Thursday, August 19, 2004

WSJ.com - How Miscalculations and Hubris Hobbled Celebrated Google IPO

WSJ.com - How Miscalculations and Hubris Hobbled Celebrated Google IPO "A combination of Google's own hubris, stubborn investors and a deteriorated technology market transformed what was billed as the hottest IPO of this short century into a rather messy affair. The auction closed late yesterday afternoon after the Securities and Exchange Commission declared the IPO effective. After reviewing the bids, Google late yesterday set the $85 price. That was 37% lower than the top of the $108-to-$135 it had declared to regulators last month as the expected range.
The price "says that a type of auction going out to the public like this is a failure because it raised uncertainties to such a level that people backed away," said Matthew Rhodes-Kropf, an auction theorist at Columbia University's business school in New York. By creating uncertainty, it "got Google a worse price than they could have gotten using a standard mechanism," he said. Mr. Rhodes-Kropf had himself bid last week, at $120 a share, but he revised that yesterday to $95."
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