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Google considers online IPO auction
IPO online instead of through wall street
amoore




msg:1238628
 9:32 pm on Oct 23, 2003 (gmt 0)

According to this article [news.ft.com] out today on the Financial Times:

Google is considering holding a massive online auction of shares early next year in an initial public offering that investment bankers predict could value the internet search-engine company at more than $15bn.

An electronic auction would be designed to prevent a recurrence of the sort of financial scandals that have engulfed Wall Street since the collapse of the dotcom bubble, according to a person close to the company.


 

Brett_Tabke




msg:1238629
 10:06 pm on Oct 23, 2003 (gmt 0)

whoa - interesting - very interesting. Kinda stunned about the whole concept.

martinibuster




msg:1238630
 10:14 pm on Oct 23, 2003 (gmt 0)

However, investment bankers warned that a pure online auction would risk setting an unrealistically high price for Google's shares, since there would not be enough stock available to meet the massive demand from private investors captivated by the prospect of a new dotcom gold-rush.

"They could get a $100bn" stock market value, said one person involved.

Meaning it goes into Google's pockets instead of to the usual suits.

While everyone's blabbering about "out of the box" thinking Google is once again showing that for them, there is no box.

[edited by: martinibuster at 10:19 pm (utc) on Oct. 23, 2003]

EliteWeb




msg:1238631
 10:16 pm on Oct 23, 2003 (gmt 0)

Fun fun fun, wonder how it would turn out and how well. Interesting take on IPO and i'd like to see the auction take place :P

Kirby




msg:1238632
 10:28 pm on Oct 23, 2003 (gmt 0)

Gotta love it. Maximizing corporate $$$ while appearing to be championing for the average Joe.

Google is once again showing that for them, there is no box.

Interesting that it's now the corporate execs that this applies to.

BlueSky




msg:1238633
 10:47 pm on Oct 23, 2003 (gmt 0)

The auction approach is not new. It was done by a limited number of companies here towards the latter part of the dot com bubble era. It had its problems as well. This describes one of them:

However, investment bankers warned that a pure online auction would risk setting an unrealistically high price for Google's shares, since there would not be enough stock available to meet the massive demand from private investors captivated by the prospect of a new dotcom gold-rush.

Shorters will have a hey day if that happens.

atadams




msg:1238634
 11:03 pm on Oct 23, 2003 (gmt 0)

However, investment bankers warned that a pure online auction would risk setting an unrealistically high price for Google's shares, since there would not be enough stock available to meet the massive demand from private investors captivated by the prospect of a new dotcom gold-rush.

Translation: The investment banker's fat cat clients can't buy the IPO shares at unrealistically low prices and then sell them to the rest of us on the open market for a hefty one-day profit.

lorenzinho2




msg:1238635
 11:10 pm on Oct 23, 2003 (gmt 0)

Couple of thoughts:

- An online IPO is a brilliant match for Google. They save the 8% (?) brokerage fee to have a bank take them out, and with one fell swoop, transform millions of Google users into millions of Google owners.

- They should do this next week. From reading and participating in these boards and working in the industry, Google is (mildly?) broken. SEO's, WebMasters, Bloggers - are combining to manipulate Googles search results. We've all seen the examples. It won't be long until this news reaches the public, the public overreacts, and Google's projected market cap gets decimated. I have no doubt that the sudden IPO mention is linked to growing issues with PR and the like. Raising $20B would allow Google to throw a lot of cash at their issues, and with the brains that they have over there, most likely buy some more time.

midwestguy




msg:1238636
 11:27 pm on Oct 23, 2003 (gmt 0)

<rant>
I think any so called warnings and worries we may be hearing is just spinmeistering and noise masking fear and panic felt at the prospect of missing out on the obscene profits and fees made by the folks who make their money off big investment banking/IPO business, like Google represents.

These folks have been drooling at the prospects of taking Google public for a long time. No doubt some of them are lucky if they were sitting down when they heard the news google may go public without their "help" and "guidance".

