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Google's IPO Trading Defies Dutch Auction Logic?
TopShelf writes "Today's first-day trading gains for Google may not have just been the result of ambitious day-traders. This story from CBS Marketwatch alleges that Google deliberately set the $85 IPO price well below the true clearing price of their Dutch Auction, and issued fewer shares than expected, perhaps with the intent of limiting supply and assuring themselves a nice runup during the first trading day. In the story's informal survey, winning bidders only received 75% of the shares they should have."
Glad I'm not the only one who suspected this.
I think the strategy could actually backfire on Google - since decent short-term gains are now attainable, many bidders will cash out early (a scenario they were hoping to limit via the Dutch Auction process).
Just MHO, but it'll be very interesting to see where the stock heads in the coming weeks.
I find it ironic that the Google context-sensitive ad for this article is about making your website a "revenue generator"...
perl -e 'print $i=pack(c5, (41*2), sqrt(7056), (unpack(c,H)-2), oct(115), 10);'
My its sad to see all the people switch sides on Google since they finally decided to become public.
Google rocks, I hope they become really rich.
Of course they wanted to see green next to GOOG at the end of the day, and not red. Imagine where they would go in the days to come, had they ended in red! Google definitely plays their business, financial, and engineering games with human psychology in mind, and they play it so well, they are always taken as 'the good guys'.
Simpy
so does "don't be evil" still apply as their motto?
?SYNTAX ERROR IN LINE 42
105 was the bottom of the expected range, until the day before when the lowered the price by $20, and the number of shares by a few million.
So then it went up $15 the first day, instead of dropping $5.
So it's still funny business as usual. Had they not changed all the numbers the day before, it would have been completely different, and very likely would not have moved much.
- Adam L. Beberg - The Cosm Project - http://www.mithral.com/
Another interesting point is that some venture capitalist firms pulled the stock they were going to sell. Did they know something the public doesn't?
D -GOOGLE.html:
From http://www.nytimes.com/2004/08/18/technology/18CN
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 surprise isn't how often we make bad choices; the surprise is how seldom they defeat us.
The news article I saw said held the opinion Google lowered the number of shares in the offering in order to increase the initial offering price-- since the "dutch auction" system had the direct effect that the fewer shares involved in the auction, the higher the final price of the auction would be set. This made a bit more sense to me than this "limiting supply" theory.
I think about the only thing to take away here is "no one fucking understands the stock market, and anyone who claims otherwise is selling something".
Irritable, left-wing and possibly humorous bumper stickers and t-shirts
IANADT, but it seems that an upward movement was almost inevitable, given the pre-set condition that the price would be set such that fewer shares would be received than "won".
Only 8.5% of the company is now held by investors.
google provides a great service. personally, if and when the price drops to 90.00, I plan to buy a couple shares and hold on to it. the value I get from google and gmail is well worth a show of appreciation. If nothing else, supporting them is a personal statement that they have done a good job so far.
The stock seems to have stabilized at $100, $13 away from where it started. If producing a stable stock price close to the IPO price from was Google's intent, at least as far as today is concerned they suceeded.
I don't know what Google could have done to please people here. If they set the price too high they're overpriced and foolish. If they set the price too low they're "causing a pop" and greedy. At this point, I'm just going to shrug and get on with my life.
Seriously, wtf?
So a company made an IPO. Wow.
Not to sound like a troll, but people are clamoring about this and I just don't get why. I use google as much as the next person and they're a good company, but what does it have to do with the stock market?
Do people think this is a magic pot of money? Just because it's google doesn't mean it will constantly increase in value. Just because it's google doesn't even remotely guarantee that the stock will perform well. That's all at the hands of the traders.
So really now, what is the big deal all about?
There's lots of complaining from the established brokerages about how Google did it. They are churning the media on this one. Google pulled a fast one on the street and they don't like it. The way it was done would have meant brokers could pass out cheap shares to their buddies. Google's Ductch auction meant that the market got to bid a price. This "first day run up" can be purely ascribed to wild day trading. There's nothing Google could do about it. They were wise to get a good price beforehand.
Google's valuation is pretty rich :
CBS says it's 23 billion. General Motors is 23 billion. Is google worth GM? I don't think so. The current $100 price should shrink quite a bit as the the entusiasm wears off.
Google is sitting pretty for the moment, I hope their employees and early investors can pull a little bit out while the price is still high.
Screw Wall Street, they were denied insider's cut and kudos to Google for being patient and suceedding in doing it a different way.
19.8 million shares * $85 = 1.666 billion. Yep that's right: 666. What happened to 'Don't be evil'?
If it wasn't for the dutch auction, you know what would've happened: the stock price would've been set at $15-20, insiders and bankers would've bought at or below that range, and then when it popped at $100, they would pocket the difference.
With the auction the pop was smaller and the company got more cash.
I think they did all right.
You're going to hear a *lot* of noise about this from those bankers and wall street types that would've preferred the $15 to $100 pop. They will float all kinds of rumours about google just to make sure nobody else tries to price their IPOs more fairly in the future.
Follow the money, as usual...
It is very uncommon in an IPO to get even half of the bidded shares.
CBS marketwatch is just going along with the unhappy crokers / brokers that are not receiving their $1/share commissions because the Google guys decided to let you and I have a fair shot at investing in GOOG via a true public auction.
