What To Expect From Classmates IPO (UNTD, MSFT, NWS, CLAS)

This week we expect the pricing of the Calssmates.com (NASDAQ:CLAS) parent Classmates Media Corp. IPO and partial spin-off from United Online (NASDAQ:UNTD).  We have noted recently and before that this Classmates.com is not a ‘normal’ social networking site like that of News Corp.’s (NYSE:NWS) MySpace nor like that of Facebook or Linked-In.  That $240 million investment from Microsoft (NASDAQ:MSFT) into Facebook created a slightly different measurement metric out there for the value of Social Networking.

We did note that United Online was attractive right after the original filing,but shares had just run up too much because investors appeared that theywere hoping for a repeat of the EMC-VMware play book.  Unfortunately, when United Online shares were running up, we noted for our Special Situation Investing Newsletter that we felt United Online shares were pricing in too excessive of a premium because of the upcoming spin-off of Classmates.com.  The implied value will be tracked and commented to by many investors, analysts, and fund managers.  Now that shares are back under $13.00, we do not feel as negatively regarding the United Online valuation. 

Classmates increased its revenue roughly 44% to $140.1 million during the first nine-months of 2007 and posted a profit of $1.7 million instead of a loss of $3.9 million in the first nine-months of 2006.

We have our own open email distribution list covering details of other IPO’s, special situations, spin-off’s, and merger candidates.  The current offering is for 12 million shares in a range of $10.00 to $12.00 per share.

Jon C. Ogg
December 10, 2007

Jon Ogg can be reached at [email protected]; he does not own securities in the companies he covers.