The Differences Between Traditional And Auction In Releasing An Ipo Finance Essay - Free Essay Example

Sample details Pages: 5 Words: 1603 Downloads: 1 Date added: 2017/06/26 Category Finance Essay Type Compare and contrast essay Did you like this example? The differences between traditional or auction in terms of releasing an IPO vary amongst the first lot of investors, cost and risks associated. EBay should use the book building method in the Skype s initial public offer because a large number of share holders are expected to turn out and thus a higher risk. This method will enable the company to take control of the process and thus there will be efficient flow of the information. Don’t waste time! Our writers will create an original "The Differences Between Traditional And Auction In Releasing An Ipo Finance Essay" essay for you Create order Neither one is definitively the better way for a company to go public; the choice between the two is dependent upon the individual aims and the targets. In the traditional means of releasing an IPO, the company going public will seek out an investment firm to work with that will underwrite the IPO, seek out a select group of investors, and determine the price of the IPO based on the amount of capital the company plans to raise and the stake ready to be sold out to the people. It uses the latest technology to assist customers in communication. Its communications are one on one just like the mobile phone technology, the only difference is that this one is via the internet using computers and enabled handsets only. Such an auction of the Skype type will attract individual investors and also investors of the corporate nature, which will open the company up to a significantly larger pool of clients. This will enable the company spend less money in the process of underwriting that it would have spent if it used the traditional IPO method. The company still requires an investment bank for underwriting, but at a lesser cost than the previous IPOs. Through an auction-based release, average individual traders/investors can get a piece of the company. Skype, the Internet telephony company, is looking to raise up to $100 million in an initial public offering, according to an S-1 filing with the U.S. Securities and Exchange Commission. The company will be selling American Depositary Shares (ADSs) and will trade on the NASDAQ Global Market. The right decision would be to go with an auction based IPO. With the auction based IPO Skype spends much less money in an investment bank for underwriting than it wou ld in the traditional IPO. On the other hand this gives small investors an opportunity to invest into a large company. Also with the auction based IPO, the profits go directly to the company and not to the private investors as it would in the traditional method (Malik, 10). The Skype management is very determined in the success of the initial public offer and well prepared to raise the capital. Such a popular company risks oversubscription due to its popularity and oversubscription and the management should be very keen on the process and ensure that the share application process is as planned. An ordinary person may be able to buy Skype s shares for less than institutional buyers who pay the IPO price. The vast majority of this year s IPOs are trading below their offering prices, including Broadsoft, which was the latest VoIP related company to go public a couple of months ago. This will probably trade at a premium to Vonage. When Skype was sold to its private investors it was valued to be worth $2.75 billion. By Skype going public, it will automatically be among the largest trading internet company This is what happened with Morning star when they opened their IPO. But in Morning stars case, the lead under writer now WR Hambrecht instead of Morgan Stanley will hold an auction to determine where to set the price and how the shares will be divided up. It ties in with the ethos of Morningstar that everyone should have a fair share, it s a fair system from the initial offer to the favored funds or individuals. Indeed that may be the reason why previous Morgan Stanley, Deutsche Bank Securities and William Blair have now considered completing the Morningstar contract. They dont want to validate the process to see it become a trend, says Taulli (Bradley, 10). It wants to compete more directly with VoIP providers like Vonage, and it wants to make its presence known in the corporate world with offerings like Skype for Business. The issue of shares is one complex business practice that involves the offering of part of a company in form of shares to the public. Skype has used this as a way of increasing its investment and its capital in general. This is one important aspect of the initial public offer of a company s shares. It can be used to raise a company s revenue because it increases the overall investment. Skype may be a different case all together, since they are probably floating a very small number of shares (worth $100 Million). So if there are few shares trading, this may create enough of demand shortage to artificially inflate the stock price, at least for a while. Skype has now gained popularity after this initial public offer and helped spread to the world. Luxembourg Skype indicated that it aimed at selling over one million dollars in the American depository shares (Moren, 10). The issue of shares increases the company s capital and helps it increase its investments and thus its growth. It also has a paid service offering low-cost calls from Skype to land lines or cell phones. Still, Skype has been slow to convert clients to some of the most reliable clients or consumers. They help to increase the company s overall capital and allows for the spread of the company s capital holdings to all parts of the world, thus its growth. The company has been very successful in allowing all its customers around the world to communicate in real time. This has further increased the efficiency and reliability of the company among the customers and thus will be in a better position to raise the one hundred million dollars in a short duration. The company has managed to raise its revenue in very different ways and especially from its income. It has howev er decided to increase the capital by using the initial public offer. The company has increased its revenue using the video and voice calls which can amount to more that ninety billion dollars in the duration of six months especially the first six months of