Initial Public Offerings Essay Example for Free

Initial Public Offerings Essay Primary private companies, who desires to go public or in other words decides to be listed in the different stock markets to raise capital, must first undergo a process called Initial Public Offering or IPO (Investopedia, 2008). This method has been widely popular and it goes to say it has its own shares of controversies as well. Especially from what was experienced during the 1990s on the dotcom crash, in which a lot of investors bought Initial stocks from companies even without a track record of operations and a feasible plan for profit (same as Investopedia, 2008). Now another Online firm plans to go public, it is the popular program Skype whose main features are online video and audio call conferencing. This could be a good idea, from a sales standpoint since Skype has been earning revenues for its parent company Ebay even before the latter has decided to treat it as a stand-alone company due to its limited synergies with Ebay’s core activities which basically are Online commerce auction site and Paypal Online payments system   (Stone, 2009).But if Skype will really go public, it could most probably used the same online method applied by former online firms: Google and Morning star which is the online auction approach. This essay will attempt to justify the consideration of Skype to go public. It will also analyze what particular type of Initial Public Offering (IPO) it may apply. We will also go in detail to assess what type of investors that Skype would most possibly attract. This study will also provide background on the lessons learned from previous online industries who went Public and used the auction approach as its method for IPO.As part of the types of methods for IPO offering, we will finally discuss potential costs and risks of each to have a better understand which method would be appropriate for a specific firm like Skpe. Skype going Public Ebay’s President and CEO could be right by the decision of treating Skype as a subsidiary company due to its function and future revenue potential if provided with the right amount of capital to work with. Skype historically, has been a consistent top performer in terms of revenue generation since its early inception. From 2007, Skype posted a significant increase of 44% to a tune of   $551 million, and segment market margins is at 21% which is also another big leap of 47% from 2007, and the projection of a total revenue for 2011 for $1 Billion dollars is not far fetch(ebay Inc., 2009), since the growth rate of Skype on its recent   quarterly performance have been anything but slow. Just last October 2009 data Skype again has increased by another 41% in total registered users, which is in the $521 Million mark and growing, Its posted growth of 29% in revenues amounting to another $181 million dollars also confirms its status as a force to be reckon with on the Voice Over Internet Protocol (VoiP) industry (Schonfeld, 2009). Direct competitors of Skype are Vonage and Net2phone although stable does not have the growth potential and massive customer base that Skype enjoys. Skype has just also been sold recently by ebay to some private investors, and group led by Silver Lake partners, ebay sold 70% of its stake on Skype (Wauters, 2009).Which shows continued interest of the potential profit generation of this software. Skype is also considered as number ten on the Top ten potential IPO candidates by TechCrunch.com, given the rapid pace of Skype growth (Schonfeld, 2009). Traditional or Online Auction Method for Skype’s IPO? Skype may opt to apply the auction method, to have a lot of potential investors instead of limiting the opportunity to buy shares to a few large investing institutions, which possibly may not desire a new online firm. Google used the same method, which is called the Dutch auction method in serving its IPO to the public, with a lot of potential risks in this kind of method Google still managed to pull it off successfully (Edmonston, 2009). What type of Investors would go for Skype Small and young investors may go for this firm if it went public, this group usually knows the boundless potential of the internet, and has some basic knowledge on the types of revenues tech stocks can produce. The emerging trend of young internet whiz kids, who have made fortunes using the net, may as well be the same characteristics of investors for Skype. Conventional Investors, still requires a fundamentally sound metrics from a company that has a above average track records and has produced mostly tangible goods which some have been a staple of a society. Lessons Learned from Online Auction Approach Bothe Morningstar.com and Google used the same method for its Initial Public Offering, for the purpose of taking the controlling power away from the underwriters and to provide opportunities to invest for those who really believe and acknowledge a company’s potential.   