Unless you just returned
from a deserted island and have yet to watch any form of
news, talk to any of your co-workers, or check any other
email besides this one, then you have heard about the Google
IPO price drop. Chances are, you have also followed the
weeks of discussion on the woes of its road to going public.
A search on Google News for “Google IPO” returns 7000+
results. This week’s trend picks apart some of the recent
IPO buzz.
Not too long ago, AOL
purchased Advertising.com, and the mood surrounding our
industry and the companies felt bright. Article after
article talked about the imminent growth and new
opportunities. The Google IPO disaster, going from savior to
FUBAR’d appeared the anomaly, a case of an innovative
company doing things, as usual, their way. Their little soap
opera didn’t seem to suggest factors at work with broader
implications. Given some of the other news over the past
week and a half, it becomes easy to wonder whether there are
larger forces at work.
Those potential larger
forces at play couldn’t derail the Google IPO, but they did
lead to some excitement regarding other expected IPO’s.
Anyone heard of a little company named Claria? No IPO for
you! I have a high degree of respect for Claria, and the
numbers in their filing point to their overall success. To
see them pull out given their strength is reason to pause.
Were it just Claria, that would be one thing. As mentioned
recently on News.com, “of the 36 stock market debuts
cancelled this year, nearly half have been in the last two
weeks, said Richard Peterson, an IPO analyst at Thomson
Financial. ‘There's been an acceleration of deals being
taken off the calendar,’ he said.”
Cancellations in our
industry include MatchNet, operators of American Singles and
several other specialized dating sites. American Singles saw
tremendous growth in their subscriber volume, now up to 9.8
million active registrants, with much of their success
arguably coming thanks to the readers of this newsletter.
Net revenue was $30.9 million in the first two quarters of
2004 almost double the company's $15.5 million net revenue
in the first six months of 2003. Another cancellation was
PlanetOut which decided that they were not ready to come
out. That might seem more logical given its pure media play
and smaller focus on being an application or service
provider.
Google was not the only one in
our space decreasing their share price. WebSideStory Inc., a
veteran analytics firm, reduced its expected initial public
offering price from $10 to $12 to $8 to $9 a share, it said
in a regulatory filing yesterday. The size of the IPO
remains the same. WebSideStory earned $326,000 on revenue of
$10.3 million for the first six months of 2004, after losing
$1.7 million on $7.7 million in the same period last year,
the filing said.
For better or worse,
Google-power will insure that their IPO happens without
major delay. Unfortunately, the buzz they created and IPO
announcements that followed, has all but dried up as if part
of the southern California drought. Perhaps the Google
mishaps saved us from experiencing another mini-bubble.
Ultimately, what makes our industry tough and that which is
the larger force at work is separating the long term trends
from the immediate execution. No one doubts the viability of
internet advertising or its continued growth. Were you to
judge by the reasons cited in the recent cancellations and
price reductions, you might think differently. The market
for stock prices and the market for online ads have proven
themselves to be very separate animals that need to be
viewed separately. We face many short term challenges that
seem to impact one but not the other, and were we to listen
to one in order to make decisions on the other, we’d do a
poor job.
Perhaps the delays and
changes in IPO’s signal a reality check for us to stay
focused and not feel that we have overcome all hurdles
already. Google’s success helped others feel good about
online advertising. It doesn’t impact us nor should we let
it. The same thing is true with the cancellations. It deals
with that other side and not our own. Then again, as I am a
fan of keeping things simple, I can’t help but think that
Service Pack 2 is to blame for this.
Jay Weintraub
https://www.lynxtrack.com/signup.php
