Tesla's Future? 10 Post-IPO Disasters

IPOs (Initial Public Offerings) are not all they're cracked up to be. As a member of the management team that took popular software maker Stac Electronics public in 1992, I know that firsthand. After selling 3 million shares at a respectable $12, Stac's stock promptly dropped into the low single digits and never really recovered. Of course there were reasons for that, but that's not the point.

Actually, I was involved in a remarkably successful IPO two decades later, so it's not all bad. As liquidity events, public offerings provide companies with cash, currency for acquisitions, and considerable market visibility. They're also a primary source of ROI for venture capitalists, which provide private funding for startups, and entrepreneurs, if they manage to cash out before things fall apart.

That said, public companies have a lot more people to answer to than private companies do, most notably their shareholders, their shareholder's lawyers, and the Securities and Exchange Commission. As a result, the same issues that might give a private company's CEO a headache will give the same executive an ulcer after the company's public.
Then there's Sarbanes-Oxley. Don't even get me started on that.

Electric car maker Tesla went public last week and, as I alluded to at the time, there was a hornet's nest of red flags surrounding that deal. The stock's already dropped considerably below its opening IPO price and I wouldn't be at all surprised to see a continued decline over the coming months, if not years.

Anyway, here are 10 companies that haven't had much to party about since that fateful day:

1. Sirius. Went public in 1994 at $3ish, rode the tech bubble up to $61 in 2000, dropped to a low of about 12 cents, now trades around a buck, post merger with XM.
2. A123. Here's a battery company with revenues matched by huge losses. It went public at $17 last year, peaked at $25 and now trades around $8. Could this be Tesla's future? And what's with that name?
3. Refco. This commodities brokerage closed a half billion dollar IPO, got caught in an accounting scandal, and filed for bankruptcy ... all within a couple of months! Refco's CEO, Phillip Bennett, is now serving 16 years for securities fraud.
4. Webvan. A poster child for the dot-com era, went public in late '99, peaked at $34, and traded as low as 28 cents a year later. Bankruptcy was just a formality.
5. Vonage. This VOIP company went out at $17 in 2006, fell to a buck in just 16 months, hit a low of 35 cents and now trades around a whopping $2.
6. Conexant. The Rockwell spinoff's IPO priced at $17 in early '99, soared to over $200 a year later (adjusted for splits), then fell off a cliff. Now trades around $2. And I hate that name.
7. Silicon Image. This digital display company's IPO was priced at $23 in late 1999, peaked at over $100, then dropped like a rock to $1.50 a year later. Now trades around $3.
8. Transmeta. The low-power microprocessor upstart pulled off a hot IPO in late 2000, hit a high of $46, then dropped into the single digits just seven months later. In a strange turn of events, Novafora bought the company, sold its patents, and promptly went under.
9. MIPS. This spinoff of once high-flying Silicon Graphics went out at $15ish in 1998, peaked a few months later at $61, then dropped to a low of a buck and change. Now trades around $5.
10. On Semiconductor. This Motorola semiconductor spinoff opened in the $20s in June of 2000, then dropped to below $1 within two years. Has managed to claw its way back to around $6.

Image CC 2.0 via Flickr