Both have been relatively smooth and successful. For Morningstar on its IPO last 2005 even when price analysts predicted that price of stock may be on the amount of lowest range projected of $16 to $19, the demand was really strong as it ended up on the marked price of $18.50 for the mutual fund and stock analysts’ online firm (Munarriz, 2005). Google however probably was overwhelmed by pressures of controversies induced by market analysts, financial scholars, other online competition   and even the Securities and Exchange Commission, has decided for a last minute reduction of its target share price (Sorkin, 2009). Online companies often face criticisms such as being overvalued or overhyped. Especially after the dotcom event, doubt of investors on whether they could really pull through some revenues and maximize shareholders’ equity is prevalent. Both Morningstar and Google have experienced those biases but took it in stride and have been relatively stable in the marketplace, despite contradictions. Cost and Risks of each IPOs According to a famous article by the Wall Street Journal regarding methods of IPOs, â€Å"Wall Street bankers compare auction IPOs with selling fine art on eBay instead of at Sothebys. The big Wall Street firms have good reason to defend the traditional model. Known as book building, it entails gauging the interest of hedge funds and mutual funds in an offering† (2005, p.2). This conventional model with its current fees of 7% of capital allows Wall Street companies to sell its IPO stock at discounted prices to their best customers, which could benefit them by taking profits if the IPO increased even on its first day of trading (Wall Street Journal, 2005 p.2). Underwriters for this traditional approach receive a percentage of the IPO sale as commission, in addition to other fees or underwriting proceeds charged to underwrite the IPO. Such examples of those fees according to Kamlet Rini (1995)are: †¢ Managers Fee Goes to the managing underwriter for negotiating and managing the offering. Amount:10% 20% of the spread (meaning the spread between the Public offering price or POP and the underwriting proceeds). †¢ Underwriting Fee Goes to the managing underwriter and syndicate members for assuming the risk of buying the securities from the issuing corporation. Amount: 20% 30% of the spread †¢ Selling Concession Goes to the managing underwriter, the syndicate members, and to selling group members for placing the securities with investors. Amount: 50% 60% of the spread These fees, almost selected investors and a potential of losing more capital by an increase in value on share price, especially when first day trading price of IPO rise for the company, has been the somehow the risks a company going public undergoes when applying this method. As for the Auction Method, in which the firm sets a price of the share well above what any investor is expected to bid, and then reduces the price incrementally when an investor actually bids, has a relatively lower amount of fees. Risks involved according to some analysts is that IPOs   develop pricing patterns similar to those exhibited by IPOs during the dot.com era, and whether it would really provide more efficient pricing (Hensel, 2005). Risk of this mispricing can occur to lack of information on the part of the small investor, especially if the information issued could be implicit somehow to the small investor. Conclusion This study has discussed the strong possibility of Skype, joining the ranks of two famous Web companies such as Google and Morningstar, on going public. Skype have a rapid pace for growth based on its quarterly revenues and growing registered users. The best method for Skype to serve its Initial Public Offering is through an Online Auction, which again worked smoothly for both of the companies stated earlier. Each IPO type has its own costs and risks. For traditional IPOs, banking on their solid foundation of book building, it has its drawbacks of high fees and profits for companies who went public especially if the share prices do well on the first trading day. For Online auction, although has relatively low fees compared to the traditional method, has also the risk of running into similar pricing patterns which has links with the dotcom mania that occurred not too long ago. But for recommendation for Skype, the auction approach still works best, first to minimize cost on fees and a large possibility of fetching true market value stock price provided by potential strong demand due to Skype’s already significant business value.

