Today: Alibaba scores with the biggest IPO of all time, Apple looks to make billions in iPhone 6 sales and Larry Ellison loses $5 billion that he'll likely soon recoup. Also, Dow closes at another new high.
THE LEAD: JACK MA COULD BUILD A MONEY BIN, BUT HE PROBABLY WOULDN'T SWIM IN IT
Between Alibaba and Apple, a whole lot of money was made Friday. How much? Scrooge McDuck Money Bin-amounts. Here's a quick look at who walked away with the most money at day's end -- at least on paper:
Alibaba: The Chinese e-commerce behemoth's record-breaking IPO took Wall Street by storm Friday, as its $68 opening price surged more than 40 percent during the day, closing up 38 percent, or $25.89, to $93.89. Alibaba behemoth raised more than $25 billion from investors, topping the previous high, $22.1 billion raised by the Agricultural Bank of China, and dwarfing the second-largest tech IPO ever, Facebook's $16 billion debut in 2012. At its closing trading price, Alibaba was worth $231.4 billion, more than Amazon and eBay combined, and more than half of Google's market value.
Jack Ma, founder and chairman of Alibaba, raked in an estimated $19.3 billion valuation for his 206.1 million shares, and Alibaba vice chairman Joseph Tsai got a cool $7.8 billion for his 83.5 million shares. According to one report, more than 5,000 current and former Alibaba employees sold shares in the IPO, creating a fresh crop of millionaires in China. Don't expect a Chinese rush on Lamborghinis or tickets to next year's Burning Man though: "We've worked so hard, but not for the sake of turning into a bunch of uncouth new rich," Ma said in a July email.
Ma, now China's richest man, said he takes inspiration from Forrest Gump. And based on a 2010 interview with Charlie Rose, Ma's view on wealth is indeed Gump-like. "If you have a couple of million, you're a rich guy," Ma said. "We have $10 million to $20 million, it's capital. Over $100 million, that's social resources. That's society giving it to you saying: 'you guys run it.' So it's not my money. I don't think I can spend it. I can only sleep in one bed. I can only eat three dinners. That's all. What is money for?"
While Chinese tech company Softbank was the biggest corporate winner, making more than $50 billion from its Alibaba stake, Sunnyvale Internet giant Yahoo was the biggest Silicon Valley beneficiary, making an estimated $6 billion after taxes on the 27 percent of its stake in Alibaba that it sold Friday. Unfortunately for Yahoo, it sold at the $68 initial offering price rather than the $93 price at the start of trading Friday, leaving $3 billion on the table. Yahoo shares dropped 2.7 percent, or $1.15, to $40.93 as investors, wary of Yahoo's next move, cashed out after the stock's 20 percent rise over the past three months. "Alibaba represents the majority of Yahoo's worth," Jay Ritter, a finance professor at the University of Florida, told the Merc's Heather Somreville. "But will the money be wasted or will it be invested wisely?"
Apple: As valuable as Alibaba is, it's still not in the same ballpark as Apple. The Cupertino tech giant (with a market cap of $609.5 billion) started selling its highly anticipated new iPhone models Friday, and indications were that it may be the best-selling iPhone launch yet.
From Australia to San Francisco, Apple fans waited in long lines to get first crack at buying the iPhone 6 and supersized iPhone 6 Plus. In San Francisco, some customers spent the night on the sidewalk, and the early birds got their worm -- the Chestnut Street Apple Store's supply of iPhone 6 Pluses sold out in minutes, the Merc's Julia Love reported.
Apple has yet to release sales numbers, but analysts estimate anywhere from 6.5 million to 15 million devices will be sold this weekend, with most experts saying 9 million is the number to beat (that's how many iPhone 5's were sold when it debuted last year). With prices starting at $199 and $299, that would add up to more than $1 billion in sales this weekend alone. The only thing that may hamper sales is supply; pre-orders are backlogged until Apple's Asian suppliers can keep up with the massive demand. Apple can also expect another significant revenue bump soon; sales will start in 22 more countries Sept. 26, and China too, eventually. Apple needs approval of another license in China, the largest smartphone market in the world, before it can start selling there. With as much as 20 percent of iPhones sold there, that day can't come soon enough for Apple.
Apple shares dropped 0.8 percent, or 83 cents, to $100.06.
Oracle: No conversation about billions made would be complete with mentioning Larry Ellison. And while he didn't directly profit Friday, his move Thursday may more than make up for it in the long run.
Shares in enterprise software giant Oracle fell 4.2 percent, or $1.75, to $39.80, Friday, a day after founder and longtime CEO Ellison stunned the tech world by announcing he was stepping aside as CEO. That drop resulted in a nearly $5 billion daily loss for Ellison, who owns a quarter of Oracle's shares.
Don't cry for Larry, though. He has a net worth estimated at $50 billion, and some experts believe one of the main reasons he gave up the CEO title -- he'll still be executive chairman and chief technical officer -- was to quiet shareholder complaints about his pay package. As the Los Angeles Times notes, CTO salaries don't have to be disclosed to shareholders. Ellison was consistently one of the highest-paid CEOs in Silicon Valley. In 2013, Ellison made $78.4 million in total compensation, according to a Mercury News survey, and he's made more than $2 billion in compensation since 2000, according to the Wall Street Journal. And as Oracle's new co-CEO, Safra Catz said Thursday, "There will actually be no changes," the shakeup will be in titles only.
SV150 MARKET REPORT: DOW RECORDS ANOTHER RECORD HIGH
Outside of Alibaba -- which is not included in the Dow or S&P 500 -- the markets were mostly quiet Friday, with the Dow making a minimal gain for yet another all-time closing high.
Social media stocks fared well, with Twitter jumping 4.2 percent, or $2.12, to $53, and Facebook increasing 1 percent, or 82 cents, to $77.81.
EBay dipped 0.5 percent, or 27 cents, to $52.43, after the BBC reported a potentially serious security flaw has plagued the site for months. Netflix declined 0.3 percent, or $1.49, to $457.52, as the video-on-demand service launched streaming service in Belgium and announced a version that can be run on Linux. Tesla Motors fell 1.7 percent, or $4.50, to $259.32, after a report said its Model 3 sedan, due in 2017, will likely have a significantly higher price tag than first thought. Tesla had touted the Model 3 as its most affordable car, but unless it's range is greatly diminished, it will likely be priced around $50,000, the report said.
SILICON VALLEY TECH STOCKS
Up: Google, Gilead, Facebook, Twitter
Down: Apple, Oracle, Intel, Cisco, HP, eBay, Yahoo, VMware, Netflix, Zynga, Tesla
The SV150 index of Silicon Valley's biggest companies: Down 10.4, or 0.64 percent, to 1,621.16.
The tech-heavy Nasdaq composite index: Down 13.64 , or 0.3 percent, to 4,579.79.
The blue chip Dow Jones industrial average: Up 13.75 or 0.08 percent, to 17,279.74.
And the widely watched Standard & Poor's 500 index: Down 0.96, or 0.05 percent, to 2,010.40.
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