Web Host Go Daddy Backs Out of IPO

Tweet

Hi Mates, It probably might be an old news for many. Still I do post believing that not many of us would be aware of it! "After months spent planning for a public offering of its shares, Web hosting provider and domain registrar Go Daddy (godaddy.com) announced on Tuesday it had withdrawn its registration statement form S-1 with the Securities and Exchange Commission, and had determined not to proceed with the sale of its stock." The turnaround was not necessarily unexpected. There had been fears surrounding the success of a potential IPO for Go Daddy since the company opened its books in May. While the company has shown remarkable growth in domain names - leaping to the top of the list of the world's largest registrars in the last year - the company's growth-encouraging rates have meant Go Daddy has yet to turn a profit. In describing to employees his reasoning for withdrawing the IPO, Go Daddy CEO Bob Parsons referred to a variety of recent articles highlighting the recent poor performance of IPOs in general, and of technology IPOs in particular. A popular comparison among analysts was the recent public offering of Vonage, a rapidly growing but not-yet-profitable technology darling whose recent IPO was widely considered a disappointment. With a bit of "godaddyesque" bluster, Parsons put a particularly confident spin on the news. "Go Daddy has decided not to proceed with an IPO at this time due to adverse market conditions," said Parsons in a press release. "With a war and escalating hostilities throughout the Middle East, skyrocketing oil prices and technology stocks once again taking a beating on Wall Street - now just isn't the right time for us." When speculation first began that Go Daddy was considering going public, analysts brought up the possibility that the company might not be dead set on following the process through to the end. In an interview with theWHIR in May, Tier 1 research president Andy Schroepfer said a Go Daddy IPO filing would likely be a "fishing expedition," seeking feedback or acquisition offers. "There are a lot of companies that don't necessarily know if they can be independent companies," says Schroepfer. "So a lot of them end up going through the process to find out from their bankers what other companies would consider buying them for." In a lengthy posting made to his blog on Tuesday, Parsons offered an explanation for why the company had pulled its IPO. He described the company's "best quarter ever" and said that market conditions, and some of the ways in which Go Daddy's reported finances are interpreted had made an IPO seem like a less appealing proposition. According to Parsons, the SEC's standards of reporting require the company to account for domain registrations as though they are paid for on a monthly basis by customers. Domain registrations, however, are paid for up front. The result, says Parsons, is that the company's filings don't accurately reflect the company's cash position. "What if you were a cash cow and nobody noticed?" he wrote. Parsons, as outspoken a CEO as any in the technology business, also said he chafed at the restrictions imposed by the "quiet period" that proceeds an IPO. The restrictions required him to put his "Life Online" radio show on hiatus and limited the freedom he had in posting to his blog. Ultimately, he said, market conditions were not ready to support a Go Daddy IPO, despite the company having received the "green light" from the SEC. "Last week when the SEC informed us our filing was accepted as being ready to go, market conditions were a terrible mess," he wrote. "In fact, inflation worries, say analysts, are bleeding into the tech sector. For all these reasons, I liken the timing of us getting the ‘green light' to a person being told his car is in perfect condition just before it's about to be driven into a wall. "I don't expect market conditions to correct themselves for sometime. I feel we owe it to ourselves to withdraw our filing until better and more stable times arrive." Parsons will return Wednesday night to his Life Online (lifeonline.com) radio program, at which point he will further discuss the decision to reverse the IPO.