

Line Corp., which offers services very similar to WhatsApp, was launched following the devastating Japanese earthquake in 2011, when commercial mobile networks were either out of service or over-subscribed in the affected areas and has now become the prime messaging application in Japan with 61 million active users in March this year.

But it's also popular outside its home market: Line had 218 million active users in 230 countries globally in March 2016, with Taiwan, Thailand and Indonesia the other key markets after Japan, together representing 91 million active users in March. The company generated revenues of ¥120,406 million ($1.07 billion) and an operating profit of $17 million in 2015, with its sales mostly coming from games, "Stickers" (large emoticons) and advertising.

The company plans to list in New York on July 14 and in Tokyo on July 15 and decided to undertake a dual listing "to further enhance its strong position in Asia and to continue a more active global expansion."

Line's IPO comes hot on the heels of the success of Twilio, the cloud-based comms platform specialist that saw its stock price leap by more than 90% on its first day of trading last month. (See Twilio IPO: Stock Soars 92%.)

Earlier this year, Dell floated its security unit, SecureWorks, on the NASDAQ on April 22, but the loss-making operation didn't excite investors and is currently trading at $13.86, just below the launch price of $14.

Optical components vendor Acacia has fared better: It priced its IPO shares at $23 and joined the NASDAQ on May 13 and has trended upwards since, currently boasting a share price of $43.95. (See Acacia Prices Its IPO.)

Most of the financial action in 2016, though, has been in the form of mergers and acquisitions, with some of the most recent examples involving a broad spectrum of companies, including Alphabet, Avast, Polycom and Telstra. (See Siris Snatches Up Polycom, Leaving Mitel Bereft, Alphabet Amps Up Video Play With Anvato Buy, Telstra Adds Software, Cloud Smarts With Readify Buy and Avast Buys AVG in $1.3B IoT Security Move.)

— Ray Le Maistre, Circle me on Google+ Follow me on TwitterVisit my LinkedIn profile, Editor-in-Chief, Light Reading

[email protected] 7/11/2016 | 8:45:58 AM
Can Line's appeal go global? Line may have users in 230 markets but the majority are in South-East Asia -- it has grown remarkably and has obviously found the right combination of games, emoticons and an advertising model that works well in those markets.

But where else can it replicate that level of success? Can it take on and hope to replace WhatsApp, for example, as an OTT messaging service of choice? That's the challenge but it's a very interesting one ebacuse it looks like there's still plenty of growth potential left in its existing markets (Indonesia is HUGE). 
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