LinkedIn vs. Facebook IPO Success

LinkedIn vs. Facebook IPO Success

 

LinkedIn’s recent IPO performance appears to have crushed the perception of big named company IPOs from Facebook, Yelp, Zynga, Groupon and Pandora. Based on their recent closing price, LinkedIn is up 141%. According to BusinessInsider Linkedin is, “the best-performing IPO this year by a huge margin. The next closest competitor, Bankrate, is up about 28 percent from its initial public offering.”

Timing may have been a factor for LinkedIn’s success. They have also seen consistent growth in unique visitors. Investors waiting for highly anticipated IPOs like Facebook may have helped increase the success of LinkedIn as well.

Although Facebook has had a lot of negative press regarding its IPO, CBS news reported that Facebook’s IPO was actually a success. CBS explained, “LinkedIn (LNKD) shares popped from the start in the professional networking company’s 2011 IPO and more than doubled in the first few days.”  Investment bankers made a bundle. This led people to think Facebook had been a flop. However, CBS author Allan Roth explained, “my definition of a successful launch of a new publicly traded stock doesn’t rest on how much money the investment bankers make. It rests on how close the offering price is to where the stock actually trades. The fact that Facebook shares closed at nearly their offering price tells me that that investors thought it was fairly priced. That’s pretty amazing, in my view, given all the hype over Facebook.”

Colin Lokey from SeekingAlpha explained that when comparing Facebook to Linkedin, fundamentals show that Linkedin is overvalued. Lokey warned, “Investors should of course, keep in mind that the fact that LinkedIn is far too expensive doesn’t mean Facebook is fairly valued at half of LinkedIn’s price.”  Prices have been affected by the recent Facebook IPO. Yahoo’s Finance writer Jeff Macke did not share Lokey’s opinion on pricing when he stated, “Linkedin stock has been dragged down over the last few weeks by the undercurrent of the Facebook Titanic.” He sees LinkedIn as a “screaming buy”.

Only time will tell how well LinkedIn and Facebook will perform. BizJournals recently quoted Linkedin’s CFO Steve Sordello about the importance of a company’s IPO results. “”An IPO is a one-time event, and what really matters is the long term. If it rains on your wedding day, you’re going to remember it rained but it’s not going to influence the marriage.”

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8 Important Business Ethics Cases

For those interested in researching some interesting ethical businesses cases, there are plenty from which to choose. Business leaders may feel squeezed by shareholders to produce profits.  Some have made some ethical blunders in an attempt to remain competitive. Others have used their size to squeeze out the competition.  The following includes some important business ethics cases based on well-known organizations:

  1. Enron – Questionable accounting practices and manipulation of the energy supply brought down this company. Enron: The Smartest Guys in the Room is an excellent documentary movie that explains the scandal.  Check out an excerpt from Enron’s Code of Ethics.
  2. Monsanto – Monsanto has been criticized for its mega-size.  Critics fear they are taking over the food supply as well as creating negative environmental issues. Check out Monsanto’s Code of Ethics for Chief Executives and Senior Financial Officers.
  3. Arthur Andersen – Arthur Andersen is known for its unethical auditing practices. Check out The Fall of Arthur Andersen for more complete details.
  4. WalMart – Studies have shown that WalMart may save people money but they may also negatively impact communities.  Their low prices may also hurt suppliers. The company received criticism when leadership announced they wanted to hire healthier, more productive employees. WalMart has been accused of being anti-union and has survived sweatshop and discrimination scandals. Check out WalMart’s Statement Regarding Code of Ethics.
  5. Countrywide – The company offered subprime loans that later resulted in default.  Critics have claimed that Countrywide employees told clients that their properties would increase in value and that their loans would be able to be refinanced when market values rose.  The market values declined causing many to lose their homes.  Check out Countrywide’s Code of Ethics.
  6. Beechnut – Beechnut’s ethics came into question when it was discovered that they were selling “apple juice” to foreign countries that contained something less than apple juice.  For more information on this scandal, check out Beechnut’s History and Apple Juice Scandal.
  7. Starbucks – Clustering strategy may force smaller companies out of business. There were so many Starbucks on street corners that movies like Best In Show made fun of how there might be one Starbucks right across the street from another.  Check out Starbucks’ Code of Ethics for CEO and Financial Leaders.
  8. Nike – Manufacturing practices included producing shoes offshore to save money. Nike has used its share of sweatshops in manufacturing. They have come under fire for human rights violations. Check out Nike’s Code of Ethics.