They just didn't want first day balloons of 100% or more, which is what happened during the dot com era. The people lucky enough to buy at the offering price (generally the underwriting banks' best customers) made out like bandits, at the expense of the company and insiders selling their shares.
from wail street weasels restricting IPO grants to buddies, setting the price at a high point from which they get rich, and the schlubs who didn't get initial grants of IPO stock when were sold side-by-side with the public offerings to provide a bonus on top of wonderful gifts from finance-world heaven get the shaft.
this way, everybody with a winning bid got stock, and had a chance to quick turn it around for a hot gain if they so desired.
backfire, hell, they did good and didn't lose hundreds of millions to the investment banks. go GOOG!
if this is supposed to be a new economy, how come they still want my old fashioned money?
So reading that I thought, I wonder if there will be a bunch of negative press about Google now? Since then, sure enough, nothing but negative press, rumors, bad mouthing. It's enough to make me wonder if the Wall Street crowd worked hard to make Google look bad so that other companies wouldn't do something similar. But I have no idea if this is accurate, or just coincidental. Anyone heard anything?
With people selling their shares only for a premium in ANY ipo, it's a mathematical certainty that a runup on the first day is completely inevitable regardless of the process used to doll them out. This is because those who sell shares will not do so on the first day unless a nice premium is paid, and there were many investors out there that wanted a piece of the ipo. Google was successful in that the IPO did not product catastrophic price raises (50%+) that others have seen. Mike Sklut www.vafrous.com
mix_master_mike
vafrous
Lowballing your IPO to ensure a 1st-day pop is OK. It provides a reward for those who bid, rather than "sit out" the IPO as many institutional investors did.
NOT being up front about it is not.
For example, they could've said (and I've simplified the #s) something like "we will sell 5 million shares and existing stakeholders up to 2 million. We will price our IPO at the bid of the 8 millionth share and allocate a 100% allocation to the bids for the top 5 million shares and a porportional allocation to the next 3 million shares."
If stakeholders sell only 1 million shares then the lowest-3-million shares will receive only a 33% allocation.
This would be nice and transparent, and would give an incentive to bid high.
Knowledge is how to play a game, intelligence is how to win, wisdom is knowing what game to play.
Whoever wrote this crap is a financial n00b. Google issued as many shares as they felt is best for their interest. The initial price of 105-135 was a pure speculation, it does not mean that IPO could bring in that price. This is not a lost opportunity cost. And finally, regardless the method of the IPO the price within a few trading days will settle to a fair market value.
People not owned by large publishers can not win in press created by large publishers. Had the stock gone south, CBS would have printed more nonsense about Google's "arrogance."
The poor coverage of and derogatory treatment of free software in the "mainstream" media has done much to discredit large publishers in my eyes. CBS, M$NBC, ABC, look more like moving tabloids than news. The only thing worse than not knowing about something is to be sure about it and wrong.
Friends don't help friends install M$ junk.
While NEW shareholders are unlikely to sell at a loss or break-even, EXISTING stakeholders who chose not to offer during the IPO may sell at or below the IPO price.
If I'm an employee and I know I need to liquidate some shares for cash, and I'll gamble the price will go UP, so I won't sell during the IPO. But guess what, the price goes down a tad and I STILL need the cash. So I sell to a willing buyer. Multiply this many times over and you have a functioning market.
Knowledge is how to play a game, intelligence is how to win, wisdom is knowing what game to play.
What is a "Dutch Auction"? Does it have anything to do with dutch oven or going dutch? Or does it refer to the stock market in the Netherlands? Oh nevermind... the link finally came up.
People keep saying "Google is now accountable to shareholders".
Well, I suppose in theory, but the vast majority of the company is still not publically traded, and it's not like the people in charge of the company don't own a controlling stake - so why would they care if they piss off all the shareholders? It's not like they can be fired.
Most of these companies that get so concerned with quarter-to-quarter earnings are entirely different from Google, which is still, what, 80% privately owned?
Fact of the matter is the self-interest of Google's main owners, the guys running the show, is still heavily in favor of long-term performance.
paintball
They just about HAD to reserve the right to do things in their prospectus, so they COULD do them later without getting fined by the SEC.
What they FAILED to do was announce, in bright lights, what their INTENT was right before bidding started.
There's more to being open than putting what you MAY do in fine print several months before the event. Transparency means you announce your decisions as you make them.
Knowledge is how to play a game, intelligence is how to win, wisdom is knowing what game to play.
If the share price goes up? I'd be more interested in regular dividends.
Granted, I don't know a whole lot about investing.
tasks(723) drafts(105) languages(484) examples(29106)
Google is sitting on a pile of cash and rapidly growing earnings...
:)
GM is sitting in a saturated market, getting smacked around by foreign competition and high oil prices, and has an unfunded pension liability in the billions...
The REAL underfunding of the pension, if pension math wasn't SO rediculously warped as to make it look like it isn't a problem, GM is probably rightly valued at the price of Google... Remember, Assets = Liability + Owners (Shareholder's) Equity, OR, Shareholder Equity = Assets - Liabilities...
Sure GM has a LOT of assets, but they have a LOT of liabilities, some of which are hidden from the balance sheet by the insanity of pension math...