the year 2010. This is a remarkable earnings value and will help boost its marketability in the purchase of the shares by the subscribers. Revenue and profit are good, and the company (Skype) has every right to pursue them. By going public, a completely different angle had to be taken in the business decision process, and the drive for profit could force Skype to cancel free services, or start charging for services that are currently free in order to cover overhead and keep revenue up. I expect that the Skype IPO can be a success. But, the company that emerges on the other side might be fundamentally different than the Skype we have now. The financial purpose of the Skype IPO is to unlock eBay s value to its shareholders. Skype also has an agreement with Verizon to allow Skype phone calls on its network. The injection of cash from the much awaited IPO could allow Skype to offer a vast variety of innovative new features and communication services, as well as providing the company with a marketing budget to help generate more paying customers and a wider adoption by businesses. However, the IPO can also be somewhat of a Pandoras Box. With investors, come a lot of expectations and demands. Shareholders expect rising share prices and dividends. They want a return on their investment, and that pressure can fundamentally change the way business is conducted, possibly stifling creativity and innovation for the sake of revenue and profit, which is not what the company initially intended to do. It doesn t really matter what the valuation of Skype s last buyout was, what really matters is what investors are willing to pay in the public market. The IPO underwriters seem to do a good job nowadays days of touting the stock to institutional investors and getting the IPOs to market (this way they earn their underwriting fees), but the problem is that more than 50% of these IPOs subsequently trade down in the public markets. Skype has been fairly aggressive at making a mark in mobile communications. In February, Skype unveiled a mobile application for use on devices carried by Verizon Wireless, the top U.S. Use of the Skype technology in their production the first half of 2010 raised its production out by a high percentage in the period, Skypes profit fell 42% to $13.1 million, weighed down by costs related to the buyout, even as revenue rose 25% to $406.2 million. The company had 6.4 million billing minutes during the first six months of2010, versus 10.7 billion minutes during 2009. EBay sold a 65 percent stake in Skype to private equity investors in November 2009 for about $1.9billion. Skype gave Jolt, a company controlled by Zennstrom and Fris, about 10 percent of the equity (valued about $224 million) and a net payment of $85 million in cash. Jolt bought 3.4 percent of shares in cash for $85 million. In addition, Skype invested $10 million in Niklas and Janus venture fund, Atominico and another $6 million in their new service, Radio. Skype has tried its best to make mark in mobile communications It developed a Skype iPhone application, which just recently added the ability to multi task. Skype also has a deal with Verizon to allow Skype calls on its network (Bradley, 10). I expect that the Skype IPO can be success.

The Political Ideology Of Anarchism And On The Main...

This essay will focus on the political ideology of Anarchism and on the main believes of this ideology. It will then specifically take under consideration the belief that the society could survive without the state which is seen as an evil. In conclusion, it will discuss how the absence of government would affect people’s lives. Anarchism derives by anarchy which means no rules. It‘s a philosophy that has is the centre humans. It focusses on leadership because all humans cooperate to establish rules that has to be respect by themselves, on decision making made by humans and not by a government which is considered unusual and on the maintenance of order. Anarchism is in favour of self-governed societies based on voluntary†¦show more content†¦Their creativity is restricted by force-based societies. Humans are social animals who prefer to work together for the common good rather than for individual interests and wise enough to rule themselves, they don’t need any superior authority when thanks to the humanity are together. Solidarity is the first human law, freedom the second. Humans can shape their own lives without being influenced by others. All people are good, innocent, rational. They have been guide in the wrong way by the authority and by institutions. The state is the reason why crimes happen. The more people are good and not aggressive, the more successfully the social system will work. No social system can be successful if people are not peaceful. Anarchists think that with the abolition of the state a new anarchist man will grew, an energic, cooperative, humane and benevolent one. The state is considered as the plague of the society. Anarchism tend to maximalize the opportunities for the good and minimalize the ones for the bad (M.N. Rothbard,2006). This essay will now take under consideration the belief that the state is unnecessary for the survival of the society. Anarchism believe that governments shouldn’t rule the society, they believe in a stateless society. Two are the main examples of a society without rulers; one is the primitive society and the second one is the society with subcultures which want to make their own rules and they are trying to eliminate the rules ofShow MoreRelatedPolitical Identity Essay1064 Words   |  5 PagesEveryone has their own political identity made up of a mixture of multiple opinions and ideologies. The four main factors that go into someone’s political identity are their ethnic identity, national identity, political attitude, and political ideology. I decided to interview my mom and figure out a little bit about her political identity and how she stands on certain topics. The first factor of someone’s political identity is their ethnic identity. 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Pixar and Walt Disney Merger Free Essays

