Digital Media

Global Gaming Factory X, the software maker that has claimed it will acquire BitTorrent search site The Pirate Bay, has found a new stock exchange for its shares--a move that can only be described as bewildering.

Mangold Fondkommission, an independent exchange that specializes in the trading of small and medium-size stocks, issued a press release Wednesday, announcing that Global Gaming's shares were available for trade.

Global Gaming was booted off its former stock exchange earlier this month after exchange officials concluded the company provided false information about its ability to purchase The Pirate Bay.

Sweden's Economic Crimes Bureau has said it is investigating possible insider trading that is reportedly connected to a sharp rise in trading of Global Gaming's shares the week before it announced it would acquire The Pirate Bay.

Hans Pandeya, the company's CEO and majority owner, has issued so many conflicting and erroneous statements that the Swedish media now refers to anything the company does as a "circus."

A spokesman for Mangold confirmed that Global Gaming was trading there but declined to provide additional comment outside of the press release.

Meanwhile, Pandeya has continually said that the deal for The Pirate Bay would be completed by the end of the month. He has said this despite failing to provide proof to his former exchange that he had the money to acquire the search engine.

Pandeya has suggested that he would secure any loans that he got to complete the acquisition with his shares of the company. Whether the shares are worth anything remains a question.

Several young companies anticipate initial public offerings this week, but there's not a single high-tech outfit among them.

There's one green-tech company however. Changing World Technologies, a company that converts waste into oil, is one of four IPOs poised to hit Wall Street this week. Changing World is scheduled to price its IPO as early as Wednesday and could raise as much as $42 million, if it prices on the high end of its $11 to $15 per share range.

Nonetheless, while the four Wall Street prospects offer some excitement to their investors, there's little reason to believe that with a recession in full swing many companies will line behind them.

"If these four companies are able to successfully complete their IPO and post positive returns for at least a couple weeks, it could motivate some of the companies that have recently filed (to go public). But I don't see the flood gates opening. It takes time for the IPO market to come back," said Paul Bard, research director of Renaissance Capital, an IPO research and investment management services company.

One of the most recent companies to file its paperwork to go public is OpenTable, an online dining reservations company. One investment banker, who requested anonymity, noted OpenTable faces a number of challenges if it moves forward with an IPO during this recessionary climate.

Fewer people are dining out, as the unemployment rate soared to 7.6 percent in January, presenting a potential slowdown in business, noted the investment banker. OpenTable's annual revenues of approximately $40 million in 2007 and the first nine months of 2008 are roughly half the level investors like to see in an IPO.

OpenTable, having just filed its paperwork, however, is still a number of months away from doing its road show to talk with potential investors and hammering out its IPO price. For many in OpenTable's situation, there's no rush: some companies have languished in the IPO pipeline for over half a year and longer.

Companies set to price their IPOs and begin trading this week, in addition to Changing World Technologies, include Mead Johnson Nutrition, an infant formula maker, and O'Gara Group, a homeland security defense company. Both Mead and O'Gara are scheduled to price their IPOs Tuesday after the markets close and begin trading Wednesday, according to their underwriters.

Madison Square Capital, a real estate investment trust, is expected to price its IPO as early as Wednesday night, as with Changing World, and begin trading on Thursday.

(Credit: Renaissance Capital's IPOhome.com)

The disappearing IPO market
They'll be among the few in recent months to brave the public markets. The number of U.S. IPOs fell last year by 85.7 percent to 29 deals across all industry sectors, according to Thomson Reuters. Within the tech sector, that decline was even sharper--dropping a staggering 90 percent to four deals last year.

But don't entirely write off 2009 quite yet.

"If you can say there is any consensus at all, overall, it feels like investors believe the market will recover in the middle of the year and, typically, IPOs have been a lagging indicator to the overall market," said David Ludwig, managing director of equity markets for Goldman Sach's technology, media, and telecom practice. "Usually it takes a quarter or two for IPO market to become robust again once the market turns."

