NEWS AT A GLANCE
The IPO drought
In the second quarter, for the first time in 30 years, there were zero initial public offerings backed by venture capital. This follows a mere five venture-capital-backed IPOs in the first quarter. (The Washington Post) With the credit crunch and weak economy forcing small companies to put off IPOs, new specialized investment banks are stepping in to provide late-stage financing. (The Wall Street Journal) Overall, 333 companies went public in the first half of 2008, compared with 702 a year earlier. “People have become less interested in risk, and when it comes to the IPO market you’re typically talking about smaller companies that people know less about,” said Alex Vallecillo at Allegiant Asset Management Co. (Bloomberg)
Chrysler shuts down minivan plant
Chrysler LLC said it is shutting down a St. Louis-area minivan plant and cutting back production at another that makes full-size pickups as it grapples with falling demand for large vehicles. The company will cut 2,400 jobs in the process. Chrysler, which is expected to report a steep drop in June sales today, has seen U.S. sales slump 19.3 percent so far this year, compared with an industry-wide 8.4 percent drop. (Detroit Free Press) Chrysler depends on trucks, SUVs, and minivans for almost 70 percent of its sales. The minivan has been hit by high gas prices, but also a broad switch to SUVs. (Reuters) “Gen X isn’t interested because their parents drove minivans, and they want crossovers,” said Global Insight analyst Aaron Bragman. “Gen Y isn’t ready yet.” (Chicago Tribune)
France fines eBay over knockoff purses
A court in Paris ordered eBay to pay luxury goods brand LVMH about $61 million for allowing fake Louis Vuitton bags and Dior perfume to be sold on its site. EBay vowed to appeal the ruling, which also banned it from selling Dior perfume. (The New York Times) The monetary damages won’t hurt eBay as much as the added costs of monitoring sales on its European site and an expected rash of similar lawsuits from other European brands. (BusinessWeek.com) This was eBay’s third straight loss in Europe in two years. “This will be the bellwether to brand holders all around the world to file suit against EBay in France,” said intellectual property lawyer Heather McDonald. (Bloomberg)
For rock bands, a new stage on the small screen
With CD sales on the decline and the music business in disarray, rock bands are taking their act to a new platform: videogames. Last weekend saw the launch of “Guitar Hero: Aerosmith,” the latest installment of Activision’s lucrative franchise. Fellow rockers Metallica will be featured in their own Guitar Hero game due out this year, and Van Halen is in talks with Activision, too. Guitar Hero was the best-selling videogame series in the U.S. last year, with $820 million in sales, and signing on with Activision or MTV Networks’ rival Rock Band can be “much more lucrative than anything you can do in the record business,” says Irving Azoff, who manages Aerosmith and other major artists. (The Wall Street Journal)
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