Can't fault the Google guys for trying not to bubble-up the market. They have set parameters on their deal that are meant to correct many of the faulty mechanisms in the IPO market that both helped facilitate the bubble -- selling a sliver off to a couple of mutual funds and hedge funds that flipped it to the unwashed at the opening price -- and brought about its timely demise when the bound stock was set free.
Everything about the auction process impresses me and tells me they've thought through all the ramifications. They have dictated to Wall Street how the deal should be run, even when this type of dictation would crush the traditional underwriting spreads: 3% fees instead of 6%; no stupid road shows; no control by a mindless syndicate desk that really has a corporate finance and a couple of high-commission-generating accounts to watch for; no corrupt friends and family. If I didn't know better, I would say that these guys actually read Confessions of a Street Addict, where I suggested this method as an antidote to the problems.
But changing the mechanism, making it fairer and more honest, doesn't eliminate the possibility that this company will come public at $60 billion to $70 billion. That's one of those events that creates the so-called virtuous cycle upward where people say, "Hold it, you mean InterActiveCorp (IACI - commentary - Cramer's Take) sells at X and Google sells at 10 X? Let's go buy InterActiveCorp." You can substitute Ask Jeeves (ASKJ - commentary - Cramer's Take), Yahoo! (YHOO - commentary - Cramer's Take), Amazon (AMZN - commentary - Cramer's Take) or any other name you would like from the era in there.
The big issue is that the market will never be equipped to handle a company that has taken over the Net as long as the Net is the way that retail buys stocks. You can control who gets the stock from Morgan Stanley and Credit Suisse, but you can't control the buyers in the open market. You can control the offering price, but you still can't control the opening price that could be dictated by market orders from non-Morgan Stanley or non-Credit Suisse clients. And the latter certainly will be bubblicious.
At the time of publication, Cramer was long InterActiveCorp and EMC.James J. Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. Outside contributing columnists for TheStreet.com and RealMoney.com, including Cramer, may, from time to time, write about stocks in which they have a position. In such cases, appropriate disclosure is made. To see his personal portfolio and find out what trades Cramer will make before he makes them, sign up for Action Alerts PLUS. While he cannot provide personalized investment advice or recommendations, he invites you to send comments on his column to jjcletters@thestreet.com. Listen to Cramer's RealMoney Radio show on your computer; just click here. Click here to buy Cramer's latest book, "You Got Screwed!" Click here to order Cramer's autobiography, "Confessions of a Street Addict."
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Can't fault the Google guys for trying not to bubble-up the market. They have set parameters on their deal that are meant to correct many of the faulty mechanisms in the IPO market that both helped facilitate the bubble -- selling a sliver off to a couple of mutual funds and hedge funds that flipped it to the unwashed at the opening price -- and brought about its timely demise when the bound stock was set free.
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