He noted, however, that given the IPO dry spell has lasted longer than in the past, there may be more companies willing to launch an IPO before the markets turn, especially if some of the first deals that test the market are well executed.

The last IPO to hit the markets was Grand Canyon Education, an Arizona-based online university that ended nearly a four-month IPO dought, when it debuted in late November at $12 a share. Grand Canyon's shares have outperformed the markets since its debut and the stock reached as high as $20.25 a share on Monday.

Who's on tap?
The performance of Grand Canyon apparently brightened the prospects for Bridgepoint Education, another online university, which filed its IPO paperwork with the Securities and Exchange Commission in late December. There's a reason both online schools appear to be doing well.

"Bridgepoint and Grand Canyon are educational companies and in a recession, when people are out of work, they go back to school," said Lise Buyer, founder of Class V Group, a firm that advises start-ups on preparing their companies to go public.

Other tech companies that recently filed IPO papers and remain in the IPO pipeline include Rosetta Stone, a foreign language training software maker, Emdeon, an automated payment system for the healthcare industry and Internet company OpenTable.

Although nearly two dozen companies have filed formal IPO paperwork since the market malaise in October, many are getting cold feet, Bard said. Since the start of the year, two companies have filed for an IPO while seven have withdrawn. And last year, 150 companies filed plans to go public but 184 companies withdrew, according to Renaissance Capital's IPOhome.com.

Within the technology sector, the companies that show the greater potential of offering up IPO candidates in this down market include software and services, which are viewed as defensive sub-sectors, said Cully Davis, managing director of Credit Suisse's technology practice for equity capital markets.

Meanwhile, other areas that appear to have gained some of that interest, investment bankers say, are security software, subscription-based services, network management, businesses around Netbooks, solid state drives, and clean tech.

Historically, tech and health care companies have been the lifeblood of the IPO market. Last year, tech and health care both ranked second with four IPOs each, behind the energy and power industry, which accounted for seven of the 29 deals that launched during the year. But in 2007, tech dished up the most IPOs with 40 of the 203 deals, followed by health care with 39 deals, according to Thomson Reuters.

What makes for a good IPO candidate?
Companies with lower capital costs will have an easier time posting a profit and, as a result, stand a better chance of launching an IPO, noted Buyer, who also cited annual revenues in excess of $100 million as another key item companies need to aim for.

Currently, the number of executives and venture capitalists seeking out bankers to take the companies public has substantially dropped, as they focus more on operating their businesses in the current economic and valuation environment, Ludwig said. But for those companies that are closer to being ready to access the markets, there's still interest.

There are caveats, investment bankers say. A couple years ago, tech investors wanted to latch onto IPOs that featured smaller companies with hyper-growth achieved through investing into sales and marketing, said Davis. But now, with their portfolios down, investors are less interested in hyper-growth companies and more focused on demonstrated profitability and realistic growth.

So when will the IPO market comes back again? Most likely, when investors decide a fresh face on Wall Street is a better bet than investing in an old one.

It was a rather blase day for Yahoo's closing stock price Friday. It didn't shoot to the moon on the latest Microsoft takeover rumor, nor crater to the Earth's core on fears that the software giant is never coming back in some shape or form.

CEO Carol Bartz

But, nonetheless, Yahoo's newly minted CEO, Carol Bartz, was likely taking notice. Her potential fortune is tied to Friday's closing stock price.

Bartz, under her compensation package, is eligible to reap the rewards of 5 million stock options, which carry an exercise price based on Friday's close of $11.73 a share.

There's a catch, however.

Bartz's shares won't begin to vest unless Yahoo's stock rises by a minimum of 150 percent above the exercise price. That means Yahoo's stock needs to climb to $29.33 a share and maintain that average closing price for 20 consecutive trading days, in order for Bartz to vest one-third of the 5 million shares.

And she needs to do this by January 1, 2013, or all 5 million options go poof.

If Bartz can hurdle the first leg of the Yahoo vesting challenge, she could find herself holding 1.67 million options with a value of roughly $48.9 million.

