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IPO Google vs. Baidu

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Xu Yaohuilaine

on 26 March 2014

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Transcript of IPO Google vs. Baidu

IPO Google vs. Baidu
林小茹 201001352 陈静慈 201328223 罗琳 201328225 陆凯玲 201328231 徐瑶慧 201328234
1. Initial Public Offering (IPO)
Advantages and drawbacks
2. Baidu
Company's presentation
Facts and figures
3. Google
Company's presentation
Financial situation during the IPO
Facts and figures
4. Comparison between Baidu and Google

Initial Public Offering
-initially offers shares of stocks to the public
-the first time the owners of the company give up part of that ownership to stockholders.

-Raise money;
-financial rewards for owners;
-Direct access to capital markets;
-employee attraction
-rid ownership

-High Cost;
-High Risk;
-Less Control;
-Pressure to meet investor expectations

Constructing IPO team

Managing financial information

Preparing Prospectus

Completing vender contract and Financial Statement

Reviewing, Auditing and press release

In addition to the upfront fees, companies pay around $500,000 a year in accounting and insurance fees just for being a public company.

Duration: Around a year
Cost: More than $2 million
Company's presentation

Financial situation during the IPO

Facts and figures about the IPO
Baidu's IPO more in depth
Company's presentation

Company's presentation

Facts and figures about the IPO

Market's first reaction

The stock performed well after the IPO
==> shares hitting $700 for the first time on October 31, 2007

Why this good start?
==> strong sales and earnings in the online advertising market
==> surge in stock price fueled mainly by individual investors

When? on August 19, 2004

How many shares ? 19,605,052

Price per share?  $85

Means of sales ? an online auction format

Market's first reactions:

Baidu's American Depositary Share (ADS): 4,04 million ADSs offered at $27 per ADS.
Opened at $66
Ended at $122.54

Rise of 354%: ranked 18th in the history of first-day gain .

Reasons :
small size of the deal (4.04 million shares),
strong interest from retail and institutional investors,
rumors of Google attempting to buy the firm fueled interest in the stock (June 2004, Google acquired 2.6% of Baidu's debt-equity)
Thank you for your

Baidu was founded in January 2000, Beijing by Li Yanhong (Robin Li).
About 17 000 employees.
One of the four best search engines in the world.
The best search engine in Chinese.

When? On August, 5 2005

How many shares ? 323 000 000

Price per share?  $27

Means of sales ?

Anouncement date of IPO: July 12 2005 at the US Securities and Exchange Commission.
Price setting :
Investment banks 3 IB firms (Goldman Sachs, Piper Jaffray and Credit Suisse First Boston) all underwrote Baidu's IPO.

Road Shows: IB presents the company to potential investors.
Discussions ==> agreeable price at which the market will accept and buy the shares.
Goldman Sachs
Allot IPO shares to institutional investors who promised to buy more shares once trading began.
IB offers to a chosen few the company shares at extra-low prices for future underwriting business.

The bank would undervalue the initial offering price for it to rise quickly.
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