Published: April 16, 2009

 NEW YORK (Reuters) – Rosetta Stone Inc <RST.N> shares priced at $18 in the company’s initial public offering, above the estimate range, a source with direct knowledge of the deal said on Wednesday, making it the fourth IPO on a U.S. exchange in 2009 as equities markets struggle to stabilize.

Rosetta Stone sold 6.25 million shares, raising $112.5 million, after shares priced above the estimated $15 to $17 range, the first IPO to do so since pumpmaker Colfax Corp’s <CFX.N> deal in May 2008.

Investors’ embrace of Rosetta Stone stands in contrast to the reception given Tuesday to college operator Bridgepoint Education Inc <BPI.N>. which had to shave 30 percent off its estimated price to get its IPO to the market.

Analysts believed that Rosetta’s success was due to a lack of publicly held competitors.

“They have brand strength — nothing compares to Rosetta Stone, everyone has seen their ads,” said Ben Holmes, publisher of research and analytics firm Morningnotes.com.

“The college space is becoming very competitive, but Rosetta Stone is in a very uncrowded space,” Holmes said.

Rosetta Stone’s chief rival, Berlitz, is privately held.

The relatively small size of the deal’s “float”, or the number of shares sold, helped Rosetta Stone command a strong price, though analysts said the company could have raised far more money in the oversubscribed deal.

“They left money on the table, but institutions and its retail clientele will remember that, and when Rosetta Stone comes back for a follow-on, they’ll be amenable,” said Scott Sweet, senior managing director of research firm IPO Boutique.

EFFECTIVE ADS

Rosetta Stone, which provides language instruction services to individuals, companies and schools primarily through CD-ROMs, has attracted attention through an advertising campaign that has featured U.S. Olympic swimming gold medal swimmer Michael Phelps.

Another ad shows a farmer wanting to learn Italian in an effort to woo a supermodel.

The Arlington, Virginia-based company offers language instruction products in 31 languages, with its beginners’ French package, for example, selling for $259, according to its Website.

But Rosetta Stone has ramped up efforts to limit exposure to cash-strapped consumers by focusing on sales to corporations and the U.S. government. It plans to develop an Arabic learning product for the U.S. Army.

Rosetta Stone’s main shareholders are ABS Capital Partners, whose shares prior to the IPO gave it 44 percent of votes and Norwest Equity Partners with a stake of 29 percent of votes, according to a regulatory filing. Following the IPO, those stakes will fall to 28 percent and 18 percent, respectively.

Half of the shares offered are being sold by selling stockholders.

In 2008, Rosetta Stone’s revenue rose 52 percent to $209.4 million from 2007, with net income of $13.9 million, according to a regulatory filing.

The IPO’s underwriters, led by Morgan Stanley <MS.N> and William Blair & Co, have the right to purchase up to an additional 937,500 shares of common stock to cover over allotments.

Rosetta Stone’s IPO is the third in the United States in April, following Bridgepoint and Chinese video game maker Changyou.com Ltd <CYOU.O>, making it the busiest month since July 2008.

Rosetta Stone has been approved to list on the New York Stock Exchange under the symbol “RST” and is set to begin trading on Thursday.

(Reporting by Phil Wahba; Editing by Andre Grenon, Bernard Orr)

Possibly Related Posts:

• News: Embedding English in Job Training – Inside Higher Ed
• Hacking Education at Union Square Ventures Dealscape
• Is Online Pedigree an Oxymoron?
• Rosetta Stone Files For IPO (RST)
• Students Connect Online with Education Abroad

News: Embedding English in Job Training – Inside Higher Ed.

Possibly Related Posts:

• Rosetta Stone IPO Prices Above Estimate Range
• Hacking Education at Union Square Ventures Dealscape
• Is Online Pedigree an Oxymoron?
• Rosetta Stone Files For IPO (RST)
• Students Connect Online with Education Abroad

Hacking Education at Union Square Ventures Dealscape.