Potentially, there is even more to come.

Here's how Bartz can score the rest of the 5 million options. The methodology remains largely the same, except for the percentage increase required and number of shares that vest:

•175 percent increase, stock hits $32.26 a share, one-sixth of options vest.

•200 percent increase, stock hits $35.19 a share, one-sixth of options vest.

•225 percent increase, stock hits $38.12 a share, one-twelfth of options vest.

•250 percent increase, stock hits $41.06 a share, one-twelfth of options vest.

•300 percent increase, stocks hits $46.92 a share, one-sixth of options vest.

Compensation experts note Yahoo's stock option incentive is rather rare. Usually, options for CEOs vest over time and by achieving certain performance metrics. In Bartz's case, however, the 5 million shares are based solely on Yahoo's stock price appreciating over the next four years.

This type of options package ties Bartz's good fortune directly with that of Yahoo investors.

And given that the company now has shareholder activist Carl Icahn on its board, the chances of Bartz later getting her options re-priced at a lower strike price are slim to none.

A wide swath of technology stocks posted double-digit gains Tuesday, as the broader markets surged to exceptionally high levels as investors anticipated an interest rate cut by the Federal Reserve.

Cisco Systems, Amazon.com, Dell, and Comcast were just some of the tech players whose shares crested above 10 percent gains at the market's close, as the Dow Jones Industrial Average jumped a whopping 889.35 points to 9,065.12, up 10.9 percent.

The tech-heavy Nasdaq rose 143.57 points, or 9.5 percent, to close at 1,649.47, while the S&P 500 soared 91.6 points to 940.51, or 10.8 percent.

And the CNET Tech Index rose to even higher levels, posting an 11.3 percent gain, up 120.98 points to 1193.35.

Cisco jumped to $18.31 a share, closing the day up 13.9 percent, while Dell also posted strong gains of 12.1 percent to close at $13.15 per share. Qualcomm, another hardware company, increased by 14.9 percent to $38.91 a share.

But by far Comcast posted the largest gain among the most actively traded stocks on the Nasdaq, rising a whopping 25.8 percent to close at $16.96 a share.

Amazon pulled in a strong performance, climbing 13 percent to $56.04 a share, while Google rose 11.9 percent to $368.75 a share.

Despite a down day for the broader markets Friday, a handful of tech stocks swam against the tide, posting modest single-digit gains.

The trading performance of Google, eBay, and Symantec on Friday.

(Credit: Yahoo Finance)

Google, Symantec, and eBay were just some of the tech companies to finish the day in the black. The CNET Tech Index was down a modest 1.59 points to end the day at 1,185.55.

Google closed up 5.53 percent to $372.54 a share, which comes as little surprise considering the tech titan posted stronger-than-expected third-quarter earnings results on Thursday. And on Friday, a number of analysts released largely positive comments on the quarter, while giving a cautious outlook for the coming quarters and years on revenue growth.

eBay, meanwhile, was up 2.54 percent to $15.35 a share, a welcome change for the e-commerce giant which earlier in the week saw its shares punished after posting its third-quarter results, in which it revised its fourth-quarter projections downward.

Symantec, meanwhile, gained 4.09 percent to close at $15.28 a share. The security software giant may have gotten a lift following a report in Barron's that investors may find a safe harbor in security software stocks.

As for the broader markets, they ended a wild week in the red.

The Dow Jones Industrial Average closed down 127.04 points at 8,852.22--a rather modest ending to a week that saw the Dow soar 936.42 points on Monday, marking its largest single one-day gain; it then traversed back and forth, crossing the 9,000 mark several times throughout the week.

The Nasdaq closed down 6.42 points to close the session at 1,711.29, while the S&P 500 dipped 5.88 points to finish up at 940.55.

The following chart shows Friday's closing numbers:

Google shares jumped nearly 9 percent in intraday trading Friday, as analysts chimed in with favorable reports following the company's .

