'Angry Birds' creator hopes for happy IPO

Game developer Rovio floats the possibility of 2012 public offering, saying the company could be worth $1B.

By InvestorPlace Oct 17, 2011 9:58AM
By Tom Taulli, InvestorPlace Writer

One of the biggest beneficiaries of the mobile boom iPhone is Rovio Entertainment. Based in Finland, the company is the mastermind behind the hugely popular game "Angry Birds."

Rovio's chief marketing officer, Peter Vesterbacka, says the company is probably worth more than $1 billion, thanks to its hit game, according to Bloomberg, and it looks like the company might be prepping for an IPO.

Rovio makes intensely addictive games that have seen more than a million downloads. It also has been aggressive in finding new sources of growth, such as by moving onto other platforms like Google (GOOG) Android and G+ beyond just the wildly popular Apple (AAPL) iPhone.

But the big vision for Rovio is to create a mega-brand. The company sees itself as becoming the next-generation Disney (DIS). And it's on its way, at least in one humorous regard -- China is home to a fake Angry Birds theme park.

To build its brand and monetize things, Rovio has built a strong merchandising business, selling things like toys and knickknacks. Sales come to about 1 million items per month, and an "Angry Birds" movie is in the works.

In light of all this, it should be no surprise that Rovio is prepping for an IPO. And the company should have little difficulty finding eager investors.

So when might a deal hit the market? Unfortunately, according to Vesterbacka, investors probably will need to wait about a year. It looks like Rovio still needs to make the necessary investments and infrastructure changes to become a public company.

And the wait definitely presents some risks. One is the onslaught of fierce competition. Besides traditional operators like Electronic Arts (ERTS), Rovio will face a growing number of early-stage companies.

Also, can Rovio make a sustainable business from just one brand? After all, Zynga has been smart to create a wide offering of games, including "FarmVille" and "Mafia Wars," which helps grow its brand and mitigate the risk of a game dropping off in popularity.

Rovio has shown that it can build at least one great brand and can find creative ways to capitalize on it. But if it wants to have a successful IPO, the company should probably work on expanding past "Angry Birds" as soon as possible.

Tom Taulli is the author of All About Short Selling and All About Commodities. You can also find him at Twitter account @ttaulli. He does not own a position in any of the stocks named here.

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