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Top 10 Entrepreneurs Who Hit it Big Before Turning 35

 

There was a time when it was unusual to hear about an entrepreneur becoming successful at a very young age.  With the technology boom, the story is becoming more commonplace.  The following list contains the top 10 entrepreneurs whose dreams came to fruition and made them very rich before they hit the ripe old age of 35.

  1. Apple – Creators:  Steve Jobs and Steve Wozniak.  Apple was established in 1976, the year Steve Jobs turned 21 and Steve Wozniak turned 26.
  2. Amazon – Creator:  Jeff Bezos.  Amazon was founded in 1994, the year Jeff Bezos turned 30.
  3. Disney – Creator:  Walt Disney.  Disney was founded in 1923, the year Walt Disney turned 22.
  4. Facebook – Creators:  Mark Zuckerburg and his college roommates Eduardo Saverin, Dustin Moskovitz and Chris Hughes. Facebook was launched in 2004, the year that Mark Zuckerburg turned 20.
  5. Google – Creators:  Larry Page and Sergey Brin.  Google was incorporated in 1998 the year that Larry Page and Sergey Brin turned 25.  Google’s IPO was in August of 2004, the year the men turned just 31.
  6. Groupon– Creator:  Andrew Mason.  Groupon was created in 2008, the year Mason turned 29.
  7. LinkedIn – Creators:  Reid Hoffman and founders from PayPal.  LinkedIn was founded in late 2002 the year that Hoffman turned 35.
  8. Microsoft – Creators:  Bill Gates and Paul Allen.  Microsoft was established in 1975, the year Bill Gates turned 20 and Paul Allen turned 22.
  9. Twitter – Creator:  Jack Dorsey.  Twitter was created in 2006, the year Dorsey turned 30.
  10. Yahoo! – Creators: Jerry Yang and David Filo.  Yahoo! was incorporated in 1995, the year that Jerry Yang turned 27 and David Filo turned 29.

Click on the company names above to find out more details and top stories about these unique companies.

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Things To Know Before Investing in an IPO

 

There is a lot of talk about IPOs lately.  IPO stands for initial public offering.  When a company decides to make shares of the company available to the public, it may sound like a great opportunity to get in on the ground floor.  However, it may not be easy or sometimes wise to buy into an IPO as soon as it is offered.

USA Today had an excellent article about Five Things You Should Know Before Investing in an IPO.  According to this article, some of these things include:

  1. Learn the Lingo – Do you know what a red herring is or an IPO offer price?
  2. It’s Difficult to Get In – It may not be impossible, but you may have to be a preferred client.
  3. First-Day Investing May Be Risky – If you like the thrill of rolling the dice, the first day can be a wild ride.
  4. Know the Sales Figures – Find out about the company’s annual sales performance.
  5. Know the Long-Term Outlook – “The Federal Reserve identified two characteristics of successful IPOs in a 2004 study: The companies have been around longer than other companies issuing stock for the first time, and they’re making a profit before they do so.

To learn more about each of these 5 areas, check out the article by clicking the link listed above.

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Top 10 Companies’ Code of Ethics and Conduct

Companies have something called a code of ethics that outlines how they will run their business.  Sometimes they refer to this as their code of conduct. There aren’t always laws to govern things like ethics.  Therefore, it is up to companies to define some of their ethical behavior.

 

via searchenginewatch.com – Google a Little Evil

According to the International Labor Organization, “Unlike labor law, corporate codes of conduct do not have any authorized definition. The concept “corporate code of conduct” refers to companies’ policy statements that define ethical standards for their conduct. There is a great variance in the ways these statements are drafted. Corporate codes of conduct are completely voluntary. They can take a number of formats and address any issue – workplace issues and workers’ rights being just one possible category. Also, their implementation depends totally on the company concerned.”

Click here for an article on the difference between laws and ethics.

The following is a list of some major companies and their code of ethics:

In researching these companies, it was interesting that Facebook didn’t have a clearly defined code of ethics listed in the same way other companies did.  For more about Facebook, check out the Wall Street Journal article:  Facebook Agrees to Work With Government on Germany Privacy Code.

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