Wednesday, August 18, 2004
As many of us have been asking since last week, how could it not be?
I think you misread the situation. It seems to me this is a clear attempt to support the IPO in the after market by keeping the price "reasonable" up front. Of course they may now deem this necessary because of your previous point about blowing off the institutional investors who would have contributed much of that stability themselves, but it is clearly a rational move.
One other point: I read your argument on why you think the Dutch auction a bad idea, and you made some good points. At the same time, it sounded a lot like a stock Wall Street defense. Perhaps the time has passed for the model you described, in which Wall Street gets the stock into some critical mass of institutional accounts. I give Google credit for testing these assumptions. Often it is hard to see what Wall Street does to justify its 6% IPO fee. There is no one who wants this IPO to fail more than Wall Street firms, and it will be interesting how they respond if it can be deemed a success in any way.