BTW: I think that Google and the Internet companies are RICHLY valued and priced for perfection... However, if they can MASSIVELY grow earnings over the next few years, they may grow into those valuations... i.e. grow earnings at 100% this year, and halve your P/E ratio, and the stock price is flat... Don't lose hype/momentum/confidence, and your P/E will shrink slower than that. By the time Google's P/E drops to "market averages" (when they aren't high-tech growth anymore, 15-30 years), they should have plenty of time to increase earnings to make up for it.
Alex
I am not a day trader.
Practically every news article I saw on the subject of this whole dutch auction thing mentioned that Google was reserving the right to fiddle with the exact number of shares sold if they didn't like how the price was turning out. And I saw quite a few articles. So it isn't like nobody saw this coming.
Irritable, left-wing and possibly humorous bumper stickers and t-shirts
All the money shows are making it sound like the Dutch auction was some whacked out failure. I say it worked great. The big Wal Street Firms didn't get to skim off it, looting the individual investor out of gains and and the people who bid got a good price.
In the Google prospectus, they state that they can set the ipo price such that successful bidders recieve approximately 80% of stock.
https://www.ipo.google.com/data/prospectus.html
In the event that the number of shares represented by successful bids exceeds the number of shares we and the selling stockholders are offering, the offered shares will need to be allocated across the successful bidder group. We, in consultation with our underwriters, expect to use one of two methods to do so--pro rata allocation or maximum share allocation. With either method, our objective is to set an initial public offering price where successful bidders receive at least 80% of the shares they successfully bid for in the auction. We do not intend to publicly disclose the allocation method that we ultimately employ. Once we choose an allocation method, we will not change it.
"How did this thing get moderated to +5 insightful?"
Because most mods here dont have a clue how the financial markets work.
How about a new acronym IANAS (I am not a stockbroker) for opinions re finance from those who know nothing about it?
Come to think of it I ANAS compliments I ANAL rather nicely.
This is a troll? Just because it doesnt say "Google is teh r0x0r! M$ is teh suxor!"?
Just because Google is "cool" doesnt mean that it is a great place to invest your money. Seems to be way too many people on here who talk aobut how great a buy Google is, without backing up that claim with fact.
The Google market share is not going to grow much further, and with Microsoft about to launch a big search engine of its own to try to take on Google, Google's market share can only really go downhill from here. Unless they start coming out with some very innovative ideas, I cant see how the stock prices will increase much further.
And here I thought we had all learned our lesson about buying over-hyped tech stocks with cool sounding names.
I am genuinely curious, why would any of you buy GOOG shares at their current prices? Besides day trading I wouldnt touch GOOG.
Movement of the stock price post-IPO gets Google nothing, nothing. Pricing the shares at 105 and ending with a $5 loss would have netted the company about $1.5 billion more and they obviously would have chosen this if they had the option. They just didn't, and had to price it at $85 due to lower priced demand than anticipated.
The original poster was ignorant of how an IPO works with the claim that they netted a nice little gain after the IPO.
Several polls of canadians show that over 90% of them prefer their system to ours. THey live right next door; they speak the same language; they share the same culture; they are knowledgeable about our system and are knowledgeable about their system. If our system is so much better than theirs, then why do about 93% of Canadians prefer their system to the American system?
eat shiat and bark at the moon
I happen to agree that the canadian system is better than the US system (I live in the US) but this is not typical. People in the US would tend to say their system is better and people in canada say theirs is. All this means is people in a democracy tend to be reletivly happy with the way their own governments do things.
"It is not how things are in the world that is mystical, but that it exists." -Ludwig Wittgenstein
My brokerage asked a series of questions in roughly two categories:
1) About my relationships with financial institutions involved with the IPO, whether I was a financial professional, that sort of thing. I assume these are required by the SEC to screen for conflict of interest.
2) About my financial resources and my investment goals and experience. They asked me to rate investing knowledge and experience ( None, Basic, Intermediate, Advanced). Those aren't the terms they used, but you get the idea. I found that if I lowballed both at Basic, I was told I was not eligible, but at Intermediate, I was accepted. (Honestly, I am somewhere in between, so both answers were honest.)
I was also asked whether I was investing for Speculation, Growth, Maintenance, etc. Basically, the brokerages were screening to keep customers from making a serious mistake in the risks associated with an IPO... so that later, I can't sue them. If I had invested all my money in Google, and lost it all... they would point at my answers and say that I claimed to have enough money and was willing and aware of the risks.
My brokerage did not require that I have a certain level of assets held with them (some did), beyond enough to pay for my bid.
So no scandal here...
No one in either of the Google IPO stories today has commented on this, that I've seen.
Why do the Yahoo charts show the stock as having been as high as $140 right off the hop, and dropping like a rock before settling around the $100 mark? Anyone with more insight as to the stock market or how Yahoo charts this able to comment?
I can't be the only one on Slashdot who's noticed this...
Endless arguments over trivial contradictions in books written by ignorant savages to explain thunder in the dark.
While Google's market share may not have much room to grow... the overall market, I believe, is going to grow, as even more people will find even more of their info through the web, and most likely through Google's search engine.
So Google has potential for increased revenue/profit.
Canadians have sort of the best of both worlds: they have socialized medicine at home, and are right next door to a capitalist medicine system if they want to use that. If socialized medicine was the only choice, and people couldn't go over the to US for treatment if they chose to, that might make at least some people less happy with the arrangement.
