Thanks for the article on changes to the IPO environment. (A late read on
my part, but that’s what vacations are supposed to be about.)
Quick question: In addition to the quiet period following an IPO (25 days,
as you reported), there is also a moratorium on short-selling. Is this
also 25 days? I’ve heard many different numbers.
— Allen Clark
Reply: There is no equivalent “quiet period” rule for shorting an
IPO. However, there is the following limitation. That is, in order to
short a stock, there must be stock certificates available to borrow and
then sell on the open market. In an IPO, the stock certificates are
not delivered for a few days, so it is impossible to short an IPO within the
first few days of the offering.
Rolling the Dice After Hours
What do you think of after-hours trading? Does it make sense?
Reply: The answer depends on the type of investor you are. If you
are a long-term investor, then buying in after-hours is probably not a good
idea. So far, there has been little trading volume and thus, you are
likely not to get a good price for your stock. Then again, if you are a
daytrader, there are definitely opportunities to make money off the
volatility. What’s more, there are typically many key announcements after
the market close (earnings announcements and so) — which can create even
more volatility in after-market trading.
But such strategies are really for the professionals.
Those firms that allow after-hours trading include: Datek, Schwab,
DLJDirect, TD Waterhouse, E*TRADE , Discover and Dreyfus.
The Next Big IPO
Good call on Sycamore Networks. What is the next big networking stock?
Reply: Thanks. Like Juniper Networks and Foundry Networks, Sycamore
reached an eye-popping valuation on its IPO — $14.4 billion to be exact.
The stock was priced at $38 and reached a high of $270.88, until it closed
at $184.75. I wrote about this company in last week’s
The company is in the so-called infrastructure space, which has been torrid
So what’s the next one? Akamai looks like a worthy successor.
The idea for this company originated with Tim Berners-Lee,
who is the inventor of the World Wide Web. He dared his colleagues to find
a way to deliver content faster. F. Thomson Leighton took the challenge
and spent much time with advanced mathematics to find a better solution.
By February of 1998, he started Akamai and as of April, 1999, the company
launched its product, FreeFlow. Here’s how it works. A company will
designate certain areas of the site for fast downloads — such as for icons,
graphics, videos (called “Akamaized” content). When a page is loaded, the
tagged content will be handled by the Akamai servers — optimizing the
content based on geographic proximity, performance and congestion
parameters. So far, the results have been impressive. Yahoo!, for
example, had a 50 percent increase in performance on its ad banners.
Akamai now has 49 customers, such as VerticalNet, About.com and CNN
The company has entered strategic agreements with Cisco ($49 million ) and
Microsoft ($15 million investment).
Here are the valuation metrics:
pro forma IPO
IPO market cap
less working cap
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