It's downright awful how much pre-IPO company owners often get short changed by the investment banking/IPO crowd who do their IPOs. Just to cite one example: all the quick in and out the same day money made by "buddies" of the investment bankers who are doing the IPO selling large blocks of the IPO stock at below **current** market price to their "buddies" who then immediately flip the stock -- so those same "buddies" will let them make some quick cash on the same kind of sweatheart deal via an IPO stock allotment on the next IPO their buddies do. That money should go to the companies whose stock is being IPO'd off.

These sweatheart deals between investment banking buddies can run into the hundreds of thousands and even millions; and that's for *each* of several "buddies" per IPO. That's a lot of money that could go into capitalizing future business growth of the company instead of "bribes in advance" for a return favor paid back to them when their buddies do *their* next IPO and allow them to flip that stock on the IPO day of their buddies stock. They get their fees; that's enough, IMO.

Good for Google. I hope they make a mint for themselves.

And if the stock fluctuates, so what. Any expressed worries by the same type of hypesters that don't seem to worry about the triple digit P/E ratios of stocks they or their firms suggest clients buy is nothing but self serving verbal puke IMNSHO.

Go Google!

P.S. I love business....but hate the parasites that sap the marrow from its bones.....like the investment banking/IPO crowd on wall street. Blah.
</rant>

[edited by: midwestguy at 11:34 pm (utc) on Oct. 23, 2003]

Chris_R




msg:1238637
 11:33 pm on Oct 23, 2003 (gmt 0)

These rumors have been around for a while:

[bayarea.com...]

I for one hope they go this method

benne2jp




msg:1238638
 11:54 pm on Oct 23, 2003 (gmt 0)

I will definitely short a few thousand shares when Google hits ~$100 share or so. If it gets that high. If they go public. Bottom falls out of every stock eventually, no matter if you sell the most powerful snake oil out there.

Monus




msg:1238639
 11:54 pm on Oct 23, 2003 (gmt 0)

This is probely the most smart move they could do. On this way they don't loose there face, Google get money to do their things, and the company get owned by the public.

Those guys have not only brain, they are realy smart and totally different. That what I like from google.

caine




msg:1238640
 12:02 am on Oct 24, 2003 (gmt 0)

I think the only winners out of this IPO are going to be the current owners - everyone who tacks on to the buy, will be buying very high, and watch them lose the money, until the share value gets more realistically in line with turnover/profit - shareholder dividend payout.

caine




msg:1238641
 12:16 am on Oct 24, 2003 (gmt 0)

Its a maybe situation, but its an auction i can't see why it would be constricted to a U.S. bidding community.

Maybe they will do it in lots on EBAY - that would be mental!

seo_sherpa




msg:1238642
 12:31 am on Oct 24, 2003 (gmt 0)

But bidding is a very dangerous process for something as hot as google IPO.

For sure the demand will outstrip the supply fuelling excessive speculation. As a consequence bulls will run on this, inflating the share price out of reach of the common person.

Even if they do get allotments it will be at an artifically high price(which probably will defeat the googles image of probity & justness).

Some out of the box thinking required on this one as well. How to manage the allotment to small investors & still maximise the inflow.

Go Go Google.....

caine




msg:1238643
 12:37 am on Oct 24, 2003 (gmt 0)

I've got a friend who trade's online, and it may be his cup of tea - been doing it for a while now, but way beyond me.

Chris_R




msg:1238644
 12:39 am on Oct 24, 2003 (gmt 0)

WR Hambrecht

Has a line at the very end of their webpage that says:

"This site is for U.S. investors only."

Whether Google would use their OpenIPO system - or evn consider this idea is unknown. You still might be able to get shares as even though their site says that - there is a space for country in the app. You can also participate through other brokers that have agreements with WR Hambrecht.

If Google were to IPO in this manner, I think they would want to make it as inclusive as possible. However, this might be a problem due to legal reasons, SEC, and so on.

If it is auctioned - keep in mind that everyone that wants some will get somme and there will be very little chance - and it would be just chance - of a big one day profit - as all the demand would be covered by auction.

