Editor's note: Google has risen nearly 200% since this article was written.
RealMoney by TheStreet.com
How Google Has Ruined Its IPO Deal
Tuesday July 27, 2004 8:58 am ET
By James J. Cramer, RealMoney.com Columnist
Someone has to say it, might as well be me: If you wanted to do everything you could to kill the Google deal, if you wanted to do everything you could to be sure that you generated the worst deal ever, you would do exactly what Google's done. Let me count the ways.
First, you buck the system, which had finally gotten a lot of the kinks out of it, and make sure that the thing's done Dutch. I know the bonds are used to Dutch auctions, but the unsophisticated public sure isn't. Start the Dutch revolution without me.
Second, you set the price at a level that is the most forbidding to the most people: north of $100. What the heck does that prove? That you intend to be the next Berkshire Hathaway?
Third, you talk about shareholder democracy but then you do the single most anti-democratic thing possible: issue two classes of stock.
Fourth, you wait until the dog days of summer to do the deal when no one's around anyway.
Fifth, you show total contempt for all of the institutions that, like it or not, represent most of the buyers out there, especially now that you price the deal at $100 a share.
Look, I know the process from 1998-2000 was deeply flawed. There was spinning going on, and friends and family and lots of laddering and all sorts of evil that since has been erased or silenced. The main flaw with the system, though, was that you couldn't reset demand on the fly to make it so that there was some sort of elasticity when buyers came in. The underwriters always blamed the SEC for that. If that was the real problem, let's deal with it. But this deal, I mean, can you say fiasco?
In six months, Google's gone from a company everyone wants a share of to perhaps the single-most scorned entity I can recall. Right out of the chute! Amazing.
I repeat: What a fiasco! What a blown opportunity. What a shot-in-the-foot moronic way to go about ruining what could have been a definite shot in the arm for this horrid market.
There. Now I feel better.