10 PRINT CHR$(205.5+RND(1)); : GOTO 10
There was an error this morning in which one of the brokerage houses let two trades go through early which resulted in the briefly reported $140 price. The NASDAQ announced that trading had not yet begun and it began trading at the opening price of $85 a little bit later in the morning. Since Yahoo's chart likely just grabs the data as it's seen and plots it, fixing this may be a manual thing. You can read about the error here.
because 100% of them are canadian! God bless the USA . The grass is always greener and more grass grows in the fields than the tundra. Move up there and become one of them if its so gravy to be a canadian. I wouldn't become canadian if it ment my entire family would get 100% health care. Fuck health care, the human race has survived thousands of years without specialized Dr's and drugs. If your ignorant enough to think we ALL NEED 100% health coverage then you deserve a good chunk of natural selection. Most people don't need it and the rest are addicts. Only a few are truely needy.
You don't have much room for growth in the stock though... 10x the current stock price and you have a market cap the same as Microsoft.
Anybody thinking that Google is going to make them millionaires in the same way that Dell, Microsoft, Intel did is taking a huge gamble.
True, a simple "everyone gets 70%" doesn't do anything, since everyone will just increase their request by 3/7ths so they get what they want.
The solution:
You make the rule a function of the bidding.
In my example elsewhere in the thread, higher bidders would get a full allocation, and lower bidders a partial allocation. If you increased your bid, you might get stuck with a full allocation.
The thing is, you make your decisions public as you make them, and you make them before the bidding starts if at all possible.
Knowledge is how to play a game, intelligence is how to win, wisdom is knowing what game to play.
The thing is, people like you [...] are a big part of the reason health care in the U.S. is both expensive and substandard. Most of the time, if you feel sick, you do -not- need to see a doctor.
True, MOST of the time. But a good family doctor is often the one who diagnoses serious illnesses early, leading to much better chances of recovery. Early diagnosis is much cheaper, too. So these visits are not quite useless.
It has to be a really good doctor, though, to pick up the small clues and not become burned out by the mass of trivial complaints. How many of them are really good? It's the specialists who get the "glory".
Stop worrying about the risks of nuclear power and start worrying about the risks of not using nuclear power.
Ah... 10x growth...
Anyway, the people who became millionaires off Dell, M$, Intel, Apple (the original hot IPO) did so not because they bought the IPO, but because they received very early stock in the company... the pre-IPO investors, the founders, and early employees/executives.
But I do think that Google in the medium-term has the potential to double to triple current investment (yes, I think it's now worth more than Yahoo). As for Microsoft, well, it is besieged on all sides by better products, malware and viruses, and vengeful users.
Linux is enroaching from the technical side, Mac OS X from the non-technical side, and free and open source software threatens its enterprise and server business. It has little prospects for growth... so I don't necessarily think that their value is that unassailable.
Hey, I guess it's better than sticking your money in a bank at 1% annually.
Marcin
I, for one, am going to wait until the stock drops down to a more reasonable price, and then pick up one for kicks and giggles.
It would look nice next to my framed playboy stock, but GOOGPLA sounds like some nasty disease.
I can't imagine that many reporters earn enough to purchase your standard 100 share bundle of stock out of the blue. That may be part of the problem. I know I don't have that kinda money, but I'm not invested in ANYTHING right now. So I didn't go through the screening process.
Another possible scenario is that memebers of the press have undue influence over the market and may not be welcome in an IPO. CNBC has moved to a disclosure scenario, and there's been rumors of completly divorcing their reporters from market ownership. Fortunately for them, CNBC is a fairly strong company that can assist in manipulation charges. NPR probably isn't.
I Browse at +4 Flamebait
Open Source Sysadmin
It's a nice conspiracy theory. But it makes little sense, if you pause to think about it.
The company receives only the capital raised through the IPO process. A higher capitalisation on the secondary market doesn't translate to a larger pot of money for the company. Google insiders would also be locked in and unable to sell their shares on the secondary market for a period of time.
Google would therefore have every incentive to ensure a high IPO price. If you believe Google deliberately set its IPO price low at $85 to get a first day "pop", then why didn't they set it even lower, at say, $50, or even, $10?
What part of the US are you in where people say they're relatively happy with the healthcare system? I can't think of anyone in the US that has said unequivocally, "We have the best damn healthcare system in the world!"
It's not offtopic, dumbass. It's orthogonal.
I love what Google's doing! As it stands I'm going to make a FORTUNE! Because I'm a Republican conservative and as such I'm really smart and informed in money matters.
John Kerry is a Joke!
Yea man. Humanity has survived how long without fridges, medicine, doctors, pizza pops, guns, and computers. TOSS IT ALL!
-If God wanted people to be better than me, he would have made them that way.
In some cases, people die as a result of this overload who likely would have lived in a more sane system of medical care such as Canada's.
Emergency rooms practice triage, it's not first-come, first serve. If you have a guy with a gunshot wound, and a guy with a sinus infection, who gets treated first? Yeah, the guy with the gunshot wound.
That's why when you show up with a fracture, you wait 8 hours to be seen - because your fracture isn't going to kill you.
paintball
Really, the change in price after the IPO should net Google more in the long run since the number of shares was cut from the originally quoted amount. They always have the option to sell off the shares they originally intended to sell as the stock increased in value.
