Google Tries To Silence IPO Rumours

egoff writes "Google has put off an IPO for now, saying "Thus far, laziness has always won out. There are so many better things to do." The New York Post suggests that Google's focus on R&D doesn't really mesh with the financial accountability of a publicly traded company. However, many analysts believe a successfully Google IPO could rejuvenate Internet-company investments."

Comments

Surely the entire sector doesn't rely on this

[zeoslap]

It's a little sad that this guy thinks the entire sector hinges on this one company. IPOs while all well and good invariably change the nature of the beast which in Googles case would be a sad sad thing. Stay private, make your employees and customers happy and be your own man.

Re:Surely the entire sector doesn't rely on this

[KingDaveRa]

I agree. Google should stay as is. They seem to be doing alright as they are, and the site is functional. I don't want to see Google turning into the next Yahoo-alike portal site bombarding you with ads and popups. Stay as you are Google!!!

Re:Surely the entire sector doesn't rely on this

[Jeehoba]

I'm sure that the sector doesn't hing on one company either, but with something as near and dear to most techies hearts it would be nice to own a peice of it!

Re:Surely the entire sector doesn't rely on this

[hrieke]

Too true. Wall Street is very short term in results, analyst driven, which would kill Google over the old term. Best stay where they are now.

Re:Surely the entire sector doesn't rely on this

[Polo]

Actually, I wonder if the employees would be happier with an IPO.

I believe Microsoft didn't go public for a long time until internal pressure forced the issue because the employees wanted their stock to be worth something.

Of course, maybe the pressure to "cash out" might be different if you're working at company that primarily does R&D like Google. It would probably be a unique experience, and more so in today's economy.

Re:Surely the entire sector doesn't rely on this

[nolife]

HAHAHA, I tought the same with VA Software!.

Re:Surely the entire sector doesn't rely on this

[H*(BZ_2)-Module]

"IPOs while all well and good..."

Are IPOs really all that good? and who are they good for? I am honestly curious, or at least I have been giving this some thought lately...

Re:Surely the entire sector doesn't rely on this

[Dominic_Mazzoni]

Actually, I wonder if the employees would be happier with an IPO.

I believe Microsoft didn't go public for a long time until internal pressure forced the issue because the employees wanted their stock to be worth something.

I doubt that most of their employees want an IPO. The way the economy is today, they should feel very lucky for what they have: good salaries, job security, incredible benefits (games, massages, free snacks, and a grand piano), and the satisfaction of working for a company they believe in.

When the economy picks up again, there'll probably be more employee pressure. I hope not: I think that the main reason Google hasn't sold out yet is that they don't have to answer to anyone. Once shareholders are in control, there's a much bigger chance that they'll eventually stop doing what's right, and start maximizing profits.

Re:Surely the entire sector doesn't rely on this

[Anne_Nonymous]

If they don't have enough cash or cashflow to grow the company, they should IPO to get some. A Google IPO would probably be a very cheap source of capital.

If they have buckets of cashflow, they can pay a dividend on their private stock to increase its current worth to employees. Employees who just want to flip their private stock in the public market so they can leave the company, are probably not a long term asset for Google.

If they have neither, then they can do nothing. Often inaction is a valid choice.

Re:Surely the entire sector doesn't rely on this

[Anonymous Coward]

Gee, and look how that worked out for M$. They're rich and we're oppressed.

Re:Surely the entire sector doesn't rely on this

[Andrewkov]

IPO's are good for the insiders who get to buy cheap stocks before the masses do, and it generates a one time infusion of cash for a company, which comes with strings attached. I hope google stays private.

Re:Surely the entire sector doesn't rely on this

[stu72]

Quick quibble: shareholders are already in control (and always are) they're just different shareholders with different goals than would be the case if Google went public.

Re:Surely the entire sector doesn't rely on this

[milo_Gwalthny]

Of course, since the company was funded by Kleiner Perkins and Sequioa (ultra-establishment venture capital firms), the pressure to make the equity liquid comes from more than just the employees. With firms like KPCB involved, the decision on when to go public will be made on purely financial grounds... nothing to do with how soft and fuzzy it makes the employees feel.

