Click to enlarge:

Source: Bloomberg

 

Fascinating comparison between Google and Microsoft gains since their IPOs from Dave Wilson. Earlier this month, Google managed to slip past Mister Softee in terms of market cap  (MSFT is now $244.8B vs GOOG $243.56B).

Microsoft Corp.’s stock-market performance during its first eight years as a public company far surpassed Google. MSFT soared about 30-fold in the 8 year period after its March 1986 IPO, peaked at more than $600 billion in cap in December 1999.

The key to long term IPO performance is initial valuation when going public. Microsoft soared about 30-fold in the same period after its March 1986 IPO. Microsoft’s market capitalization, which peaked at more than $600 billion in December 1999.

The gap in stock performance reflects a disparity between the valuation of Google, based in Mountain View, California, and Microsoft, based in Redmond, Washington, when they first sold shares publicly. Google was valued at $23 billion in its IPO, which followed a price cut and a reduction in the number of shares sold. The dollar amount was 44 times the comparable figure for Microsoft, which went public at a $519 million valuation.

Consider this when you consider what Facebook’s long term performance might look like, coming public near $100 billion valuation . . .

 

 

Source:
Microsoft Gains Ease Sting of Google Valuation
David Wilson
Bloomberg, October 2, 2012

Category: IPOs, Technology, Valuation

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

9 Responses to “Microsoft versus Google IPO Performance, Valuation”

  1. wally says:

    By the time of Google’s IPO, people had caught on to the potential in tech companies. MSFT came at the head of that curve, so examples had not preceded it.

  2. jeremyt says:

    The graph shows that Google captured a higher fraction of their actual value in their IPO. Google did better than MSFT, though not as well as Facebook, which captured about 200% of their current market value in their IPO.

    ~~~

    BR: Sounds like you don’t want the public investing in IPOs anymore. Don’t worry, the Facebook IPO “capture: may give you your wish . . .

  3. b_thunder says:

    To me a lot more interesting chart involving MSFT is this one:

    http://www.zerohedge.com/news/applesoft-it-different-time

  4. RW says:

    Well, just remember that corporations are people too.

  5. [...] • MISH: Charting errors in BLS participation • DR. DURU: What to do with your homebuilder stocks now • THE TECHNICAL TAKE: Investor sentiment: In a vacuum • BIG PICTURE: Microsoft vs. Google IPO performance valuation [...]

  6. CSF says:

    A great point about valuation, but hindsight is always 20/20. In 1986 how many of us knew that a small cap company named Microsoft had so much potential? You might have invested in 50 other IPOs that you considered just as promising as this little company from Redmond. How did the others work out? On the other hand, Google at the time of its IPO was already well known as a company with enormous potential. Those who refrained from Google at the IPO, fearing it was overvalued, were quickly proven wrong. My only regret is not buying more.

  7. AHodge says:

    microsoft created some awesome sofware
    with others help –ideas spawn one another
    and wrapped themselves up in a patent monopoly on basic system software
    and havent done shit since with their what? $30 60 bio year cashflow?
    so thats near 100% gross magin if you count only useful costs as deductions
    the marginal cost of one more unit is zero
    nice work patent office

  8. NoKidding says:

    AHodge has it right. I would not throw out the patent system, but Microsoft illustrates the downside. Phones and tablets are crushing PCs for many reasons, but the unshakable OS tax is a big factor.

  9. cognos says:

    Blah blah… boo hoo.

    “I want my 30x, 10X isnt good enough! Therefore I will hide in Tbills.”

    Lousy strategy.