Despite a few noisy IT industry experts who believe another financial "bubble" is inevitable and could hit in the near future, 2014 nonetheless appears to be a promising year for initial public offerings because the pipeline of hot companies ready to access the market is stronger than ever.
This insight comes from attorney Rick Kline, a partner in the Goodwin Procter law firm, which has served as lead adviser on IPOs for Xoom, Gigamon, Marketo, Control4 and several others in the last several years. Overall, Goodwin Procter handled 18 IPOs in 2013 in the technology and life sciences sectors, ranking second behind Davis Polk as the most active of all law firms advising on IPOs.
"The pipeline is great for 2014. There are a number of companies who have filed confidentially or are gearing up for their first filing," Kline told eWEEK. "My sense is that the market is in great shape, unless there is some external event that hits us or the U.S. has a problem with the debt ceiling issue. I expect 2014 to be robust as 2013 was."
No Facebook, Twitter in Sight for 2014
In the last two years, a number of companies decided to wait for Facebook (May 2012) and then for Twitter (November 2013), Kline said, to gauge interest from the market. "The one I hear people talking about this year is Alibaba [the Chinese e-commerce site]," he told eWEEK.
Alibaba dwarfs even Amazon.com by sales volume: $160 billion in 2012 compared with $86 billion for Amazon, according to RetailNet Group. Its IPO could value the company at more than $150 billion, more than the IPO value of either Facebook or Google.
To put Alibaba's size in perspective, consider one huge shopping day in November: More than 300 million people visited Alibaba's Websites, and 50 million of them made a purchase. When all was said and done, that day generated 158 million packages to be delivered.
Yahoo, for one, will be looking forward to that IPO. In September 2012, Yahoo sold 40 percent of its stake in Alibaba for $7.1 billion, but it still holds a 24 percent share of the company. Depending on how the IPO goes, Yahoo stands to gain between $18 billion and $30 billion, Bloomberg has reported.
"We do expect at some point that Alibaba will have the IPO, and that will provide more cash for us," Yahoo Chief Financial Officer Ken Goldman said.
So it looks as though China will be staging the biggest IT-related IPO of the year.