Blog Archives

Vonage’s IPO quickest to be hit by a class action lawsuit ?

What a disaster: float on May 24th, lose over 30% in market capitalization, and get hit by a shareholder lawsuit less than 2 weeks after the IPO. CNET has the details:

The suit filed on Friday in the United States District Court for the District of New Jersey by the Atlanta-based law firm Motley Rice asserts that the Internet telephony provider, its officers and the IPO’s underwriters misled investors.

Vonage’s stock, which debuted on the New York Stock Exchange on May 24 at $17 per share, has lost about 30 percent of its value in its first seven days of trading. The complaint filed against Vonage claims that the company’s investors were motivated to push for an IPO because the company had been losing money, and the investors were desperate for … Read more »


Sarbanes Oxley’s collateral damage: US public markets ?

I mentioned two days ago the continued decrease of the volume IPOs of VC-backed companies. Discussing it with a VC friend, we sort of joked about the efficiency of the Sarbanes Oxley regulation that is essentially scaring away from the public markets a generation of companies – hence reducing in a round about way the potential for fraud and abuse from these new companies.

This morning, Benchmark Capital’s Bill Gurley is pointing to a Wall Street Journal piece (that I could not read b/c you need to be a subscriber) from the CEO of the Nasdaq market warning of the potential demise of US Markets due to Sarbanes Oxley:

He is properly concerned that the overly bureaucratic Sarbanes-Oxley (SOX) processes could lead to the end of global domination by the U.S. capital markets. Ironically, the two gentlemen that created SOX did it with the intention of “preserving” U.S. capital market leadership. Their fear was that people … Read more »


Siebel ecosystem being put out of its misery by Oracle for $3.6B net

Lots of buzz around the second mega acquisition of the day ($5.8B), seeing Oracle eating up Siebel Systems for dessert. Given that the company has about $2.2B cash on hand, Oracle is paying $3.6B, i.e about 2.7X Siebel’s trailing revenues.

The best quote about the deal comes from… SalesForce.com’s Marc Benioff (who worked at Oracle, and made $25M or so as an early stage investor in Siebel if memory serves me right) in his note to employees:

Oracle put Siebel investors out of their misery today.  We have been doing that for Siebel customers for years.  Our announcement today at Dreamforce will accelerate that. It’s the end of software.  Client/Server software is being consolidated by Oracle just as mainframe software was consolidated by Computer Associates. Oracle’s strategy is simple, instead of innovating, buy as much installed software as possible, call it all Oracle Fusion, and make sure it all uses Oracle’s database.

Now, the same … Read more »


In memory of the dot-com era

A good Sunday read from CNET.com that features its Top 10 dot-com flops:

Webvan Pets.com Kozmo.com Flooz.com eToys.com Boo.com MVP.com Go.com Kibu.com GovWorks.com

Not too sure how the list was compiled, since some of these companies did not go down the hole after spending “that much” money, but they were certainly icons of the bubble era: Kibu.com shutting down within a few weeks of launch, or GovWorks.com that became famous through the feature film Startup.com.

They might also have done a top 50 including the likes of Excite@Home (though one could argue that it was an ISP), wine.com – which raised about $100M – and sold its assets to eVineyard,  NetCentives ($130M VC/IPO – Chapter 11), EggHead.com ($120M VC/IPO – Chapter 11), Jobs.com ($100M VC – Chapter 11), etc.

Even though they were not dot-com themselves, I would also mention two firms that were closely involved with these companies, and had the same fate: lawfirm Brobeck Phleger and Harrison, and merchant bank Comdisco. Just to complete the … Read more »


SpaceStation to Houston: what are those BIDU shares that have shot up into the stratosphere ?

Note: When I came back from lunch, the stock had shot up again to close at $122.54. What’s above the stratosphere ?

Baidu.com (BIDU) just made its debuts on Nasdaq, and went from an original IPO pricing of $14 to an pre-open price of  $27 to an open of $66 to $99 $122.54 in a couple of few hours. This chinese search engine, which is set to earn $12M on $30M of revenues, was awarded a $3.6B market cap – representing a 300x (forward) earnings multiple.

Bambi Francisco wrote in a note before the stock opened:

Due to healthy demand for the 4 million shares available — Baidu had intended to sell 3.7 million shares at $20 apiece — it’s hard to imagine this stock not trading at $30 or $40 some time in the near future, if not today.

Then a few minutes ago, in Baidu feels like Netcape redux, but where’s Meeker:

To the amazement … Read more »


Stunning returns for Google VCs

In one of his landmark posts, Bill Burnham dissected SEC filings and other publicly available information to tell us Just How Much Did VCs Pocket On Google?

I recommend the reading to anyone interested in understanding VC exits, and to some extent, how profits are split in VC partnerships – unequally so.

As a reminder, Kleiner Perkins Caufield & Byers and Sequoia Capital invested $12.5M each in Google in 1999, for about 24M shares. Both funds have distributed a majority of these shares to their own investors, otherwise their investment would be worth $7.1B (at today’s closing price).

Because of the distributions of shares at "lower prices", Bill estimated the value of KP’s investment at $4.3B, i.e a multiple of 344x in 6 years. This is the number that will be used to calculate the performance of their $500M fund IX (?), which was returned multiple times with just … Read more »