Google climbed as high as $384 a share during the day, after reporting a stronger than expected third quarter on Thursday after the markets close. Google's rally marks its second consecutive day of gains, in which its shares have risen as much as 11.7 percent.

Analysts overwhelmingly gave Google a thumbs up in its ability to control costs in the quarter, aiding the company's ability to exceed analysts earnings estimates.

UBS Securities analyst Benjamin Schachter, noting he expects Google to exhibit strong cost controls going forward, increased his earnings estimates for Google to $19.80 a share from $19.18 a share for 2008, as well as bumping up 2009 estimates to $22.69 a share from $21.92 a share.

Jim Friedland, an analyst with Cowen & Co., noted that Google hired 519 employees in the quarter, compared with 1,830 a year ago. And capital expenditures stood at $452 million in the third quarter, compared with $698 million in the previous quarter and $842 million in the first quarter.

J.P. Morgan analyst Imran Khan also touted Google's ability to control costs, but he also expressed concern about Google's revenues going forward.

Said Khan in his research note:

We think the company benefited from progress made in increasing coverage and stronger than expected network revenue. Going forward, we expect the macroeconomic drag to be slightly offset by market share gains from other search engines and other forms of advertising media. However, as our economic outlook has deteriorated, we are lowering our (fiscal 2009) domestic revenue estimate to $11.9 billion from $12.6 billion.

Goldman Sachs also cut its Google revenue estimates for 2008 through 2010, as well as lowered its price target on the Internet titan.

Goldman dropped its Google revenue forecast to $15.8 billion from $15.9 billion for fiscal 2008, lowered its 2009 forecast to $18.2 billion from $19.4 billion and its 2010 to $20.6 billion from $23.2 billion.

Said Goldman in a research note:

Results did not tell us much about future revenue, as Google did not comment on intra-quarter trends except to highlight the consumer fascination with the financial crisis, which may or may not imply fewer commercial searches (more queries for gold bars, fewer for brokerage accounts?)...We reduce our price target to $520 (prior $650) due to slower long-term revenue growth and incorporation of stock-based compensation into our DCF (discounted cash flow).

Goldman, however, raised its earnings outlook for Google for 2008, citing tight cost controls and higher margins and a healthier free cash flow as a result. Earnings estimates were raised to $20 a share from $19.45 a share for 2008.

But given questions around Google's future revenues in a challenging environment, Goldman lowered its earnings expectations for 2009 to $22.20 a share from $22.46 a share, and in 2010 to $25.25 a share from $25.42 a share.

Apple and eBay were two notable stocks to swim against the tide Friday, staying in positive territory throughout the mid-morning through the market's close. Meanwhile investors watched the Dow Jones Industrial Average take one of its most harrowing rides ever.

As the Dow whiplashed investors with its swings that ranged more than 1,000 points during the day, Apple and eBay took investors on an upward path.

Apple intraday trading

(Credit: Yahoo Finance)

Apple closed up 9.08 percent from Thursday, ending the day at $96.80 a share. It gained most of its traction in the final hour of the trading session and was one of the most actively traded stocks on the Nasdaq.

eBay, meanwhile, initially struggled to stay in positive territory, but succeeded and ended the day up 4.82 percent to close at $16.73 a share. The online auction giant was also one of the most actively traded stocks on the Nasdaq.

eBay intraday trading

(Credit: Yahoo Finance)

The CNET Tech Index also ended up for the day, climbing 19.05 points, or 1.67 percent, to close at 1158.14. The tech-heavy Nasdaq squeaked by with a nominal gain of 4.39 points, or 0.27 percent, to end the day at 1,649.51.

For the Dow, after its wild ride, it closed down 128 points, or 1.49 percent, to 8,451.19.

Market watchers attributed the Dow's wild swings in the final hours of trading to a meeting of the Group of Seven nations (G7), which met in Washington to attempt to develop a solution to the credit crunch, according to a report in MarketWatch.

Dow Jones Industrial Average intraday trading

(Credit: Yahoo Finance)

The S&P 500 also closed down for the day, with a 10.70 point drop, or 1.18 percent, to 899.22.

