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  • CASE STUDY: The Internet Investment Rollercoaster (Chapter 1: The Revolution Is Just Beginning, pp. 35-36) Dale Earle Heloisa Tiberio Jessica Awa Group F Kwaku Morgan-Arhin MGS 5040-01 Latoya Nelson 2 / 1 / 2010 **Matthew Norton Dr. Melworm
  • NOTABLE CASE FACTS
    • In 2009, technology was the place to invest, at least from an investor’s point-of-view
    • Between 1998 and 2000, venture capitalists spent about $120 billion into 12,450 new “dot-com” ventures
    • Investment bankers took 1,262 of those 12,450 websites and turned them into IPO’s (Initial Public Offerings)
    CASE: “The Internet Investment Rollercoaster”
  • HOW DOES AN IPO WORK??
    • When investors decide to invest in a particular share, they do extensive research to determine how much the public might be willing to pay
    • This process is called underwriting, which results in an IPO that’s presented to customers for purchase
    • The investors’ goal is to hopefully use the difference as profit for themselves and also create a worthwhile opportunity for the customers; a win-win situation if all goes well
    CASE: “The Internet Investment Rollercoaster”
    • IPO shares in e-commerce were at its peak between 1998 and 2000; some tripled or quadrupled in value (ex. $15/share at sunrise; $45/share by sunset)
    • Many had to have connections or “know someone that knows someone” to purchase IPO’s early before they inflated in price
    • In 1999, The SEC (Securities and Exchange Commission) illegalized banks from “hooking-up” potential entrepreneurs with inside deals
    NOTABLE CASE FACTS (cont’d) CASE: “The Internet Investment Rollercoaster”
  • NOTABLE CASE FACTS (cont’d)
    • After the March 2000 “explosion”, venture capitalists turned away from “Get Big Fast” sites into more profit-reliable industries; they later did an “about-face” years later
    • Internet advertising firms and search engines also became vastly popular
    • Entrepreneurs gradually changed the way they did business
    CASE: “The Internet Investment Rollercoaster”
  • HOW ARE THOSE EARLY IPO’S DOING NOW??
    • NOT GOOD!!!
    • Many of them fell to $1/share a few months before 9/11…
    • WHY??
    • More and more businesses started catching on; the pie could only be sliced in so many ways…
    • ARE THEY STILL IN BUSINESS??
    • Approximately 5,000 of the early ventures shut down; others are still around due to reputation and longevity
    CASE: “The Internet Investment Rollercoaster”
  • EXAMPLES OF SOME EARLY “HOT IPO PROPERTIES”
    • amazon.com
    • shopzilla.com
    • ebay.com
    • yahoo.com
    CASE: “The Internet Investment Rollercoaster”
  • WHAT ARE THREE VERY PROFITABLE IPO’S CURRENTLY??
    • twitter.com
    • youtube.com
    • facebook.com
    CASE: “The Internet Investment Rollercoaster”
  • WHY??
    • Two words: Social Networking
    • Google paid $1.65 billion in 2008 for YouTube because they apparently felt the same way
    • Microsoft paid Facebook $240 million just to be their main advertisee
    CASE: “The Internet Investment Rollercoaster”
  • IPO CHANGES OVER THE YEARS
    • Google (GOOG) ~$180.04 $533.34
    • Amazon (AMZN) ~$34.75 $117.47
    • Overstock.com Inc. (OSTK) ~$54.95 $11.99
    • eBay (EBAY) ~$42.24 $23.19
    • Dell (DELL) ~$40.20 $13.22
    • Hewlett-Packard (HPQ) ~$21.30 $47.83
    Name of Business 2005 Present CASE: “The Internet Investment Rollercoaster”
  • QUESTIONS??