IPO Guru: Why the Frantic IPO Pace Heading into the New Year
Dec. 14, 2011
Although 2011 has been a disappointing year for initial public offerings, several companies aim to go public this week making it the busiest IPO activity since 2007.
So what’s going on?
“There is a very large backlog of companies wanting to IPO and the November 4 Groupon IPO turned the light back on IPOs,” says expert IPO analyst Francis Gaskins. Google his name – he’s a widely quoted IPO guru online, on television and in newspapers.
“The IPO light was turned off by the market’s decline in August,” he explains.
You might recall the stock market took a nosedive over worries of the federal government’s debt. At this writing, Standard & Poor’s 500 increased by 8 percent in the last nine weeks.
Which companies stand to benefit?
“This week there are five energy-related IPOs, two social networking IPOs (Zynga & Jive Software), two industrial companies plus Michael Kors, which we like very much, and one IT company,” Mr. Gaskins explains.
In 2011 until now, $35 billion has been raised in 115 IPOs. That’s a decrease from 2010 — 154 IPOs netting an aggregate $39 billion.
Both years are considered to be subpar. Normally, you could expect 25 percent more dollars to be raised among about 250 IPOs.
“The IPO market is leaving 2011 with a decided bang,” he says.
So what about the New Year?
“As long as the averages don’t tank we’ll continue to have a healthy IPO market when it begins again sometime in January,” adds Mr. Gaskins.
(Note: I’m proud to say Mr. Gaskins and I are both members of a select roundtable of consultants, Consultants West, www.consultantswest.com.)
From the Coach’s Corner, Mr. Gaskins’ site: IPODesktop.com.
“In the business world, the rearview mirror is always clearer than the windshield.”
-Warren Buffett
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Columnist Terry Corbell is a business-performance consultant and profit professional. Click here to see his management services (many are available online). For a complimentary chat about your business situation or to schedule Terry Corbell as a speaker, why don’t you contact him today?
Largest Ever – Is GM’s IPO Political or Practical?
Aug. 19, 2010
A leading expert on initial public offerings, Francis Gaskins, is not wowed by General Motors’ IPO – to say the least. That’s despite GM being profitable in the first two quarters of 2010. Its Q2 sales of $33.2 billion led to a $1.3 billion profit.
In filing the IPO, the company is anxious to return to Wall Street by shedding its nickname, “Government Motors.” The manufacturer’s demise resulted in an unpopular bailout and the second-largest industrial bankruptcy in history.
GM’s bid to return to the New York Stock Exchange followed a 700-page document filing at the U.S. Securities and Exchange Commission. GM plans to use the ticker symbol “GM.” It also hopes for a listing on the Toronto Stock Exchange. But the ticker symbol hasn’t been determined.
To fully pay back taxpayers and all stakeholders, GM’s IPO would probably have to raise$70 billion. The government has a 60.8 percent stake in GM after giving the company $50 billion in 2009. The United Auto Workers Union has a 17.5 percent ownership. But $2.1 billion in preferred stock is owned by the government and will not be included in the IPO.
Widely respected for his views, Mr. Gaskins gives the IPO a thumbs-down. He publishes IPOdesktop.com, which is called “Forbes Best IPO Site.” His Twitter account: www.twitter.com/ipodesktop.
His succinct tweet: “No rational reason to value GM’s IPO more than Ford. Implies big loss to taxpayers.”
Far from being a mere harsh critic, Mr. Gaskins is scholarly, one of the nicest people I know, and is even artistic as a violinist — except he doesn’t fiddle around in an IPO analysis.
The Wall Street Journal reports 10 investment banks will implement the IPO – historically, the largest group of financial institutions ever in a U.S. IPO.
The newspaper reports the banks include: Morgan Stanley, J.P. Morgan Chase, Bank of America Merrill Lynch, Citigroup, Goldman Sachs Groups, Barclays Capital, Credit Suisse Group, Deutsche Bank, RBC Capital Markets and UBS.
Each is reportedly providing as much as $500 million in credit.
My recollection is that GM got into trouble following its weak sales, high material costs, and too-high union wages and pension costs. Many taxpayers and pundits criticized the government’s bailout of GM by calling it an administration payback to union supporters without enough consideration for taxpayers.
Now, questions abound over GM management’s expertise and financial reporting, which are among the reasons Mr. Gaskins isn’t confident about the IPO.
“They don’t know what’s happening,” he says.
What about the IPO’s timing? My sense is it appears the government is pushing the deal in advance of the Nov. election so politicians can escape more criticism of the unpopular bailout.