(Credit: Susan Dove/ CNET News)

Tech stocks and the broader markets received a mild case of whiplash Wednesday, as rate cuts by the Federal Reserve and other central banks around the world prompted a brief run up before stocks gave way to yet another consecutive day of losses.

The CNET Tech Index, which includes the likes of Apple, Cisco, eBay, and others, closed down 15.10 points to end the day at 1,189.15, off 1.25 percent.

The broader markets also posted declines, with the Dow Jones Industrial Average giving up 189.01 points, or 2 percent, to end the day at 9,258.10. The tech-heavy Nasdaq fared a little better, with only a 0.83 percent decline, or 14.55 points, to close at 1,740.33.

Investors remained skittish despite the central banks cutting interest rates. There were hopes that the cuts would instill confidence in consumers and businesses to prompt spending and jump-start the economy.

Some of the companies that were particularly hard hit include Yahoo, which fell as low as $13.20 a share in intraday trading--a level it hadn't reached in five years. The Internet search pioneer closed at $13.76 a share, down 5.62 percent, during the regular trading session.

Dell and cable giant Comcast were also down during the regular trading session, but a few companies were able to post and retain their gains on Wall Street.

Apple gained 6.42 percent to finish the day at $89.79 a share, while chip giant Intel rose 4.17 percent to close at $16.25 a share.

Credit: Susan Dove/CNET News

The U.S. stock markets surged again on Friday, buoyed by Wall Street optimism over the government's move to help the markets.

The Dow rose more than 400 points at one point on Friday, while Standard & Poor's was up nearly 5 percent on news that the Federal Reserve plans to scrutinize banks' balance sheets and guarantee money market mutual funds, as well as reports that the Securities and Exchange Commission has prohibited short sales of financial companies.

But not everyone was celebrating. Online traders who were shut out of accounts or experienced trade delays as a result of all the market action were not happy.

"Ameritrade has lost my confidence and cost me MONEY. The prices spiked on several securities in my account, but do you think I could log in and sell?????? By the time I got on, the prices had all retreated," a trader wrote in a message on a Yahoo Finance message board. "10 years ago, I could understand, but today? Please. I need a stable platform that I can RELY on, not something that may or not be available at the whim of the Ameritrade."

Ameritrade received the harshest criticism, with people reporting that they were locked out of accounts, with some saying they had problems at Scottrade and Zecco as well.

"ALL brokers had the same problem, with many worse than E*Trade. AMTD was kicking people out and couldn't get back in--at least that is what I heard. How would you like that?" a Yahoo Finance message board member wrote. "My understanding is that the clearinghouse for the brokers was overloaded, and that backed up into the online brokers."

One trader said he couldn't log onto the Scottrade site for a while, and when he did log in, the site was slow and then rejected an order he placed with an "administrative error."

"I am furious as well," the trader writes on the Yahoo forum. "Just as upsetting as the failed platform, their help desk personnel denied they were having a problem. Hard to believe, since I was on hold for 10 minutes, waiting to talk to someone, and you get confirmation here others were having problems. What a crock of BULL @#$%. Yea, I was hoping to make some money today, but none of my trade actions are moving. It was a nice thought. At least I made SOME money this week. Something tells me this volatile action will continue on Monday, due to all the backup retail orders."

Another trader wrote that he had been frozen out of his Ameritrade accounts four times this week and that the toll-free number was busy.

One poster seemed to sum up the anger well with this comment: "Have been locked out for 20 minutes AGAIN today. I received a call from a supervisor. Her comment was 'we received your call yesterday and are researching the issue.' Fix your damn site. Class action anyone?"

A Scottrade spokeswoman provided this statement via e-mail: "This week has brought some of the highest trading volume ever for Scottrade. Our trading sites have remained up and running throughout the week. While some customers did experience some slowness, they were able to place trades online or through our branch offices. We sympathize with those who have experienced issues and have been working hard to alleviate them."

Representatives from TD Ameritrade did not immediately return a call seeking comment.