Queen Sondok Essays -- Korean History

Queen Sondok Queen Sondok was the first woman to become a queen in the Korean Silla kingdom in 632 A.D. Queen Ma-ya, Sondok's mother, did not bear any sons to become king, so King Chinpyong sent her to a convent in the mountains to become a nun. This brought a great deal of sadness to Sondok, she said, "The monastery has swallowed everyone I love." (7) After Queen Ma-ya was gone, King Chinpyong, who had reigned for fifty years, remarried a woman who also could not bear him a son (7). Since Sondok was the eldest daughter, Sondok became queen after the king died. She became the most famous queen of a Korean state. Queen Sondok was born in Korea in 610 A.C.E. She ruled for fourteen years, holding the realm together against external and internal threats. During this period, women already had a certain degree of influence as advisers, queen dowagers, and regents. Throughout the kingdom, women were heads of families since matrilineal lines of descent existed alongside patrilineal lines. The Confucian model, which placed women in a subordinate position within the family, was not to have a major impact in Korea until the fifteenth century and most of people throughout the kingdom believed in Buddhism, Daoism, and Shamanism (6). During the Silla kingdom, women's status remained relatively high. Early in her life Sondok had displayed an unusually quick mind. For example, when she was seven, her father received a gift from the Emperor of China. It was a beautiful painting of peonies, accompanied by a box of the flower's seeds. Sonduk commented that the flower was beautiful, but it was a pity, because it had no sweet perfume. Her father, brow knit in confusion, asked her how she could know that, since she had never se... ... (http://www.womeninworldhistory.com/heroine7.html) 2. Still More Women Rulers 3. Women of Royalty - Sondok, Queen of Silla (http://royalwomen.tripod.com/womenofroyalty/id17.html) 4. Muses – The Graces—Graeco-Roman (http://www.geocities.com/Wellesley/1582/muses.html) 5. Lee, Ki-baik -1984 ANew History of Korea Translated by Edward W.Wbner. Harvard University Press, London. (http://ko-m.hp.infoseek.co.jp/Miruk.htm) 6. Famous Koreans – Six Portraits by Mary Connor. Education about Asia, volume 6, number 2, Fall 2001. (http://www.aasianst.org/EAA/connor.htm) 7. Sondok: Princess of the Moon and Stars, Korea, A.D. 595 (The Royal Diaries) by Sheri Holman 8. The Influence of China on the Three Kingdoms and Unified Silla (http:// www.marymount.k12.ny.us/marynet/TeacherResources/SILK% 20Road/html/sillatang.htm)

