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Case
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Reference no. 111-075-1
Published by: IBS Case Development Center
Published in: 2011
Length: 16 pages
Data source: Published sources

Abstract

The case describes the recent boom in the internet and technology sector. Many new internet companies like LinkedIn, Yandex, etc were coming up with highly priced IPOs. For example, LinkedIn, a social networking site for professionals, came out with its initial public offering (IPO) on May 9, 2011, on the New York Stock Exchange (NYSE). It expected to raise around $ 274 million and was valued at around $ 3 billion by the exchange. Resurgence of the IPOs of internet companies is not quite a frequent phenomenon because of the telecom and internet burst in 2000 and the subsequent market crash that led to the wash-out of many companies and billions of dollars being lost by the shareholders. The success of social networking sites (Facebook in particular) and also the more recent social commerce websites had made the people believe and invest in the internet boom. In January 2011, Goldman Sachs valued Facebook at $50 billion. The most powerful sources that played a big role in the current boom could be finance and some emerging countries like China. First, there was an altogether new breed of investors to back and support these ideas financially. And second, this boom was not just American but global, with China being the major player in the industry along with the US. There was a widespread feeling that the boom could lead to many disappointments but that these would be different from the disappointments of a decade ago, because the companies now had real business models and significant revenues and profits particularly.
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Abstract

The case describes the recent boom in the internet and technology sector. Many new internet companies like LinkedIn, Yandex, etc were coming up with highly priced IPOs. For example, LinkedIn, a social networking site for professionals, came out with its initial public offering (IPO) on May 9, 2011, on the New York Stock Exchange (NYSE). It expected to raise around $ 274 million and was valued at around $ 3 billion by the exchange. Resurgence of the IPOs of internet companies is not quite a frequent phenomenon because of the telecom and internet burst in 2000 and the subsequent market crash that led to the wash-out of many companies and billions of dollars being lost by the shareholders. The success of social networking sites (Facebook in particular) and also the more recent social commerce websites had made the people believe and invest in the internet boom. In January 2011, Goldman Sachs valued Facebook at $50 billion. The most powerful sources that played a big role in the current boom could be finance and some emerging countries like China. First, there was an altogether new breed of investors to back and support these ideas financially. And second, this boom was not just American but global, with China being the major player in the industry along with the US. There was a widespread feeling that the boom could lead to many disappointments but that these would be different from the disappointments of a decade ago, because the companies now had real business models and significant revenues and profits particularly.

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