If you just want google shares - you should be able to but them on the open market (assuming you have access to NASDAQ/NYSE/AMEX) the same day they go public.

indigojo




msg:1238645
 1:28 am on Oct 24, 2003 (gmt 0)

I said 4 billion about a year ago and everyone here laughed at me. Now were hearing figures upto 25 billion

EquityMind




msg:1238646
 1:56 am on Oct 24, 2003 (gmt 0)

I said $10BB about 8 or 9 months ago. I really hope they go this route, It would be a way for those of us who know and respect Google to participate in it's financial evolution. Count me in for as much stock as I can be allotted.

EquityMind

Webwork




msg:1238647
 2:45 am on Oct 24, 2003 (gmt 0)

So much depends on what they do with the proceeds of the aution. Short at your own risk.

In the dot com days companies used overinflated shares to buy other companies with overinflated market values.

Today, cash is king in a market where there still might be a few buyouts to come. If they raise this kind of money they ought to hire Warren Buffet (I suspect he's already in on the action) to guide them about investing the proceeds.

"Diversify" is what everyone says about their online businesses. With that kind of cash in hand watch them go on a very calculated buying spree - not all search.

Let's see: Buy Dow Jones, buy SAS, use some to set up an alternative auction to EBay, enter streaming media, enter online interactive games, ....

ideavirus




msg:1238648
 4:57 am on Oct 24, 2003 (gmt 0)

Is this something similiar to Book Building types? excepting that, its completly done online?

Sounds very good!

Tor




msg:1238649
 6:13 am on Oct 24, 2003 (gmt 0)

Does anyone know of this kind of approach to an IPO has been tried before anywhere?

Chris_R




msg:1238650
 7:12 am on Oct 24, 2003 (gmt 0)

Does anyone know of this kind of approach to an IPO has been tried before anywhere?

Yes they have:

[openipo.com...]

Is one - there is some useful info on that site if you look around. Should help answer some questions as to how the process might work.

Just to reiterate:

Google hasn't said anything official about an IPO happening anytime in the future.
Even if they did - we don't know they would use an auction process.
Even if they did - we don't know they would use OpenIPO.

dirkz




msg:1238651
 9:26 am on Oct 24, 2003 (gmt 0)

I will definitely short a few thousand shares

As they will probably get overrated this seems to be a good idea.

danny




msg:1238652
 10:20 am on Oct 24, 2003 (gmt 0)

However, investment bankers warned that a pure online auction would risk setting an unrealistically high price for Google's shares, since there would not be enough stock available to meet the massive demand from private investors captivated by the prospect of a new dotcom gold-rush.

I translate that as: "Don't cut us out or you might make too much money."

Chndru




msg:1238653
 12:31 pm on Oct 24, 2003 (gmt 0)

Here is a scoop of the previous openIPO deals:
ht*p://www.wrhambrecht.com/comp/corpfin/case.html

amznVibe




msg:1238654
 12:37 pm on Oct 24, 2003 (gmt 0)

It's been tried before [bizjournals.com]

rogerd




msg:1238655
 2:02 pm on Oct 24, 2003 (gmt 0)

I immediately thought of the OpenIPO precedent, and thanks to Chris_R's link I was able to see how they were doing. It doesn't look like the IPO-by-online-auction biz is booming. After a small flurry in 2001, they did only one IPO in 2002, and one more in 2003.

I think Google going the auction route would be great. I really like the idea of creating an alternate IPO channel, and this would add legitimacy to it.

You've gotta love hearing the investment bankers squeal about the price the company gets being too high ("We and our favored customers are supposed to get that money!"), and there being no liquidity in the aftermarket for Google stock. Ha! I bet their limo phones were working overtime when this story broke...

bcolflesh




msg:1238656
 2:10 pm on Oct 24, 2003 (gmt 0)

Also check the discussion on this subject at Slashdot:

slashdot.org/article.pl?sid=03/10/23/2349217

loanuniverse




msg:1238657
 2:31 pm on Oct 24, 2003 (gmt 0)

I will definitely short a few thousand shares when Google hits ~$100 share or so.

Let's not forget that Google is profitable now, just make sure you don't get burned. Some internet stocks P/E ratios as of 2 minutes ago as shown by Yahoo Finance:

YHOO: 119.52
IACI: 408.91
AMZN: negative earnings

This 35 message thread spans 2 pages: 35 ( [1] 2 > >
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