Google is merely trading time for good will in the eyes of the public and in the eyes of the stock market. A stock that takes a plunge on IPO tends to create a good deal of negative perceptions regarding the company. Everyone and everyone was looking at Google to see how this played out.
Had the stock gone red, you can be that headlines would be heralding the demise of Google. Instead, they are up what? 17%-18% Sure the company could have made money on the IPO, but that would have cost them in image. They can still sell their shares at a later time, possible at a higher price.
It is just a matter of now or later and how they want to be perceived.
I also disagree that they lowered the price because of lowered demand. I think they lowered the price and cut back the supply because they saw what people were willing to pay and thought: We can offer it at that price that people are willing to pay, get our money now... or offer the stock at a lower price, cut supply and create an upsurge in price.
The "performance" of the stock on the IPO day is something that you can't buy with money. The mindset that comes with that kind of IPO jump is worth more to google in the long run than the hundreds of millions they didn't make by selling off shares.
That's my take, at any rate. Whether what they did is a good or bad thing depends on how you view the stock market's workings.
Winged Power Photography
Invade Canada.
paintball
The fact that Google were able to bypass so much of the existing IPO infrastructure upset the investment banks. Normally, the banks work on a principle that they can always unload the nut centres on the promise that the customer will get a couple of juicy soft centres next time round. There are many companies that would find an IPO much more difficult so the idea of having some 'sweeteners' around is always useful for them.
If the best looking issuers bypass this mechanism then the banks will have less of a possibility for unloading other shares.
See my journal, I write things there
IPO = It's Probably Over-priced !!
This is standard practise, and a reporter that didn't even know something as basic as that perhaps wasn't the right reporter to follow a story about an IPO.
I could see it being an issue if the Dutch auction bidders were somehow locked in, but I don't think that was the case. Those bids should have been conditional based on the actual inital price since you're bidding on your actual perceived value of the company and the amount of cash raised affects that.
Actually, you could bid for as few as 5 shares (and no commision), so anybody who bothers having a brokerage account would certainly be able to find $500 bucks to invest.
As I said in another post, the reporters who were deniend bid status were probably screened out due to their answers for investment strategy or experience.
I assume people with conflict of interest and inside information, i.e. Google employees, were not allowed to bid on the Dutch auction.
If you own any mutual funds, you might want to look into what their behavior around the Google IPO was this week.
The IPO shares had a pop of about $13 on day one, which clearly indicates that there were a lot of people who wanted in on GOOG stock but didn't get it out of the Dutch Auction process so they were willing to offer a premium to the first Dutch Auction winners who were willing to sell and bank an instant profit.
I suspect that there were many "institutional investors" who boycotted the Dutch Auction simply because they didn't like it, as it takes the ability to bank instant profits away from them and instead gives it to the average investor. However, mutual fund managers represent a whole bunch of average investors at once... when they lose money, they're losing their customer's money.
If any of your mutual funds turned out to have paid more than the IPO price for GOOG stock yesterday, sell the fund today. Your manager spent some of your money trying to make the Dutch Aution process look bad. If he was willing to pay $95 per share for GOOG in the afternoon, he should have been willing to bid $95 per share in the Dutch Auction, which would have resulted in the same shares for less money.
The Dutch Auction is just a different way of doing an IPO, one that upsets the big boys because everybody gets to come out of the gate at the same time with no advantage for them anymore. This instant-pop seems to indicate that some people were waiting for GOOG to hit the NASDAQ system and not playing in the Dutch Auction, and if somebody was doing that in your name I don't think you want them controling your money any more.
Umm...repeated polls show that somewhere over 70% of Americans want universal healthcare, which is what Canada (and just about every other western nation) has.....
eat shiat and bark at the moon
Life is not a right. We all have to keep up our end. Absent that ethic, everything ultimately falls apart.
HBI's Law: Frequency of calling others Nazis is directly correlated with the likelihood of the accuser being Communist.
For every incidence of hypochondria that you cite (which in effect is what you are saying) there is someone like me who refuses to see a doctor unless dragged in chains to the door of the office and then prodded by a bayonet.
Mods: How exactly is it insightful to suggest that everyone in the US is a hypochondriac anyway? Sounds like a bunch of European moderators this morning - woops, that's every morning.
The problem with your attitude is that you neglect the myriad cases where a GP can be a very useful triage device. The GP can identify those with bacterial infections that need antibiotics, which frankly is the only reason I go. The GP can tell you to go to the hospital.
Otherwise, who gives a shit how often the hypochondriacs go to the doctor? In the US we have enough GPs to handle triage. Sounds like Canada doesn't, to the detriment of their supposedly 'superior' health care system. Hint: it's only superior because they have ours right next door. If China were their next door neighbor I suspect things would be different.
HBI's Law: Frequency of calling others Nazis is directly correlated with the likelihood of the accuser being Communist.
"I would have bought shares if an investment bank set an arbitrary IPO price of $130/share, instead of buying shares at $85 each via this Auction process."
Why??? What does that mean? I don't get it at all.
Anybody who goes the Dutch auction route earns Wall Street's wrath. Overstock.com did this two years ago - their CEO claims nobody wanted their business, and that they still get bad-mouthed because of it (see here and here for the Motley Fool's take on that).
Granted, Overstock.com is a classic dot-com, which could explain a lot of the bad press...
To a Lisp hacker, XML is S-expressions in drag.
Ok, I'm joking. My questions: did Google do something dishonest, or illegal? I don't know enough about IPO's to know.