NEW YORK – Mickey Mouse and Nemo are now corporate cousins. Walt Disney has announced that it is buying Pixar, the animated studio led by Apple head Steve Jobs, in a deal worth $7. 4 billion. We will write a custom essay sample on Pixar and Walt Disney Merger or any similar topic only for you Order Now Speculation about a deal being imminent raged on Wall Street for the past few weeks. Disney has released all of Pixar’s films so far, but the companies’ current distribution deal was set to expire following the release of this summer’s â€Å"Cars. The merger brings together Disney’s historic franchise of animated characters, such as Mickey, Minnie Mouse and Donald Duck, with Pixar’s stable of cartoon hits, including the two â€Å"Toy Story† films, â€Å"Finding Nemo† and â€Å"The Incredibles. † â€Å"Disney and Pixar can now collaborate without the barriers that come from two different companies with two different sets of shareholders,† said Jobs in a statement. â€Å"Now, everyone can focus on what is most important, creating innovative stories, characters and films that delight millions of people around the world. † As part of the deal, Jobs will become a board member of Disney, the companies said. And John Lasseter, the highly respected creative director at Pixar who had previously worked for Disney, will rejoin the House of Mouse as chief creative officer for the company’s combined animated studios and will also help oversee the design for new attractions at Disney theme parks. â€Å"The addition of Pixar significantly enhances Disney animation, which is a critical creative engine for driving growth across our businesses,† said Disney CEO Robert Iger in a written statement. During a conference call with analysts Tuesday, Iger said that acquisition discussions had been going on for the past several months. Jobs added that after a â€Å"lot of soul searching,† he came to the conclusion that it made the most sense for Pixar to align itself with Disney permanently instead of trying to distribute films on its own or sign with another movie studio partner. According to the terms of the deal, Disney (Research) will issue 2. 3 shares for each Pixar share. Based on Tuesday’s closing prices, that values Pixar at $59. 78 a share, about a 4 percent premium to Pixar’s current stock price. Shares of Pixar (Research) fell slightly in regular trading on the Nasdaq Tuesday but gained nearly 3 percent in after-hours trading. The stock has surged more than 10 percent so far this year on takeover speculation. Disney’s stock gained 1. 8 percent in regular trading on the New York Stock Exchange and was flat after-hours. Prior to the deal’s announcement, some Wall Street observers had speculated that Disney may be paying too much for Pixar. A source tells FORTUNE that some Disney board members also thought the price was too high. To that end, Disney chief financial officer Thomas Staggs said during the conference call that the deal would reduce Disney’s earnings slightly in fiscal 2006, which ends this September, as well as fiscal 2007. He added though that Pixar should add to earnings by fiscal 2008 and that Disney was still on track to post annual double-digit percentage gains in earnings through 2008. But one hedge fund manager said that the risk of Disney losing Pixar was too great. â€Å"The question isn’t did Disney pay too much but how expensive would it have been for Disney if Pixar fell into someone else’s hands,† said Barry Ritholtz, chief investment officer with Ritholtz Capital Partners, a hedge fund that focuses on media and technology stocks. Jeffrey Logsdon, an analyst with Harris Nesbitt, agreed with that assessment. He said that Pixar’s â€Å"success quotient† justified the price of the deal. Pixar has yet to have a flop with its six animated movies. They have grossed more than $3. 2 billion worldwide, according to movie tracking research firm Box Office Mojo. Disney, however, has struggled in the computer-generated animated movie arena. Even though its most recent CG-animated film, â€Å"Chicken Little† performed better than many had expected at the box office, it was not as big a hit as any of the Pixar films. â€Å"Robert Iger has made no secret of the fact that he wanted to get the animated business back to where it was. It’s what Disney has known for but the movies they did in-house did not do as well as the ones they did with Pixar,† said Michael Cuggino, a fund manager who owns about 100,000 shares of Disney in the Permanent Portfolio and Permanent Portfolio Aggressive Growth funds. Pixar has yet to announce what movies it is working on after â€Å"Cars,† however. It is believed that Pixar’s next film about a rat living in a fancy Parisian restaurant, tentatively titled â€Å"Ratatouille† may be released on 2007 and that a â€Å"Toy Story 3† may be in the works as well. Jobs said during the conference call that nothing has been decided about future Pixar releases yet, but added that the company feels strongly about making sequels to some of its previous hits. And Iger said that announced plans for Disney-produced animated films, including the release of â€Å"American Dog† in 2008 and â€Å"Rapunzel Unbraided† in 2009, are still on track. It would have been unthinkable to imagine Disney and Pixar teaming up just a few years ago. The two companies broke off talks to extend their current distribution agreement in 2004 due to a strained relationship between Jobs and former Disney CEO Michael Eisner. But since Iger succeeded Eisner last year, he has extended an olive branch to Jobs. Disney and Apple have already announced several online programming deals during the past few months. Disney now has agreements in place to sell hit ABC prime time shows, such as â€Å"Desperate Housewives† and â€Å"Lost†, as well as content from ABC Sports and ESPN on Apple’s popular iTunes music and video store. Cuggino said the addition of Jobs, who will also become Disney’s largest individual shareholder, to Disney’s board could mean that more innovative digital deals could be in the works. â€Å"Jobs is a dynamic personality who knows consumer electronics. It’s an opportunity to bring some youthful energetic thinking to Disney’s board. † Disney, like many other large media companies, has seen its stock price stagnate during the past year as investors have flocked to more rapidly growing digital media firms such as Apple as well as search engines Google (Research) and Yahoo! Research) But Logsdon said the acquisition of Pixar could help Disney increase revenue throughout all of its business lines. So even though some may be quibbling in the short-term about how much Disney had to spend, he thinks Disney made the right move. â€Å"It’s a smart strategic deal,† Logsdon said. â€Å"The benefit in theme parks, consumer products and cable will p robably make this deal look a lot smarter a year or two from now. â€Å" How to cite Pixar and Walt Disney Merger, Essay examples