If asked, Mr. Gaskins says he’d tell the government: “I would say don’t do the IPO.”
Translation: If you are an investor, read the 500+ page IPO prospectus and do your due diligence. This IPO appears more political than practical.
P.S. The irony is that GM is now producing some outstanding vehicles, especially Buick. The legendary model’s sales are up 137 percent.
From the Coach’s Corner, to see Mr. Gaskins’ astute analysis on Bloomberg Television: http://bit.ly/dd1LE4.
Disclosures:
- Mr. Gaskins and I are fellow members of Consultants West, www.consultantswest.com, an association of veteran consultants.
- My firm has had multiple GM dealers as valued clients, and has benefited financially by recommendations from GM sales management.
Facebook’s Popularity Drops in U.S., Canada and Europe, but Inches Toward Highly Valued IPO
Updated – June 14, 2011
Many analysts believe Facebook is now set to go with its widely anticipated initial public offering in Q1 2012. What’s astounding is Facebook has lost ground in North America and Europe, but analysts are predicting a valuation as high as $100 billion.
A Web site, www.insidefacebook.com, reported the irony regarding Facebook’s popularity in this article: “Facebook Sees Big Traffic Drops in US and Canada as It Nears 700 Million Users Worldwide.”
It explained where and why Facebook lost members in the month of May:
- U.S. lost almost 6 million down to 149.4 million
- Canada dropped by 1.52 million to 16.6 million
- UK, Norway and Russia each lost more than 100,000
Ostensibly, Facebook’s privacy issues are having an impact.
So, why is Facebook growing? Inside Facebook indicates the site gained 11.8 million users among Third World populations that have recently started warming up to the thought of using the social networking site.
Meantime, many marketers started allocating more of their budgets for Facebook ads, according to a report in Website Magazine, www.websitemagazine.com, as early as Aug. 2010.
“Two years ago the big brands were experimenting with us,” Website Magazine’s senior editor Mike Phillips quotes Facebook COO Sheryl Sandberg. “They started buying with us a year ago. Now, they’re going big.”
Mr. Phillips writes that she claims the social medium’s top advertisers are now investing 10 to 20 times more dollars.
“Facebook appears to be positioning itself for an IPO in 2012,” confirms Francis Gaskins, a widely quoted and respected IPO expert. “Here’s an interesting article.”
If Facebook is inching toward its initial public offering in 2012, shouldn’t it show it’s making profits from ads.
So, what about Facebook as a marketing tool?
“For most companies, it’s not yet completely clear whether Facebook ads are truly effective at generating quality leads or increased conversions/revenue,” Mr. Phillips astutely points out. “What is clear, however, is that Facebook continues to grow its user base.”
He says research firm comScore reports Facebook has overtaken Yahoo as the nation’s No.1 display advertiser.
“Now might be the time to get involved in Facebook advertising,” suggests Mr. Phillips. “Prices have remained steady, the website is still the hottest property online and you can expect those prices to increase sooner than later. You can run a few simple campaigns on the cheap, look for results and optimize in no time at all. There is plenty to gain here.”
As a business-performance consultant, I concur. To quote my good friend, Cork Platts, now a retired Los Angeles marketing guru, a basic marketing tenet is “test, test, test.”
For me, that’s especially true when it’s an inexpensive marketing investment. But be careful to get a return on your investment, and don’t cannibalize your brand. I wouldn’t want a Facebook presence to trump my Web site. Facebook should merely part of overall marketing. Consider: Winners and Losers in Facebook’s Invasion of Google’s Turf.
Meantime, my biz coach sense is that an IPO with a $100 billion valuation doesn’t make sense for a social networking site that’s lost ground in the U.S., Canada and parts of Europe, especially when we’re not sure about its revenue.
Such a high valuation on dubious earnings is reminiscent of all the hype and countless failures in the dot.com bust. Was it that long ago?
From the Coach’s Corner, here are related social-media resource links:
11 Tips to Make Money on Facebook
5 Strategies to Sell More from Your Web Site
Invigorate Sales with Customer Retention, Referral Strategies
Mr. Gaskins’ resource links:
(Note: Mr. Platts is also founder of Consultants West, www.consultantswest.com, an association of veteran consultants that meets regularly in Los Angeles. Mr. Gaskins is also a member, and I’m proud to be associated with them.)
“Privacy is dead, and social media hold the smoking gun.”
-Pete Cashmore
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Columnist Terry Corbell is also a business-performance consultant and profit professional. Click here to see his management services (many are available online). For a complementary chat about your business situation or to schedule Terry Corbell as a speaker, why don’t you contact him today?