No, nothing dishonest, not even unethical. In fact, you could go so far as to say they had the single most "honest" IPO in history.
Rather than the norm of paying a group of "experts" to decide a good starting price for their shares (which invariably results in those experts setting the price WAY too low so their buddies can all make a killing when the price goes up), Google basically asked the actual public what price they would pay to get a good estimate. Thus, Google made far more than they would have otherwise, while starting their stock at a realistic price. This annoyed the experts, their buddies, and all the middlemen who would have gotten a cut (by "a cut", read "the lion's share of the IPO").
The "controversial" drop in starting price you can consider an incredibly saavy move - It guaranteed that the price would go up a bit, but not so much as to get the same sort of unrealistic bubbles that killed so many dot-coms. Sort of a built-in reward for those who jumped in on the IPO, but not so much as to look unsustainable.
I don't quite understand the details of this part, but they somehow also managed to make sure that real people (rather than only Wall Street scum) could buy shares. Naturally, this caused a great deal of annoyance to the Wall Street scum who would normally profit from such an IPO.
Overall, they joined The System while telling The System to piss off.
As an aside, even for those who would fault them for bucking the system, I would point out that they only joined kicking and screaming. Because they had gotten so big, even if they had stayed private, SEC rules would have kicked in that provide all the hassle of public trading but none of the benefits. Almost like telling someone "You make the best widgets around, so we'll take them. We'll pay you if you want, but we take them either way".
>there is a direct correlation between competent management of a company and stock value.
This is absolutely not true.
There are lots of competently run companies in boring, dull industries whom's stock never goes anywhere. Try looking at furnature manufacturers or fisheries.
During any mania, such as the "dot com" boom, there were lots of incompetent managers who's stock shot up skywards. Look at the history of Sunbeam when Dunlop was leading it.
Never mistake a company with its stock. The direction of a company is controlled by a small number of fixed people. A stock is controlled by a large number of changing people.
The surprise isn't how often we make bad choices; the surprise is how seldom they defeat us.
Don't be evil
Is greediness the same thing as evilness?
I was disappointed myself as I would have loved to invest in the IPO but Ameritrade said, "No." Personally I think the whole thing is silly. Oh well.
Several polls of canadians show that over 90% of them prefer their system to ours. THey live right next door; they speak the same language; they share the same culture; they are knowledgeable about our system and are knowledgeable about their system. If our system is so much better than theirs, then why do about 93% of Canadians prefer their system to the American system?
Where do you get this poll and did it come from the office of the Conservative alliance. If this were true why does any party that even midly suggest that it might be a good diea to start a study to see if we coudl adopt the american system, gets vilified like they just purposed that legalize eating babies? Why does every pole say Canadians are satisfied with their healthcare but concerned abotu wait time. IT's not perfect. But it's nowhere close to what you suggest.
"There are more things in heaven and earth, Horatio, than are dreamt of in your philosophy."
One reason for the 75% of shares could be to force people to buy shares to make a 'round lot' of 100, or 1000, or whatever, thus making the price go up. In the open market its easier to sell 100 shares instead of 75. Everything is tend to be done in multiples of 100s. Quite devious, actully.
The way the Dutch Auction worked was that people
indicated what price they were willing to pay for how many shares. Once GOOG decided how many shares to sell, they counted down the bid shares from the highest prices until all were accounted for. Then they sold them all for that value. That means that since they sold for $85, everyone who got shares were WILLING to pay at least $85, and probably more! Since some people thought they were worth $85, while others thought they were worth more, the ones who thought they were worth less sold 'em to the ones willing to pay more, and the price/share went up.
in the early 90s when Hilary tried to do something about it, the Big Money behind pharma and privatized healthcare spent mega millions to spread propaganda to fight it.
eat shiat and bark at the moon
I thought it was going to start between 105 and 135. By my math, that's about as HIGH a price as the market would handle... so I decided that the price wouldn't rise for awhile.
But since it started at $85... I wish I had sunk some money into it!!!!!!
That's a 17% gain in 4 hours. If you had $100k into it, you would have made $17,000 in 4 hours, or roughly $4,250/hr.
Stewey
There are 10 kinds of people in the world. Those who understand binary and those who don't.
Don't put too much stock in CNN here. They're looking for a scandal to boost their numbers. Google is run by ethical managers and who employees many smart people. They've managed to make search profitable and been innovative along the way, building up a user base *and* income. So no, they're aren't a remannt of the dot-com era; they are, in fact, the opposite of much of that.
I think the brokerage houses are really upset about Google cutting them out of the big commissions they usually charge for bringing an IPO to market. They fear other companies may start doing the same thing. They face the potential lost of billions in revenue over the next few years.
It is in their best interests to shovel as much dirt on this IPO as possible. Hence all the bad press recently about employee stock options, Playboy interviews and this grousing about a fairly small first day advance. This article is just a product of the sour grapes from Wall Street.
These brokers have always used initial public offerings prices as a form of corporate bribery to their best clients. No small investor got a chance to purchase Netscape at its original offer (~25.00 ??). If memory serves me right you were lucky to touch it for 100.00.
Google has attempted to leveled the playing field for everyone wanting to take advantage of their good fortune. I do not believe that for one moment there was any malice or greed associated with Google's executives and their actions in the IPO.
