Amazon.com issued an initial public offering in May 1997. Prior to its IPO, the following information on shares outstanding was listed in the final prospectus:

In the IPO, the firm issued 3,000,000 new shares. The initial price was $18.00/share with investment bankers retaining $1.26 as fees. The final first-day closing price was $23.50.

1. What were the total proceeds from this offering? What part was retained by Amazon? What part by the investment bankers? What percentage of the offering is this?
2. Mr. Doerr of Kleiner Perkins Caufield & Byers owned a significant number of shares. What was the market value of these shares at the end of the first day of trading?
3. What was the market value of Amazon.com following its first day as a publicly held company?
4. Refer back to the IPO of eBay presented in the problems for Chapter 13. What were the fees for eBay as a percentage of funds raised? Does a pattern emerge?
5. Suppose the issue of 5,000,000 shares of stock was originally oversubscribed at a price of $15 per share. Calculate the money left on the table if you realize that the stock could have been priced at $17.5 per share.
6. Xavi decides to short sell 10,000 shares of Guiness Co. stock, currently trading at $7.00 per share. Determine Xavis profits if Guiness stock trades at $5.00 per share at the moment in which Xavi has to buy the shares back.
7. Bluestar Airlines has physical assets valued at $12,500,000, and according to industry experts, the net present value of its future earnings amounts to $40.00 per share. Assuming there are 1,000,000 outstanding shares, determine the maximum price per share that a buyer will pay in an equity sale if this buyer is thinking about dismantling the company and selling its assets.

\begin{tabular}{|c|c|c|c|} \hline & & \multicolumn{2}{|c|}{\begin{tabular}{c} Percentage of Shares \\ Outstanding \end{tabular}} \\ \hline Name and Address & \begin{tabular}{c} Number of Shares \\ Beneficially Owned \end{tabular} & \begin{tabular}{c} Prior to \\ Offering \end{tabular} & \begin{tabular}{c} After \\ Offering \end{tabular} \\ \hline Jeffrey P. Bezos & 9,885,000 & 7.5% & 41.4% \\ \hline c/o Amazon.com, Inc. & & & \\ \hline 1516 Second Avenue, 4th & & & \\ \hline Seartle, WA 98101 & 3,401,376 & 16.4 & 14.3 \\ \hline \end{tabular} \begin{tabular}{|l|c|c|c|} \hline \begin{tabular}{l} Kleiner Perkins Caufield \& \\ Byers \end{tabular} & & \\ \hline \begin{tabular}{l} 4 Embarcadero Center, Suite \\ 3520 \end{tabular} & & & \\ \hline San Francisco, CA 94111 & 195,000 & & \\ \hline Tom A. Alberg & 75,000 & & \\ \hline Scott D. Cook & 75,000 & & \\ \hline Patricia Q. Stonesifer & 15,688,925 & 72.5 & 63.5 \\ \hline \begin{tabular}{l} All directors and executive \\ officers as a group (14 persons) \end{tabular} & 20,858,702 & 100.0 &.-- \\ \hline Total shares outstanding & & & \\ \hline \end{tabular} \begin{tabular}{|c|c|c|c|} \hline & & \multicolumn{2}{|c|}{\begin{tabular}{c} Percentage of Shares \\ Outstanding \end{tabular}} \\ \hline Name and Address & \begin{tabular}{c} Number of Shares \\ Beneficially Owned \end{tabular} & \begin{tabular}{c} Prior to \\ Offering \end{tabular} & \begin{tabular}{c} After \\ Offering \end{tabular} \\ \hline Jeffrey P. Bezos & 9,885,000 & 7.5% & 41.4% \\ \hline c/o Amazon.com, Inc. & & & \\ \hline 1516 Second Avenue, 4th & & & \\ \hline Seartle, WA 98101 & 3,401,376 & 16.4 & 14.3 \\ \hline \end{tabular} \begin{tabular}{|l|c|c|c|} \hline \begin{tabular}{l} Kleiner Perkins Caufield \& \\ Byers \end{tabular} & & \\ \hline \begin{tabular}{l} 4 Embarcadero Center, Suite \\ 3520 \end{tabular} & & & \\ \hline San Francisco, CA 94111 & 195,000 & & \\ \hline Tom A. Alberg & 75,000 & & \\ \hline Scott D. Cook & 75,000 & & \\ \hline Patricia Q. Stonesifer & 15,688,925 & 72.5 & 63.5 \\ \hline \begin{tabular}{l} All directors and executive \\ officers as a group (14 persons) \end{tabular} & 20,858,702 & 100.0 &.-- \\ \hline Total shares outstanding & & & \\ \hline \end{tabular}