Newspaper article The Christian Science Monitor

Google's Debut in the Stock Market Sends a Mixed Signal ; A Weaker-Than-Expected Premarket Auction, Followed by Two Brisk Days of Trading, Tell a Tale of Tech IPO Market

Newspaper article The Christian Science Monitor

Google's Debut in the Stock Market Sends a Mixed Signal ; A Weaker-Than-Expected Premarket Auction, Followed by Two Brisk Days of Trading, Tell a Tale of Tech IPO Market

Article excerpt

In the 1990s, it may have been the closest thing to having Ed McMahon knock on your door and hand you one of those big Publishers Clearinghouse checks: Invest in some high-technology company that was going public for the first time and watch your portfolio rise. Sometimes by 70 to 80 percent. In two hours.

Today initial public offerings (IPOs) by high-tech companies look more like investments in swampland. The mixed response to Google Inc.'s much-ballyhooed public stock offering last week is a reminder of both the perils and promise of the high-tech IPO market.

Amid a series of highly publicized missteps and faint market conditions, company executives had to slash the opening price of their shares from as high as $135 to $85. They also cut the number of shares offered from 25.7 million to 19.6 million.

But when the stock finally started trading Thursday, it jumped 27 percent in two days, closing Friday at $108.31. That put the stock within the range of prices the company had originally estimated, though at the low end. Overnight, the upstart search-engine firm became worth more than Ford Motor Company.

Despite the respectable rise, analysts say the Google IPO does not signal a return to health of the high-tech sector. Nor does it open the door, as many had hoped, to a long line of other IPOs from high-tech or Internet companies.

"Google is such a high-profile and highly successful company that you really can't extrapolate anything from this sale about the high- tech sector in general or other IPOs," says Carl Howe, cofounder of Blackfriars Communications Inc., a marketing and communications firm in Maynard, Mass. "It's not like there are dozens more lined up just like it."

To a certain extent, many of the details of the firm's IPO reflect the peculiarities of Google itself and the way it structured the stock deal. The last-minute drop in stock price also points up a new caution that many investors are exhibiting in the wake of the great dotcom crash of a few years ago. Indeed, as many as 20 firms have delayed issuing IPOs in just the past few weeks, a response both to Google's pre-market travails and a weak stock market.

"There has been this burning desire for the past few months to find the next big thing, the big fish that got away, and so all the focus of Wall Street has been on Google as the latest opportunity," says Martin Weiss, president of the Weiss Group Inc., an investment forecasting firm. "[Investors] of the 1990s have been spoiled to expect drama and hyper growth."

To be fair, virtually no sector is doing well in the market at the moment - and that has been reflected in the drop-off in IPOs in general. In 1999, 486 companies went public with stocks. Through mid- August, 123 had done so far this year, according to Renaissance Capital, a Greenwich, Conn. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.