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Google's IPO: Grate Expectations

The Los Angeles Times wrote that Wall Street is breathing easier now. Google's "announcement of a lower-than-expected price for its shares raised fresh doubts about the auction process that has been touted as a fairer alternative to the way Wall Street long has sold new stocks. For major investment banks that reap rich benefits from traditional underwriting practices, the lesson of Google's struggle may be that their franchise is safe."
Los Angeles Times: Wall Street May Have Taken Google To School (Registration required)

And here's another catalog of Google's missteps: "Two of Google's big early investors, the storied Silicon Valley venture capital firms Kleiner Perkins Caufield & Byers and Sequoia Capital, decided to withdraw their combined 4.5 million shares from the auction early yesterday, betting they can get a better price at some point in the future," the New York Times reported. The Times also reported that the bankers late Tuesday night recommended a repricing of the deal and that calls between Google's executives, bankers and VCs "included heated exchanges in which the various parties blamed one another for miscalculating the demand for the offering."

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With all of the snags in Google's IPO preparation, the focus will be on Google's future now. San Jose Mercury News tech columnist Dan Gillmor noted what lies ahead for Google. "The most over-hyped initial public offering since Netscape is almost over. Google's stock is about to be in public hands, and a bucket of new cash is about to land in the company's bank account and the pockets of insiders. The Mountain View company must now justify the $85-a-share price that its new investors plunked down. It must become a great enterprise, not just a good one," he wrote.
San Jose Mercury News: Company Must Now Take Steps To Go Beyond Good (Registration required)

Breakdown, Go Ahead and Give It to Me

Google's IPO is not expected to open up a floodgate of good fortune for other tech stocks, according to some IPO watchers. IPO guru and fund manager Tom Taulli told The Washington Post: "Google is putting a nail in the coffin for technology IPOs. We will see a shakeout in the IPO market for tech stocks. After all, if Google can't get a good price and is having difficulty with its own IPO, it overshadows everybody." Taulli penned a piece for CNET's News.com last week, writing that Google's handling of its IPO has been disastrous. "As everyone knows, it is Google's two 30-something founders who are running the IPO circus. True, their management techniques have been hugely successful for its search engine business--but these skills do not translate well to the tricky business of raising billions of dollars. This is something that should be left to the pros. A couple of the pros, including Merrill Lynch, have opted out of the Google IPO. True, a cynical person would say the reason is that these banks considered the fee structure to be meager (it may be less than 2 percent, according to recent speculation). However, as seen in the past month, there are other good reasons. First of all, it is absolutely insane to conduct a mega IPO after mid-August. Would it be smart to sell ice cream in January? Not if you are in Massachusetts.”
The Washington Post: Google Ends Auction of IPO Shares (Same link as above) (Registration required)
CNET's News.com: Google This: Disaster

In other tech IPO news, Linux player Lindows, soon to be called Linspire, has postponed its IPO, citing "fickle" market conditions. The Wall Street Journal also reported "several other companies reduced proposed offering prices, the latest signs of a weakening IPO market." The San Jose Mercury News also gave a rundown of recent problems for other planned tech IPOs, including reduced estimated prices for online computer store PC Mall and WebSideStory of San Diego.
The Wall Street Journal: Lindows Pulls Its IPO as Others Cut Prices in Weakening Market (Subscription required)
Reuters via the San Diego Union-Tribune: Lindows To Delay IPO, Cites ‘Fickle Stock Market'
San Jose Mercury News: Recent Setbacks For Tech IPOs (Registration required)

Despite these setbacks, many dot-coms are readying their IPO plans, the Washington Post reported yesterday. "Dozens of dot-com companies are hoping that Google's initial public offering marks a reawakening of all things Internet. In the months since Google announced it would sell stock to the public, more than 150 companies have said they plan IPOs, despite the rocky economy and slumping stock market. Others, with names like Kelkoo SA and Advertising.com Inc., are opting to sell themselves to bigger companies offering huge wads of cash," the paper said.
The Washington Post: Dot-Coms Get Back In IPO Game (Registration required)

China Grove

Amazon.com Inc. is trying to slip in some news on a day when it's all about Google. The Internet retailer is setting its sights on expanding business in Asia. The company is buying Joyo.com, China's largest online retailer, the company announced today. Reuters had the story early on, citing sources close to the deal. Amazon's move "would mark its entry into the rapidly growing China market after at least several months of searching for a suitable domestic partner or acquisition target," Reuters said.
Reuters: Amazon To Buy China's Biggest Internet Retailer

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