Free AOL Sends Go Daddy IPO Packing

Go Daddy received a clear message from Wall Street on Tuesday: Stop, Daddy!

The company, which registers domains and hosts Web sites, shelved its plans for an initial public offering, citing among other things "hostilities throughout the Middle East." Whether you buy that reason or not, the collateral damage will include the dashed hopes for other start-ups counting on a Hail Mary IPO to raise cash in the stingy public markets.

It's hard to say just how excited or indifferent institutional investors were on investing in Go Daddy on its own merits. That's because the withdrawal of the company's IPO came on the same day that America Online announced it would offer email domain registrations for free, effectively pulling the rug that was Go Daddy's consumer-oriented market out from under its feet.

Aside from businesses, most domains are registered to people who want a personalized email address and their own Web site. AOL will start offering the vanity email addresses next month, and domains for personal sites will follow. AOL hopes to stitch those sites into its own social network.

That move did little for AOL's parent Time Warner , but it left investors searching for a reason to invest in a company like Go Daddy that was competing with a larger, better-known competitor offering its core service at no cost to customers.

It's tempting to read into Go Daddy's move more evidence that tech companies without a sterling income statement and the promise of profit for the foreseeable future simply weren't welcome in the markets. Go Daddy, which has posted a loss in each of the last five years, appears to be caught in the undertow of Vonage's VG now legendary IPO fiasco.