Public Offerings Morningstar's & Google's Term Paper

Download this Term Paper in word format (.doc)

Note: Sample below may appear distorted but all corresponding word document files contain proper formatting

Excerpt from Term Paper:

The executives at Morningstar had deliberated that their decision with a lot of people, inclusive of critical investment bankers prior to the actual offering. The minimum experience of an auction IPO companies are normally encouraging. One recent occurrence has been the recent exclusion wherein CyroCor Inc. offered shares through the auction route at $11 per share in a July auction and has lost 50% of its value since then. It follows from this that the auction route for raising capital through issue of shares does not favor every company. However, there are some positive aspects and companies must fancy the odds of auction route as the real option. All companies encounter a non-stop auction for their stock from the point they start trading in public. (Syre 2005)

Wall Street was extremely cynical as regards the Google's Dutch-auction IPO, that restricted banker's impact by opening biding to the public and fixing a debut price though the vagaries of supply and demand. Notwithstanding the success of the $1.7 billion Google sale, that witnessed a 17% spurt in price on the day of the auction issue, after a year just a limited number of companies have shown interest in raising capital through the auction route. Besides, traditional investment banks are not near in following the method. However, after Google set the example, some companies started exploring the option, although the technique was limited to few companies. People subscribing to this view also observe that Dutch-auction have grabbed some remarkable successes in the last one year. The benefit of the deal with Morningstar was the inherent openness and the transparency of the auction route as it works in the business of supplying information to the investors. (Carney 2005)

Another benefit of the auction method is its cost-effective structure which at a fee of nearly 2% which is lower than the range of 3% to 5%. Hambrecht normally charges as Morgan Stanley had since done some due conscientiousness. The Morningstar which was priced at $18.50 went up nearly 8.5% on the very first day, closing at $32.75 and the fund managers with the company expressed happiness with the developments. One more company- the New River Pharmaceuticals - NRPH, a Virginia-based pharmaceutical company that started off at $8 raised $33.6 million. Subsequently, its price has gone up to $40. This has been the best-performing IPO within the last twelve months, on a percentage basis even surpassing Google's post-IPO surge. (Carney 2005)

Of late the recent revival in the IPO market in the U.S. brings forth the issue whether the conventional IPO issue is somewhat efficient in pricing the IPO's compared to the online auction. Lowering the price hammering of the IPOs on the first day has been a vital subject since the dot-com period. To cite some examples, Enel witnessed a mammoth difference between its issue price and open price of 966.9%. VA Linux saw a surge of 896.7% and Sycamore Networks experienced growth of 612.8%. It is seen that under the conventional method of IPO, the investment banks underwriting the issue market the issue basing on the strengths of the company. (Hensel)

As a reciprocal gesture, these investors sometimes get the initial allotments of IPO shares in part so as to compensate them for making public this pricing information, and therefore profit from the price advantage gained in the price surge on the inaugural day. Detractors of the conventional IPO allocation process debate that these investors benefit the most from the price increase compared to the issuing company. To eliminate this problem, Dutch auction process that was developed by W.R. Hambrecht was behind the mechanism of the Google's IPO and represents one of the latest endeavors to efficiently price IPOs such that the issuer obtains the more precise description of financial status of the company. (Hensel)


Carter, Adrienne. "Morningstar Follows Google's Lead" Business Week, 10 January, 2005.

Carney, Beth. "IPOs: Going, Going.. Not so fast" Business Week, 16 August, 2005.

Hensel, Nayantara. "An empirical analysis of Online Auction IPO Processes and Traditional IPO

Processes" Graduate School of Business and Public Policy U.S. Naval Postgraduate School,

Syre, Steven. "The IPO path less taken" the Boston Globe, 1 September, 2005.[continue]

Cite This Term Paper:

"Public Offerings Morningstar's & Google's" (2007, May 30) Retrieved October 23, 2016, from

"Public Offerings Morningstar's & Google's" 30 May 2007. Web.23 October. 2016. <>

"Public Offerings Morningstar's & Google's", 30 May 2007, Accessed.23 October. 2016,

Other Documents Pertaining To This Topic

  • Public Policy Making it Has

    The first limitation is the perceived value of an idea for a public policy creation or change. In other words, if the community (or at least a large portion of it) does not see the value of the idea there is very little chance that the idea will become public policy - even if it could have helped a large number of people (Audretsch, Gilbert, & McDougall, 2004). While

  • Public vs Private Sector Unions Public and

    Public vs. Private Sector Unions Public and Private Sector Unions Collective bargaining in public sector is a recent phenomenon that became common in 1960 and started gaining momentum at the time when unionism in private sector was slowly declining (Reilly, 2012). Changes in the government policies and the legal requirements made the way for the increasing unionism in the public sector. There has always been a debate regarding the issue if private

  • Public Offering One of the Most Common

    Public Offering One of the most common challenges that firms will face is taking a company public. This is because the timing must be right and there needs to be clear objectives as to where new investment capital will be utilized. Those firms that are taking these factors into account will have a more successful initial public offering (IPO). In the case of Avaya, the company is considering an IPO

  • Corporations Law Initial Public Offerings Ipos Are

    Corporations Law Initial Public Offerings (IPOs) are the first time a privately held company sells its stock to the public. When such corporation needs to raise additional capital, it can either take on debt or sell partial ownership. If the corporation chooses to sell ownership to the public, it engages in an IPO (Initial Public Offerings, 2011, p. 1). Although it is difficult to get on the ground floor of an IPO

  • Aztec s Capital Investment Company Overview

    Thus, the paper provides the following recommendations on the strategies that the company will use to prepare its 3-year financial plan to achieve its corporate objectives. First, Aztec needs to rely more on the share capital as source of fund than raising fund from the bank loan. Loan capital is the fund borrowed from the bank while the share capital represents the funds raised by selling shares to the public. Typically,

  • Lesson Plan Amp Reflection I Didn t Know

    Lesson Plan Amp; Reflection I didn't know what state you are in so was unable to do state/district standards! Lesson Plan Age/Grade Range; Developmental Level(s): 7-8/2nd Grade; Below grade level Anticipated Lesson Duration: 45 Minutes Lesson Foundations Pre-assessment (including cognitive and noncognitive measures): All students are reading below grade level (5-7 months) as measured by standardized assessments and teacher observation Curricular Focus, Theme, or Subject Area: Reading: Fluency, word recognition, and comprehension State/District Standards: Learning Objectives: Students will develop

  • Branding New Service Dominant Logic

    Branding in Service Markets Amp Aim And Objectives Themes for AMP Characteristics Composing Branding Concept Branding Evolution S-D Logic and Service Markets Branding Challenges in Service Markets Considerations for Effective Service Branding Categories and Themes Branding Theory Evolution S-D Logic and Service Markets Branding Challenges in Service Markets Considerations for Effective Service Branding Branding Concept Characteristics Characteristics Composing Branding Concept Sampling of Studies Reviewed Evolution of Branding Theory Evolution of Marketing Service-Brand-Relationship-Value Triangle Brand Identity, Position & Image Just as marketing increasingly influences most aspects of the consumer's lives, brands

Read Full Term Paper
Copyright 2016 . All Rights Reserved