Al Gore Throws Hat Into The IPO Ring...

from the not-quite-what-some-were-expecting dept

While there's still some speculation about an Al Gore run for the presidency, it appears he's got bigger fish to fry, such as an IPO for his cable TV station Current Media. Honestly, it looks like a tough sell as an IPO. It's not profitable. There are some serious questions about how viable a business it can be, and its "unique" angles, such as embracing the internet, haven't been all that successful (almost all of its revenue still comes from the TV side). If it succeeds as an IPO, it may be entirely on the strength of Gore's name, which seems like the opposite of what the company should want at this point.

Filed Under: al gore, cable tv, ipo, losses
Companies: current media

So Much For Efficient Pricing: Auction-Priced NetSuite Shares Still Surge

from the rationality-is-a-myth dept

I've always been a fan of the idea of a dutch auction IPO -- where the price is set via an auction rather than some investment bankers picking a price based on what they've heard from institutional investors. When bankers just set the price, it tends to lead to companies leaving money on the table, as the banks price the stock too low in order to get the publicity of a first day "pop." While some of that pop is reasonable, the size of some of them suggest that the company threw away many millions of dollars for no good reason. An auction, in theory, solves that by making the price more explicitly set on the market (though, there are some who make compelling arguments about the problems the auction model has as well). For the most part, it was smaller, less well known companies that tried to use Dutch auctions for IPOs -- but the concept got a lot of publicity when Google IPO'd using a Dutch auction. Of course, many investment banks were so freaked out about it that they starting spreading FUD about Google. That didn't work out so well. However, many other companies have still been scared off from using a dutch auction, in some cases probably costing the company millions.

That's why it was nice to see NetSuite become one of the few "hot" companies to also go Dutch auction with its IPO. Yet, with the shares pricing last night and hitting the markets today, there was still a significant first day pop (though, it started the day heading down rather than up). While this definitely worked out well for NetSuite, it does raise some questions about the dutch auction process. It still seems like a much more efficient way to price IPOs than an investment banker picking the price -- but it's pretty clear that there are many other factors that go into how investors actually treat a stock once it hits the market.

Filed Under: dutch auction, ipo
Companies: netsuite

Should The SEC Allow For A SOX-Less Market?

from the might-we-suggest-the-Amex? dept

As evidence that Sarbanes-Oxley has made it too burdensome for small companies to go public, many have pointed to the rise of London's Alternative Investment Market (AIM), where several American companies have chosen to list. This market is basically a haven for shakier companies that can't list on more established exchanges. A new academic paper suggests that AIM itself represents a model of financial market regulation that warrants exploration. The basic idea is that if you have a system like Sarbanes-Oxley in place, you could also have a market that is exempt from the regulation. Smaller, shakier companies would flock to this market, but investors would know to be wary about investments in these firms. Such a market might resemble the NASD-owned OTC BB market, which trades penny stocks, except that even that market is currently subject to SOX. You can see this concept in place to some extent in the private stock exchanges being established by Wall Street banks, which offer companies a place to list without being subject to regulation. But these are off limits to most investors, and for smaller companies, listing on them doesn't make much sense. One possible objection is that if a SOX-less market were to exist, companies of all sorts would try to list on it, but they'd be imperiling their reputation by doing so. Most likely, the majority of companies would opt to remain on established, reputable exchanges. Seeing as the SEC is actively looking for ways to reform Sarbanes-Oxley, it might be worthwhile to explore the possibility of allowing for the establishment of such an exchange.

Filed Under: ipo, sarbanes-oxley

Solar Cell Mania Reaches Its Limits On Wall Street

from the the-sun-god dept

Despite the market's convulsions, the VMWare IPO went off without a hitch, suggesting that investors aren't yet throwing the proverbial baby out with the bathwater. They may be in a state of panic over credit markets, but they won't let a quality company be ignored. However, they may be pulling back from certain riskier ventures. Canadian solar cell maker Photowatt has announced that it will suspend its IPO plans, citing unfavorable market conditions. This is a pretty common excuse for companies, particularly at times like these when the market does look inhospitable. What seems most likely is that investors simply have their fill of solar power, as there's been a rush of IPOs in the space this year. With every one that comes out of the gate, it gets that much harder for the next company to go public, particularly if it's not on solid financial ground.

Filed Under: ipo, solar
Companies: photowatt