Possibly Related Posts:

• Rosetta Stone IPO Prices Above Estimate Range
• News: Embedding English in Job Training – Inside Higher Ed
• Is Online Pedigree an Oxymoron?
• Rosetta Stone Files For IPO (RST)
• Students Connect Online with Education Abroad

Anyone who is following the Presidential race in the United States
is aware that Immigration Reform is going to be one of the most hotly
contested topics in the campaign. There’s an ongoing debate as to the
quantity of illegal immigrants in the US. As the US slides into what
soon may be an acknowledged recession and taxes have nowhere to go but
up, health care, educational and other benefits provided to the
significant illegal population is increasingly being called into
question. Of course one counter-argument is that the US was built on
immigration and immigrants (illegal or otherwise) contribute in many
ways to the US economy. Whatever your position, on July 8, 2008, during
a campaign rally, Barack Obama jumped into the frying pan. It’s unclear
whether he did so unintentionally or willingly but his statements are
certain to have an impact on the race.

Obama said, in no uncertain terms, “[i]nstead of worrying whether
immigrants can learn English, they’ll learn English. You need to make
sure your kids can speak Spanish.”

Many assume that Obama merely meant that everyone that speaks more
than one language will have a competitive advantage when they look for
employment in the global workplace; however, he did not make such a
narrow statement. His words have caused a significant backlash in the
US. First, many Americans are concerned about a loss of identity. The
US population is not well traveled and they have not historically been
accustomed to being surrounded by multiple tongues. While increasing,
greater than 70% of the US population do not have passports.
While prejudice associated with racism has been largely eradicated in
the US, polls among Hispanics have suggested that a lack of fluency is
their number one perceived source of discrimination, not race, religion
or skin color. Recent polls have found overwhelming support for making
English the official language of the United States. A 2007 Zogby poll
found that 83 percent of Americans favor making English the official
language, including substantial majorities of Democrats, Republicans
and Independents. So, the fact is that US citizens are worried about this and that Obama would suggest otherwise is surprising.

Second, Obama specifically chose “Spanish” as the
second language Americans should learn. Is this because it is the most
widely spoken second language in the world after Engish? Of course not.
Is this because speaking Spanish will have the highest correlation to
finding a job in the United States? That’s unlikely too. While I have
been spending much of my life trying to learn Spanish (and will
certainly encourage my children to do the same, especially if they are
living in Southern California or a Spanish-bilingual region), this has
been a personal choice for me when I was a child (still haven’t quite
succeeded). In short, while I certainly believe that speaking Spanish
in Southern California would make my life easier, the choice of Spanish
seems primarily targeted at gaining the Hispanic vote. Again, this a
daring political choice for Obama because if taken literally (whether
meant literally or otherwise), it does risk isolating his supporters.

Education has been defined as the great equalizer
and the reality is that twice as many students drop out of school in
the United States when they do not speak English. Not speaking English
unequivocally limits opportunities in the United States. The
correlation between increased economic achievement and fluency in the
“mother tongue” is material. In “Supporting English Language Acquisition“,
Tia Martinez and Ted Wang indicate that “a fluent English speaking
immigrant in the US earns nearly double that of a non-English speaking
worker.” The inverse is that poverty rates are much higher among US
residents that do not speak English. If economic opportunity and
success is each of our personal goals, perhaps many of us should
endeavor to learn additional languages and encourage our children to do
the same; however, within the United States, ensuring our citizenry
acquires English fluency and English literacy IS
something we should all be worried about and a much more pressing
concern. Learning a second langauge after English may follow as a close
second. The global nature of the issues in this US election is sure to
resonate far beyond the borders of the United States.

Should American children be required to learn Spanish or another
second language? Should this be a personal choice or part of a clear
curriculum? What factors should be used in making this decision?
Whatever the case, I do believe that in the big leagues, the US
Presidency, the candidates should be held accountable for their choice
of words. It’s going to be interesting to see whether Obama stands by
this position in the coming weeks.

As always, I am curious as to what others think. Please provide your comments.

-jim

Possibly Related Posts:

• Rosetta Stone IPO Prices Above Estimate Range
• News: Embedding English in Job Training – Inside Higher Ed
• Hacking Education at Union Square Ventures Dealscape
• Students Connect Online with Education Abroad
• The Olympification of English in Beijing

Possibly Related Posts:

• Rosetta Stone IPO Prices Above Estimate Range
• News: Embedding English in Job Training – Inside Higher Ed
• Hacking Education at Union Square Ventures Dealscape
• The Olympification of English in Beijing
• Is English the Official Language of the U.S.?