Wall Street Clears a Place at the Table for Rosetta Stone

This morning, the New York Stock Exchange opening bell rang at the touch of Rosetta Stone’s CEO, Tom Adams.  He was flanked by a contingent of applauding company executives.

The bell-ringing ceremony was a celebration of the company’s new public offering. The Arlington-based Rosetta, a language learning solution company best known for its fleet software suites that span 31 languages, will be traded under the ticker symbol “RST” as of today.

The stock saw heavy trading in the market’s opening moments, but then dropped off quickly thereafter. RST opened at $23 before leveling off at about $25 for most of the day. It closed at $25.12 seeing a 7.12 climb in value.

The move toward public trading was anticipated as far back as April 2, when the company filed with the Security and Exchange Commission (SEC). In a statement released yesterday, Rosetta announced it would begin offering 6.25 million shares of common stock starting at $18 a share. Rosetta is offering half of the available stocks itself, while the remaining half will be offered by selling stock holders. Underwriters also have a 30-day option to purchase as many as 937,500 additional shares from selling stock holders to cover over-allotments, should any arise.

The public offering could net the company as much as $106.5 million in capital and is, according to The Washington Post, the first venture-capital-based initial public offering (IPO) in six months. The money the company raises, according to its filing with the SEC, will be spent on ramping up its Web-based language learning services, trying to penetrate further into international markets, and targeting business customers with industry-specific language learning solutions.

According to the company’s IPO filing, it saw growth over 2008 to the tune of an additional $11.32 million in profits over its 2007 posting. In the same period, revenues increased from $137.3 million to $209.4 million. While the company retails through a variety of sellers like Apple, Barnes and Nobles Booksellers, and the Borders Group, it makes most of its money in direct-to-consumer channels like airport kiosks.

"In its drive to expand, Rosetta doesn’t seem to be pushing the speech recognition aspect of its software," says Aphrodite Brinsmead, associate analyst at Datamonitor. "However given the growth of its business, this is good exposure for speech recognition and may help further its use within the language-learning industry."

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