This Week’s IPOs: Biotechs and a Cloud Play

Feb 13, 2012, 10:19 am EST
This Week’s IPOs: Biotechs and a Cloud Play

Last week we had 10 IPOs, with an average return of 16%. Caesars (NASDAQ:CZR) was a big contributor — it soared 58.20%. But there were six other deals that saw double-digit returns as well: company ticker return (%) Homestreet HMST 0.00 GSE GSE 27.80 Synacor SYNC 5.00 FX Alliance FX 11.10 Caesars CZR 58.20 Cementos Pacasmayo CPAC -4.30 ChemoCentryx CCXI 11.30 EPAM Systems EPAM 16.30 Roundys RNDY 20.20 Cempra CEMP 14.56

This week there are only three IPOs planned. Let’s take a look at each:

Ceres (NASDAQ:CERE). The company sells seeds to produce renewable bioenergy feedstocks, which helps reduce reliance on petroleum fuels. Read 

Why the Facebook IPO Will Make a Fool of You

Feb 12, 2012, 7:00 am EST
Why the Facebook IPO Will Make a Fool of You

I have several friends who think the Facebook IPO is the next Microsoft (NASDAQ:MSFT). I think it’s more likely the next Research in Motion (NASDAQ:RIMM) — or perhaps the next Sony (NYSE:SNE), Kodak (PINK:EKDKQ) or China Eastern Airlines (NYSE:CEA) — all of which were once world-class brands that got muscled aside by brash new competitors.

With Facebook, you may as well buy a lottery ticket.

Don’t get me wrong — in just a few short years, Facebook has accumulated an unprecedented 845 million users representing 12.07% of the world’s population. But does that merit an offering worth as much as $100 billion? Maybe to a lot of people, but not to me. Let’s look at the numbers: Read 

Bigger Game Plan in Zynga’s Hasbro Deal?

Feb 10, 2012, 3:00 pm EST
Bigger Game Plan in Zynga’s Hasbro Deal?

When Zynga (NASDAQ:ZNGA) came public in mid-December, the performance was awful. The stock was priced at $10 and quickly plunged to $8. But then it started to gain momentum, and its price is now $13.32.

One of the catalysts was the Facebook filing, which caused lots of excitement with investors. No wonder: Zynga accounts for 12% of the social network’s revenues.

But something else was happening: buzz about Zynga moving into the virtual gambling business (it looks like states will begin to legalize it). Read 

LinkedIn Keeps on Branching Out

Feb 9, 2012, 4:41 pm EST

As reported Wednesday in the IPOPlaybook, short sellers were accumulating larger positions in Groupon (NASDAQ:GRPN) and LinkedIn (NYSE:LNKD) ahead of their earnings reports this week.

The trade certainly worked in the case of Groupon, which reported a loss Wednesday for its first quarter as a public company and saw its shares lose 14% of their value in Thursday trading.

But it looks like investors didn’t pick up a social-shorting doubler this week. After the close of trading Thursday, LinkedIn released positive fourth-quarter results that sent the stock up about 4%, to $79.80, in early after-hours trading. Read 

Can Facebook’s Zuckerberg Buck Recent Trend of $1 CEOs?

Feb 9, 2012, 8:32 am EST

Facebook’s initial public offering filing revealed that chief executive Mark Zuckerberg plans to cut his salary to $1 a year, joining other high-profile CEOs who have made what some say ultimately amounts to a public-relations gesture.

However, some academic research suggests investors in companies where the chief takes home a dollar or less in salary every year don’t profit after these moves. Also, these rock-bottom salaries can be a smokescreen obscuring the fact that these CEOs are already fabulously wealthy thanks to stock ownership and other goodies.

“CEOs with these arrangements, despite the drastic cuts in salary, have total compensation that is similar to that at other firms, making up lost salary through not-so-visible forms of equity-based compensation,” according to a 2011 paper from the Fisher College of Business at Ohio State University. Read 

4 Reasons Companies Go Public

Feb 9, 2012, 8:30 am EST
4 Reasons Companies Go Public

While many IPOs turn into hits — such as Google (NASDAQ:GOOG), Salesforce.com (NYSE:CRM) and LinkedIn (NYSE:LNKD) — success is far from guaranteed. Some companies, like Pets.com, have filed for bankruptcy within a year of an offering. In other cases, companies end up going back to private ownership. This actually was a huge trend from 2002 to 2007, which benefited private equity firms like the Blackstone Group (NYSE:BX) and KKR (NYSE:KKR).

And through the years, the IPO process has become much tougher. For example, there is an extensive set of regulations that require lots of disclosure, as well as strong information systems. The result: It can cost millions of dollars a year just to keep up with compliance requirements!

A public company also must find ways to develop interest in its stock. Again, not an easy task. Because of consolidation on Wall Street, fewer analysts provide coverage. In fact, it’s not at all uncommon for a public company to have no analyst coverage. Read 

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