IPO Boom Enriches Owners
Huge opportunities. Supplies real needs. US leads
Surge of venture capital.
Giant wealth creation. $700 bio in 1999. Mostly for owners: only $105 bio for companies
Drives personal spending more than investment
Temporary addition to computer equipment spending, Commercial real estate.
IPOs down. Valuations down. New issue %down. Frantic search for next new thing
Funds outstrip outlets? Foreign?
Profit outlook poor. Returns go to stakeholders. Near zero marginal cost (like TV ?) no pricing power
Shareholder value record poor. Tiny new issue % “profits don’t matter”
Therefore stock values unrealistic. Acquisition offset? (Cisco, AOL). Proprietary offset? New telecom/ optical switching etc. surge?
Conclusions:Like many booms, takes an opportunity and overdoes it. Investment must become more selective. Further correction likely