Pecking Order Theory

Brigham Concise 4th Edition Chapter 1: An Overview of Financial Management 1. Which of the following are among the three main areas of finance? a. financial institutions b. investments c. financial management d. all of the above are correct e. none of the above are correct d. Correct. 2. The globalization of business and the increased use of information technology are the two key trends in financial management today. a. True b. False a. True 3. Which of the following could explain why a business might choose to organize as a corporation rather than as a sole proprietorship or a partnership? a. Corporations generally face fewer regulations. . Corporations generally face lower taxes. c. Corporations generally find it easier to raise capital. d. Corporations enjoy unlimited liability. e. All of the above statements are correct. c. Correct. 4. A partnership is subject to the same taxation as corporations. a. True b. False b. False 5. One main disadvantage of partnerships is the requireme nt of a charter and set of bylaws. a. True b. False b. False 6. One disadvantage of the sole proprietorship form of organization is that there is: a. unlimited liability. b. double taxation c. more regulations than for corporations d. easy transferability of ownership interest . all of the above are correct. a. Correct 7. A corporate charter should include which of the following: a. name of the proposed corporation b. type of activities it will pursue c. amount of capital stock d. number of directors e. names and addresses of directors f. all of the above f. Correct. 8. One reason that the value of most businesses is maximized if they are organized as a corporation is that: a. corporations face unlimited liability. b. it is easier to transfer ownership of a corporation (corporations are more liquid assets). c. corporations have a more difficult time raising capital than sole proprietorships. d.All of the above b. Correct 9. Which of the following represents a significant disadvantag e to the corporate form of organization? a. Difficulty in transferring ownership. b. Exposure to taxation of corporate earnings and stockholder dividend income. c. Degree of liability to which corporate owners and managers are exposed. d. Difficulty corporations face in obtaining large amounts of capital in financial markets. b. Correct 10. The chief financial officer (CFO) is usually the highest ranking officer in a corporation. a. True b. False b. False 11. The activities of the financial staff include: a. forecasting and planning. b. ajor investment and financing decisions. c. dealing with financial markets. d. risk management. e. all of the above. e. Correct. 12. The financial vice-president’s key subordinates are the president and the chief executive officer. a. True. b. False b. FAlse. 13. In most firms the treasurer has the responsibility for managing the firm’s cash and marketable securities, for planning its capital structure, for selling stocks and bonds to r aise capital, for overseeing the corporate pension plan, and for managing risk. a. True b. False a. True 14. The primary goal of a publicly-owned firm interested in serving its stockholders should be to: a.Maximize expected total corporate profit. b. Maximize expected EPS. c. Minimize the chances of losses. d. Maximize the stock price per share. e. Maximize expected net income. d. Correct 15. Managers that depart from the goal of shareholder wealth maximization run the risk of being removed from their jobs. a. True b. False a. True. 16. Most actions that help a firm increase the price of its stock also benefit society at large. a. True b. False a. True. 17. The primary contribution of finance to total social welfare is its: a. Function as a productive resource. b. Contribution to the efficient allocation and use of resources. c.Role as an exogenous variable. d. Positive impact on the externalities of â€Å"other variables. † e. Contribution to environmental protection. b. Cor rect 18. Most firms today have in place strong codes of ethical behavior, yet there are no obvious answers for many of the ethical questions facing many companies. a. True b. False a. True. 19. Socially responsible actions that increase costs may have to be put on a mandatory basis. a. True b. False a. True. 20. An agency relationship arises whenever one or more individuals hire another individual or organization to perform some service and delegate decision-making authority to that agent. . True b. False. a. True. 21. In financial management the primary agency relationships are those between: a. stockholders and managers b. managers and debtholders c. managers with similar levels of authority within the firm d. a and b e. a, b, and c d. Correct 22. Which of the following work to reduce agency conflicts between stockholders and bondholders? a. Including restrictive covenants in the company’s bond contract. b. Providing managers with a large number of stock options. c. The pas sage of laws that make it easier for companies to resist hostile takeovers. d.All of the statements above are correct. a. Correct 23. Which of the following actions are likely to reduce agency conflicts between stockholders and managers? a. Paying managers a large fixed salary. b. Increasing the threat of corporate takeover. c. Placing restrictive covenants in debt agreements. d. All of the statements above are correct. b. Correct 24. The managers should always undertake actions that result in a transfer of wealth from bondholders to stockholders. a. True b. False b. False. 25. Which of the following factors tend to encourage management to pursue stock price maximization as a goal? . Shareholders link management’s compensation to company performance. b. Managers’ reactions to the threat of firing and hostile takeovers. c. Statements a and b are both correct. c. Correct. 26. Mechanisms used to motivate managers to act in shareholders’ best interests include: a. m anagerial compensation b. direct intervention by shareholders c. the threat of firing d. the threat of takeovers e. all of the above e. Correct. 27. Creditors lend funds at rates that are based on: a. riskiness of the firm’s existing assets b. expectations concerning the riskiness of future asset additions c. he firm’s existing capital structure d. expectations concerning future capital structure decisions e. all of the above e. Correct. 28. The dividend policy decision is the way the firm is funded (e. g. , the mix of debt and equity used). a. True Incorrect. The dividend policy decision is the choice of how much of earnings to pay out as dividends and how much to retain to reinvest in the firm. b. False b. False. 29. Managerial actions are the only determinant of a firm’s stock value. a. True False. b. False. 30. If the firm maximizes EPS, it will maximize stockholder wealth. a. True b. False b. False.

The Roles of The National Security Enterprise - 1301 Words

The National Security Enterprise (NSE) is the overarching government apparatus responsible for national security decision making. This is generally thought of as the National Security Council (NSC) and the Department and Agencies they represent. However, Roger Z George and Harvey Rishikof point out in The National Security Enterprise: Navigating the Labyrinth that national security decision-making may rest with the President and the NSC but is significantly influenced by the Modern Media (including the traditional Press), lobbyist, think tanks, and the US Congress. A significant role for the NSE is ensuring that these different elements of government can exchange information, share responsibilities, and collaborate to avert or at least minimize damage to U.S. foreign and domestic interests.(George and Rishikof 2011) The National Security Act of 1947 created the National Security Council. â€Å"The National Security Council (NSC) is the principal White House institution that is responsible for coordinating national security strategy, advising the president on national security issues, overseeing policy implementation through the interagency process, and responding to national security crises.†(George and Rishikof 2011) The exact make-up of the National Security Council has fluctuated with the changes in Presidential administrations. 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