IPO VIEW-Canada’s Mitel IPO could be overvalued

* Mitel pricing is too high – analyst

* Mitel has declining revenue, profit

* Plans to debut only in United States

* U.S. is bigger market for IPOs – banker

By Clare Baldwin

NEW YORK, April 16 (BestGrowthStock) – Canadian communications
company Mitel Networks Corp (MITL.O: ), which hopes to raise
about $200 million by going public, could struggle in its
Nasdaq debut next week because of its steep valuation, analysts

Mitel sells Internet-based voice, video and data
communications hardware and software to small and medium

The company, whose backers include both Canadian
billionaire Terry Matthews and Queen Elizabeth, will be valued
more richly than competitors Alcatel-Lucent SA (ALUA.PA: ) and
Cisco Systems Inc (CSCO.O: ) if it prices at the midpoint of the
expected range.

Mitel has a price-to-earnings ratio of 60 compared with
Alcatel-Lucent’s 41 and Cisco’s 21, said IPOdesktop.com
President Francis Gaskins.

“It’s overpriced. The last three quarters were flat and
they barely made money in January if you back out the
non-recurring adjustments,” he said.

Mitel’s revenue slipped 14 percent to $484 million in the
nine months ended Jan. 31 from $563.7 million in the year-ago
period. Net income fell 74 percent to $15.2 million.

Ottawa-based Mitel said it would use proceeds to pay back
credit and loans, and for general purposes. Mitel had $30
million outstanding in revolving credit and more than $400
million outstanding in two loans as of Jan. 31.

Mitel could not be reached for comment.

Mitel was co-founded by Matthews in 1972. British
Telecommunications Plc bought a controlling interest in the
company in 1985 but companies controlled by Matthews regained
control of Mitel in 2001.

Other major shareholders in Mitel include Francisco
Partners Group, Morgan Stanley Principal Investments Inc,
EdgeStone Capital, Power Corporation of Canada, and executives
and directors.


Mitel in 2007 withdrew a prior application for an IPO due
to its acquisition of Delaware-based Inter-Tel, according to a
regulatory filing. In its second bid for an IPO, Mitel is
sharpening its focus on the United States.

Mitel next week is expected to begin trading on Nasdaq. In
its first IPO attempt several years ago, it planned to dually
list on the Toronto Stock Exchange and Nasdaq.

One banker in charge of Canadian capital markets operations
for a large international bank said the value of Canada’s IPOs
is about one-fifth of that in the United States, adjusted for
the respective country’s overall stock market capitalizations.

Besides having a bigger appetite for IPOs, U.S. investors
might pay extra attention to a foreign-based company, said
Chicago-based Harris Private Bank Chief Investment Officer Jack

“There is a certain appeal of the Canadian investments to
U.S. investors,” said Ablin, who oversees $55 billion.

“(U.S. investors) trying to gain exposure to other
seemingly more stable currencies and markets is a trend that’s
going on now that will likely continue,” he said.

Mitel earned just over 65 percent of its revenue from its
U.S. business in the three months ended Jan. 31, but it could
be expanding its business abroad.

Mitel signed an agreement with Brazil’s EBX, the holding
company for billionaire Eike Batista, to produce Internet
protocol equipment, including phones, in the country, local
business daily Valor Economico reported late in March, citing
CEO Terence Matthews.

Batista’s EBX is one of Mitel’s largest clients in Brazil.

Other IPOs expected next week include Alimera Sciences Inc
(ALIM.O: ), Codexis Inc (CDXS.O: ), Excel Trust Inc (EXL.N: ), Global
Geophysical Services Inc (GGS.N: ), DynaVox Inc (DVOX.O: ) and SPS
Commerce Inc (SPSC.O: ).

Investing Analysis

(Reporting by Clare Baldwin; Additional reporting by Pav
Jordan in Toronto and Elzio Barreto in Sao Paulo; Editing by
Richard Chang)

IPO VIEW-Canada’s Mitel IPO could be overvalued