[ Thanks to Kevin
Reichard for this link. ]
“For Mr. Liang, IPO definitely stands for Immediate
Principal Obliteration, given his experience with Cobalt
Networks Inc. (COBT–Nasdaq, high $172 (U.S), low $22), a
maker of Internet and Web hosting server appliances. “I’m a fan
of… Linux, so I waited all morning for the [stock] to open on its
IPO day,” he says. “It was recognized as a major Linux company, and
I had beat my head over missing out on Red Hat.”
“(Red Hat Inc. [RHAT–Nasdaq], an early packager of Linux, was
also an early beneficiary of the dot-com boom. When the company
went public last fall, the stock traded at around $40 [U.S.] for a
couple of months before rewarding believers with a fast rise to a
peak of more than $151. Like many high-tech stocks, though, Red Hat
has recently “blowed up real good,” as SCTV would say, and is
currently trading at around $17.)”
“He got into Cobalt at $147 a share, and the stock did
indeed get up to a high of $170. Unfortunately, from that point it
was downhill all the way, with the stock now trading at around
$28. When you add in the fact that Mr. Liang sold Starbucks
Corp. (SBUX–Nasdaq, high $45.25 [U.S.], low $19.87) at around $27
a share to raise the money to get in on the initial public
offering, and Starbucks’ stock in the interim spent a lot of time
trading in the high 30s, you can understand why Mr. Liang is
considering selling his Cobalt shares, and advises others to “Never
buy shares on the IPO day.”