Bob Rinderle / Business & Beyond

LinkedIn: IPO A Go-Go

LinkedIn was valued at $8.5B today on its IPO, or more than 500 times earnings. 

The networking site raised $352.8M yesterday by selling 8% of the company (7.84M shares) for $45 a share, but valuations quickly doubled this morning on the open market as shares traded at $90 apiece.

Henry Blodget offers an unique view (see link), stating that the underwriters of the IPO, "Morgan Stanley and Bank of America, et al, just screwed the company and its shareholders to the tune of an astounding $175 million."

Starbucks No. 3 Food Chain

According to Advertising Age, "Last week Starbucks blasted past Wendy's and Burger King to become the No. 3 restaurant chain, posting $9.07 billion in domestic restaurant sales last year, up 8.7% from 2009. For a company that's outspent on advertising anywhere from two to eight times by rivals and just a few years ago faced 600 store closings and negative sales, that's quite an achievement.

At the heart of that turnaround are menu and product innovations, and the ability to maintain steady price points—which tend to be higher than other chains—even through a recession.   

'It's more about just cultivating a brand than traditional advertising,' said Morningstar analyst RJ Hottovy. 'Once you've got a brand consumers' love, they're going to continue to visit the store. Plus, Starbucks has done its advertising more efficiently. It's been all over social media, mobile payments—stuff that elevates the image of brand."

 

Ain't No Mountain High Enough? Music In Decline (chart)

Marvin Gaye and Tammi Terrell sang "ain't no mountain high enough, ain't no valley low enough, ain't no river wide enough, to keep me from getting to you." 

Unfortunately the music industry is not as resilient nor everlasting as love, and the disruptive forces buffeting it have pushed sales back to levels not seen in more than 20 years.  As you view the chart below, keep in mind that Musicland declared bankruptcy in 2006 and Tower Records shuttered their last 89 stores the same year; Virgin closed their U.S. Megastores in 2009.

"Remember the day, I set you free I told you, you could always count on me, darling.  From that day on, I made a vow, I'll be there when you want me, someway somehow."  Ain't no mountain high enough, indeed.

 
   

Facebook's $50B Valuation In Context

Infographic comparing Facebook's valuation with other tech/digital companies.