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IPO Market Still Strong For Companies Without Businesses

from the don't-worry-about-the-lack-of-a-business-model dept

Thu, Jul 27th 2006 8:43am — Joseph Weisenthal

There's been a lot of talk about the state of the IPO market, and how it hasn't been as generous during this boom as it was during the last one. The few high-profile IPO attempts have received a pretty chilly reception, as Vonage has been a disaster, while Clearwire abandoned its own attempts, as it likely would have faced a similar fate. But while investors have shied away from these companies, it seems they have plenty of appetite for speculation. In March, Steve Wozniak raised funds for a blank-check IPO, meaning the company would raise money first, and then figure out what kind of business to enter. Since then, several companies have tapped the public markets in such a manner, raising money for a business to be determined later. The latest is one focused on media and telecom that claims former CIA director George Tenet on its board. So it's true that the markets aren't interested in big, money-losing operations, but it'll throw money at a black box with no real business. It sounds just like the last bubble.

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5 Comments

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Dan, 27 Jul 2006 @ 9:29am

If it's just like the last bubble, why hasn't my salary doubled yet?!
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Anonymous Coward, 27 Jul 2006 @ 9:42am

blank check IPO???? not knowing what the comany is going to do (besides run with your money)... that must require some extreme speculation
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Anonymous Coward, 27 Jul 2006 @ 9:55am

Actually, its pretty smart. Technology probably isn't that great an investment, but investing in good management seems like a good idea. Thats all hedge funds are, giving your money to someone really smart (or someone you think is really smart) to make you money.

People should look more at management when picking companies to invest in. Even the best technology or product can be screwed up by bad management.
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Need an IPO, 27 Jul 2006 @ 11:24am

Anonymous Coward
Just give me your money I will start making something someday. Trust me.

..Yea that must be the best management ever. Anonymous Coward are you a manager? I don't see what Management has to do with an IPO offering.
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Anonymous Coward, 27 Jul 2006 @ 11:32am

Re: Anonymous Coward
His point was that the investors weren't investing in the black-box company. They were investing in the managers of the company. The investors say Steve Wozniak will make a good manager, or George Tenet will make a good manager. They are looking at the management team behind the upcoming company, not at what the company does (which is yet to be determined). THAT is what management has to do with an IPO offering. The idea behind this kind of investment is that you give a smart team your money and trust that they build a good company with it. This model of investing (whether good or bad) is ALL about management.
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