I am not saying the Dutch auction method is perfect or it can't be exploited, but it is certainly far more fair than the treatment Joe Average investor gets with IPOs from any brokerage house.
Maybe a suburb filled with trial lawyers and insurance agents. I'm sure that part of the country is plenty happy with the U.S. healthcare system.
Rampant Ninja related crimes these days...Whitehouse is not the exception
That is largely affected by how many shares the company retains for itsself.
If the founders still control a majority of the shares and don't plan on dispersing them, then all they've really done is allow others to join them on the magical carpet ride, and to raise a lot of money for financing operations.
Wall Street doesn't actually get to say a damned thing about the operation of your business. They can expect things, and the analysts can say what they expect to see happen. Those expectations might affect buy and sell orders. [Which you correctly point out could cause a floundering company to do stupid things.]
As a matter of fact, since no large institutional investors were really involved in this, there isn't some big megacorp who can now say "OK, time to start being evil like everyone else is -- begin the baby-grinding operations".
If you had the scratch you could buy shares in Warren Buffet's company. You sure as hell can't tell him how to run his business because he retains a controlling share.
Now, if they keep dispersing shares and a large controlling stake ends up in the hands of someone who is all about corporate greed, what you say could happen.
But in general, going public to a degree isn't an automatic trip into corporate evils.
Lost at C:>. Found at C.
Several analysts commented that the IPO price should have been set around $50 instead of $85. This was to help drive the price up to a stable price instead of deflating after the second day of trading.
All that is necessary for the triumph of evil is that good men do nothing. --Edmund Burke
I'll add one you can replace with IANAS (also works with IANAP, I am not a politician). I can't claim original credit for it though. Okay, here it goes
IANAC - I am not a crook
Rampant Ninja related crimes these days...Whitehouse is not the exception
Most people want to know that medical assistance is available at all times regardless of their financial abilities. Much of the civilized world does this with government-sponsored doctors.
The US was doing that: public hospitals must fix anybody, and are not allowed to ruin your credit if you cannot pay for the aid. Doctors did not like this, so now the doctors at most hospitals are consultants who bill the clients directly to avoid the laws applying to hospitals. The hospital charges you a few thousand for use of their space, and you do not have to pay, but then the anesthesiologist sends you a bill for giving you pain-killers, and the surgeon sends you a bill for cutting you open, and either of them can ruin your credit.
The US has corporate-sponsored medical aid. Most companies include "health insurance" as a benefit for working in a job. If you do not work in a corporate-approved job, health insurance is very expensive and very limited. This discourages people from escaping from company-mandated lives.
The real disadvantage to having government-sponsored doctors is the doctors.
If a doctor is really good, they move to an open market (like the US) so they can charge market prices. That is threatened in the US by health insurance companies setting standardized wages, but you can still get better service if you are willing to pay more. Many doctors have policies that you are responsible for the difference between their price and what your insurance is willing to pay.
People are also discouraged from becoming doctors. They must be willing to spend a decade of their life on specialized education, and then have their pay determined by the government (or health insurance companies) rather than their abilities. The most talented and ambitious will choose a different field where they can be compensated for their abilities. The average level of expertise declines, and everybody loses.
I spend my life entertaining my brain.
Google's prospectus reads, in part:
"The initial public offering price will be determined by us and our underwriters after the auction closes. We intend to use the auction clearing price to determine the initial public offering price and, therefore, to set an initial public offering price that is equal to the clearing price. However, we and our underwriters have discretion to set the initial public offering price below the auction clearing price. We may do this in an effort to achieve a broader distribution of our Class A common stock or to potentially reduce the downward price volatility in the trading price of our shares in the period shortly following our offering relative to what would be experienced if the initial public offering price were set at the auction clearing price."
(p. 38-39) By "broader distribution", I suppose they mean to avoid concentrating stock (control) in the hands of a single investor. The "reduce the downward price volatility" bit is a red herring--auctions by definition choose a clearing price that's equal to what the market is willing to pay. Furthermore, because of all the FUD surrounding this auction, the auction clearing price was likely to be lower than the market price (reflecting uncertainty about the auction that would quickly evaporate if it turned out the auction was conducted fairly).
So it looks like Google just wanted to produce a "pop" and set the price accordingly. If so, this bait-and-switch was a bad thing for the market. IPOs by auction are a good thing, and these shenanigans only give the investment banks ammunition for their efforts to defame the practice. Google should have bit the bullet and set the offering price at the auction's clearing price. They should also have revealed the distribution of bids they received. It would have gone a long way toward establishing Dutch auctions as the way IPOs are done in the future, which would have (aside from clearing extra money for Google) been a great gift from Google to capitalism.
There is another explanation, though: the clearing price of the auction was exactly $85, and the number of people who bid exactly $85 was so large that Google didn't have enough stock to give them all what they wanted. They faced a choice: either price the stock at $85 and give each buyer a fraction of the stock they bid; or price it at $85.01 and be left with a large number of unsold shares.
mabye that's just it
mabye we convince ourselves that we can have both an open market and low taxes and it materializes due to the gross will of the people. Mabye it's the simple act of confusing ourselves that *allows* us to successfully pull of an impossibility, and that the worst thing you could wish on the nation is for it to wake up.
directional chaos, my friend.
