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CASE STUDY: The Internet Investment Rollercoaster (Chapter 1: The Revolution Is Just Beginning, pp. 35-36)

CASE STUDY: The Internet Investment Rollercoaster (Chapter 1: The Revolution Is Just Beginning, pp. 35-36). Dale Earle Heloisa Tiberio

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CASE STUDY: The Internet Investment Rollercoaster (Chapter 1: The Revolution Is Just Beginning, pp. 35-36)

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  1. 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

  2. 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”

  3. 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”

  4. NOTABLE CASE FACTS (cont’d) • 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 CASE: “The Internet Investment Rollercoaster”

  5. 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”

  6. 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”

  7. EXAMPLES OF SOME EARLY “HOT IPO PROPERTIES” • amazon.com • shopzilla.com • ebay.com • yahoo.com CASE: “The Internet Investment Rollercoaster”

  8. WHAT ARE THREE VERY PROFITABLE IPO’S CURRENTLY?? • twitter.com • youtube.com • facebook.com CASE: “The Internet Investment Rollercoaster”

  9. 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”

  10. IPO CHANGES OVER THE YEARS Name of Business 2005 Present 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 CASE: “The Internet Investment Rollercoaster”

  11. QUESTIONS??

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