CASE STUDY: The Internet Investment Rollercoaster (Chapter 1: The Revolution Is Just Beginning, pp ) Dale Earle Heloisa Tiberio Jessica Awa Group F Kwaku Morgan-Arhin MGS Latoya Nelson 2 / 1 / 2010 **Matthew Norton Dr. Melworm

NOTABLE CASE FACTS In 2009, technology was the place to invest, at least from an investor’s point-of-view 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 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) Investment bankers took 1,262 of those 12,450 websites and turned them into IPO’s (Initial Public Offerings) CASE: “The Internet Investment Rollercoaster”

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 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 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 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”

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) 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 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 In 1999, The SEC (Securities and Exchange Commission) illegalized banks from “hooking-up” potential entrepreneurs with inside deals NOTABLE CASE FACTS (cont’d) CASE: “The Internet Investment Rollercoaster”

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 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 Internet advertising firms and search engines also became vastly popular Entrepreneurs gradually changed the way they did business Entrepreneurs gradually changed the way they did business CASE: “The Internet Investment Rollercoaster”

HOW ARE THOSE EARLY IPO’S DOING NOW?? NOT GOOD!!! NOT GOOD!!! Many of them fell to $1/share a few months before 9/11… WHY?? WHY?? More and more businesses started catching on; the pie could only be sliced in so many ways… ARE THEY STILL IN BUSINESS?? 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”

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

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

WHY?? Two words: Social Networking Two words: Social Networking Google paid $1.65 billion in 2008 for YouTube because they apparently felt the same way 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 Microsoft paid Facebook $240 million just to be their main advertisee CASE: “The Internet Investment Rollercoaster”

IPO CHANGES OVER THE YEARS Name of Business2005Present Google (GOOG) ~$ $ Google (GOOG) ~$ $ Amazon (AMZN) ~$34.75 $ Amazon (AMZN) ~$34.75 $ Overstock.com Inc. (OSTK) ~$54.95 $11.99 Overstock.com Inc. (OSTK) ~$54.95 $11.99 eBay (EBAY) ~$42.24 $23.19 eBay (EBAY) ~$42.24 $23.19 Dell (DELL) ~$40.20 $13.22 Dell (DELL) ~$40.20 $13.22 Hewlett-Packard (HPQ) ~$21.30 $47.83 Hewlett-Packard (HPQ) ~$21.30 $47.83 CASE: “The Internet Investment Rollercoaster”

QUESTIONS??