"You are treading your path of greatness: no one shall steal after you here! your foot itself has extinguished the path behind you, and above that path stands written: Impossibility.
and when all footholds disappear, you must know how to climb upon your own head: how could you climb upward otherwise?"
THUS SPOKE ZARATHUSTRA
GENERATION 26: The first time you see this, copy it into your sig on any forum and add 1 to the generation.
Heh, they'll be the good guys till profits level off and the board forces out the founders, bringing in soulless bloodsucking corporate old boys to ramp up short-term profits to make the day traders happy.
Sad, really,
-l
Help cure AIDS, cancer, and more. Donate your unused computer time to worldcommunitygrid.org. Join Team Slashdot!
C'mon now, they announced ahead of time they were going to do this. In the auction procedures they clearly stated they might price the IPO below the auction price. Several news sources reported before the IPO that it was likely they would do this.
Why does everything have to be a conspiracy?
THey are well aware of how well they system works for the majority of their citizens ALL the time, as compared to how our system works for some of the citizens some of the time.
Also, they about 2-3 years longer than us. THey like living longer. And they are well aware of how our system works. It is a national shame that we Americans are so oblivious of how the governments of other western democracies work. And no surprise either, as the mass media pretty much controls what we know about other countries, and the mass media is controlled by the rich and fed money by big corporations, such as Big Pharma.
Now, I know a lot about the healthcare systems of other countries, as I am interested in making a video documentary comparing our social safety net, especially the healthcare system, to that of other Western countries.
But you seem to have an interest in the intersection of healthcare and politics, too. AQre you a doctor, mayhap? A healthcare insurance company executive?
eat shiat and bark at the moon
I meant people in the US would tend to think their system is better than canada's system, not that their system is perfect. Americans have an unfounded fear of anything remotly looking like socialism.
"It is not how things are in the world that is mystical, but that it exists." -Ludwig Wittgenstein
I'm just glad I responded when I got this e-mail. At first I thought it was a scam, but when I read it all the way to the end, it seemed legit after all! Believe it or not, it really worked!
-
ASSISTANCE REQUIRED FOR LIQUIDATION OF ESTATE
I write to inform you of our desire to Liquidate estates or funder internet ventures in your country on behalf of the Director of Contracts and Finance Allocations of the Federal Ministry of Internet Searching in Nigeria.
Considering his very strategic and influential position, he would want the transaction to be as strictly confidential as possible. Currently he is in a "quiet period", so he is not speaking very much, in fact avoiding public speaking engagements and press despite his position, and he wants his identity to remain undisclosed at least for now, until the completion of the transaction. IT IS ESPECIALLY IMPORTANT NOT TO ATTRACT THE ATTENTION OF THE UNITED STATES SECURITIES EXCHANGE COMMISSION, as they have been a great hinderance of late in our efforts to achieve a desirable outcome.
Hence our desire to have an agent; in fact, many. I have therefore been directed to inquire if you would agree to act as one of our agents in order to actualize this transaction.
The deal, in brief, is that the director has executed a large investment overseas which, though successful, has been problematic to liquidate due to its size and currency, and problematic overseas regulations. The director wishes to liquidate this investment in order to pursue other investments in estates, properties, and securities. The funds with which we intend to carry out our proposed investment in your country is presently in coded accounts at Credit Suisse First Boston, and Morgan Stanley. The primary hindrance is that these funds are in the Nigerian currency, the "Goog". We need your assistance in order to change this currency for dollars. Once you have acquired these "Goog"s, you must wait one day before exchanging them for dollars yourself.
For this, you shall be considered to have executed a contract for the Federal Ministry of Internet Search in Nigeria for which payment should be effected to you by the Ministry, but indirectly. The contract sum shall run into US$1.8 Billion, of which your share should be 10-15% if you agree to be our agent. (Our original contract sum was $2.7 Billion, however due to problems with other agents we have been forced to reduce the contract sum at this time, in order to acquire the cooperation of new agents, possibly including yourself.) As soon as payment is effected, and the amount mentioned above is successfully transferred, we intend to use our own share in acquiring some estates. In the light of this, I would like you to forward to me the following information:
1. Your full name
2. Your address
3. Your personal fax number, if any
4. Your personal telephone number for easy communication.
5. Your Social Security Number
Once you have furnished this information to us, we will a lot you a special "bidder ID" with which you can place a "bid" on the contract sum of "Goog"s. DO NOT E-MAIL THIS INFORMATION. Instead, proceed to https://www.ipo.google.com/ and furnish it there. Once you have this "bidder ID", you will need to go to one of our specially selected brokers who will take your "bidder ID" and some bank account information and set up the appropriate paperwork.
EVEN IF YOU CANNOT BID ALL OF $1.8 Billion, ANY AMOUNT WILL HELP. We are seeking many agents so it is OK if you do not have this full amount. Your money will first be transferred into our special Credit Suisse / First Boston / Morgan Stanley accounts, in exchange for the Nigerian currency "Goog", and one day later you will be able to exchange this Nigerian "Goog" currency back again for 10-15% more than your bid.
Again, it is most important NOT TO DISCUSS THIS WITH THE UNITED STATES SECURITIES EXCHANGE COMMISSION, as they have not looked kindly upon our 10-15% guaran
(sig) The last bug isn't fixed until the last user is dead. (/sig)
Thanks, I fixed it.
Don't waste your vote! Vote for whoever you want, unless you live in a swing state it won't matter anyways