Outspoken GoDaddy CEO Claims IPO Quiet Period Was Just Too Tough

from the nice-one dept

Thu, Aug 10th 2006 8:49am — Joseph Weisenthal

Earlier this week, GoDaddy announced it would pull the plug on its planned IPO, giving the typical excuse of poor market conditions. This seemed like a plausible reason, considering the fate of Vonage, and the general difficulty in getting unprofitable companies (like GoDaddy) to market. But now GoDaddy is offering another reason. Its founder, the outspoken Bob Parsons says he just couldn't bear to keep his mouth shut during the mandatory quiet period. Parsons said that it has been "suffocating" and that he didn't like having to suspend his weekly radio show or TV appearances. It's true, quiet periods can be tough; even Google almost got derailed during theirs. But the real reason is probably closer to what they told the SEC, that the market conditions weren't right. But saying they were doomed by the quiet period is so much more in fitting with the company's image, and now that it has no plans to go public, Parsons can say whatever the heck he wants.

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15 Comments

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Gramma' Extraordinaire, 10 Aug 2006 @ 9:52am

"the the"? Couldn't read the article because I don't know what this means. Grammar? Grammar? Grammar? (just wanted to get it out of the way before someone gets a chance to whine about it)
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- Joe, 10 Aug 2006 @ 10:00am
  
  Re:
  Thanks, fixed it.
  
  Hope the entry makes sense to you now.
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Eric, 10 Aug 2006 @ 10:10am

IPO
There are few things I understand about the stock market. What would be the benefit to the company and its founders to go into the public market share? How much share in their company do they offer in the IPO? How does the IPO value get determined? Why would there be a mandator "quiet period"?

Economics is my weak point... can someone explain this stuff to me?
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- Anonymous Coward, 10 Aug 2006 @ 10:21am
  
  Re: IPO
  they go ipo to raise money to invest in the company
  
  The executives grant themselves shares, and have an added source of income
  
  Value depends on what market is willing to pay, the investment company involved estimates this amount
  
  The quite period requires no details to be discussed that arent alreadly public (any thing not in the IPO prospectus). I would imagine it has something to do for insider information or something like that
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- Derek, 10 Aug 2006 @ 10:26am
  
  Re: IPO
  It is all capitalism.
  
  The company gets cash. As much cash as they can convince investors to pay. ANd there are no real rules there.
  
  To an outsider the numbers look totally arbitrary as well. Investment bankers determine the IPO amount based nt on what the company is worth but on what they think they can get people to pay. And the same witht he quantity of shares.
  
  So the company could sell 1 million shares for $100 or 10 million for $125. Or 5 million for $30. Whatever.
  
  The quiet period is primarily self imposed. The SEC has strict controls over what can be said by 'officers' of the company before important events like IPOs but these rules are so convoluted and subjective that it is MUCH easier to say nothing at all. Any statement an officer makes can later be construed by someone else as misleading, fraudulent, promissory or wrong, so they just say nothing.
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- Anonymous Coward, 10 Aug 2006 @ 10:29am
  
  Re: IPO
  the idea behind a quiet period is so that the company can't hype themselves up before the release of the stock, in an effort to stock prices higher
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  - Anonymous Coward, 10 Aug 2006 @ 10:30am
    
    Re: Re: IPO
    i meant- *in an effort to drive stock prices higher
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- Ethan, 10 Aug 2006 @ 10:39am
  
  Re: IPO
  The benefit for the company would be raising additional capital by selling shares to the public which in turn would hopefully be used to fuel upcoming growth. Also insiders that currently hold stake in the company i.e founders could sell some of their stake in the offering for liquidity. An IPO is priced by hired investment bankers who run a bunch of numbers: cash flow, expected future cash flow, expected growth, margins etc. However considering the company isn't turning a profit yet, makes it a little trickier to properly price the offering to intrinsic business value. Upon all this number crunching they may add in some magic (considering its making no profit) and then try to decide on a fair offering price. After which the investment bankers in a sense will purchase the entire offering, then in effect they will offer these shares first to institutional investors and their favorite clients, and finally after this is finished the offering we will available to the public at an inflated price above what in actuality the firm offered to the investment bankers. To add a last note, it is a very poor idea for a company to go public while not turning any profit. A rule of thumb is usually to show a profit on the books for at least 4 consecutive quarters, before an IPO, even if it is an internet company, compliments to Google. I tried to make this as clear and concise as possible, please forgive me for any errors.
  
  p.s. This isn’t economics; it’s more along the lines of corporate finance :)
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Scott, 10 Aug 2006 @ 11:30am

IPO
IPO is how many Chickens you are offered by folks to give them a piece of your company...It actuall stands for Initial Poultry Offering :o)
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- Anonymous Coward, 10 Aug 2006 @ 12:27pm
  
  Re: IPO
  I give 5 chickens.
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  - ulle53, 10 Aug 2006 @ 12:51pm
    
    Re: Re: IPO
    I see your 5 chickens and raise you 5 more
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Scott Gardner, 10 Aug 2006 @ 12:40pm

Reason for IPO
An IPO is not always to raise cash. Take Apple as an example. They were sitting on $300 million in cash reserves *before* they went public. Frankly, Apple needed investment capital like a fish needs a bicycle.
Instead, some companies go public so that ownership of that company actually has financial meaning. It's one thing to say "I'm the co-founder and half-owner of XYZ company", and another thing entirely to say "I own half the shares of a publicly-traded company with a market cap of $100 million dollars". In the second example, you're worth $50 million dollars. In the first example, you just have pretty business cards.

Scott
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Jamy Dickpin, 15 Aug 2006 @ 5:34pm

GODADDY CANCELS DOMAIN FORWARDING
Domain Forwarding is now cancelled even is it was FREE

http://DomainKiting.com

If you don't sign on and "Renew" each Domain Forward in your account at GoDaddy or Reseller Wild West Domains the the domain forward "Reverts" to a GoDaddy Pay Per Click parked page.
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- danny, 2 Sep 2006 @ 10:17pm
  
  Re: GODADDY CANCELS DOMAIN FORWARDING
  How about stating an actual fact. Forwarding is free on Godaddy accounts, whereas the Wild West Domains resellers can choose to offer it free or not.
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Ross, 28 Oct 2006 @ 10:20pm

Smart move
I'd say this is a pretty smart move on Bob's party as every web company is doing an IPO now, we are in dot com bubble 2.0. However when is his company finally going to turn a profit?

- www.thehostguru.com
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