Re:Surely the entire sector doesn't rely on this

[nelsonal]

As far as I know, the company is fairly tight lipped about their financing, they are cash flow positive, which means that they are able to fund their current cash needs with operating cash flows (cash that the business generates). They have recieved at least one round of venture funding, and those investors will eventually want a way to liquidate their investments. Usually there are only two methods of liquidating a venture investment, public markets, which will allow the venture captialists to sell their stake, or a sale of the company to another company.

Re:Surely the entire sector doesn't rely on this

[bewert]

Re:"I believe Microsoft didn't go public for a long time until internal pressure forced the issue because the employees wanted their stock to be worth something."

Actually, I think it was the securities regulators--they were getting so much private stock issued, which was starting to get sold between employees and their families more and more, that the regulators stepped in.

I agree--Google, stay private! There's nothing like a 3-month reporting horizon to mess your long term strategies up, especially if your stock starts diving from entirely unrelated matters. For instance, a war over oil (oops, I mean freedom!), with virtually no allies to help pay for it, that suddenly seems to be a bit of a bigger job than planned by the geniuses in the Defense Department...

Re:Surely the entire sector doesn't rely on this

[swb]

incredible benefits (games, massages, free snacks, and a grand piano)

Those are bullshit benefits that any company could provide for the cost of an exec's car compensation, and only appeal to twentysomethings still rebelling against mom & dad's "no junkfood" rules.

Incredible benefits would be in-building healthcare clinics, a childcare center, a credit union and maybe a post office or mailing center, a decent cafeteria, along with generous time-off and flex-time (I'm sure they have this kind of arrangement already). These are the kinds of resources adults need but have a hard time getting access to due to operating hours and work hours not always meshing.

Re:Surely the entire sector doesn't rely on this

[nelsonal]

Textbook is that they allow a firm to raise capital for spending projects. To the company an IPO is no different than any other new equity investment, the current owners agree to sell an ownership stake to new investors, at a set price. As a source of funds they are useful, because owners don't get a structured payment schedule, the company is never required to pay a dividend, unlike debt financing which requires interest payments and an eventual principle payment.
A more cynical view is that companies go public to promote their name, provide a market to sneak option payment to employees, and enrich their venture capital owners. There is something to be said for the markets as an advertising tool. How many people have heard of Cisco, because of the simple fact that they were one of the best performing stocks for most of the 1990s, even if they will never see a piece of Cisco hardware, and how many purchase decisions were made on those grounds. With the current differential between GAAP standards and tax standards, in which options are a taxable expense, but don't need to be reported as an expense to owners, there is a strong incentive to pay empoyees with them, which is not possible for a private comany, with no plans to ever go public. Venture capitalists also need a method to get a return on their investments, most don't have a time horizon long enough to wait for the company to begin paying dividends to provide their entire return.
Realize that every company has an owner, and that the owner or owners all expect that managment work primarily for their benefit. Also that private owners can be just as short sighted as wall street, or public owners can be just as forward thinking as private ones. It doesn't make them any less evil either. Ask about any farmer about Cargill (a private ag services company), and you will see a venom that is about the same as the /. hatred for Microsoft.
Its just that for about 5 years, public owners were overpaying for everything, so everyone was trying very hard to sell an company, especially ones related to the internet or technology to the public owners. Now that they have realized they over paid and valuations fall, expect to see a significant number of companies taken back private.

Re:Surely the entire sector doesn't rely on this

[Anonymous Coward]

Or they could sell to other VCs, private investors, company management, or "strategic partners", albeit not at the fancy valuation that an IPO would bring. If the VCs are minority shareholders, then management should do what's right for the company, and not the short term interests of near term flippers.

Re:Surely the entire sector doesn't rely on this

[nat5an]

Actually, apparently they have a really nice cafeteria that cooks gourmet food every day for lunch.

Google Food

Re:Surely the entire sector doesn't rely on this

[EastCoastSurfer]

A Google IPO would probably be a very cheap source of capital.

Giving away equity for capital is the most *expensive* way of raising capital. In the process of giving away equity you lose ownership and thus control of the company. If a company does IPO then the *cheap* source of capital doesn't look so cheap when the equity sells for many times than the capital that was received.

The true least expensive way to get capital is to get a loan. As long as you make your loan payments the company ownership remains intact and if an IPO ever happens you get to retain all of the equity.

Problem is that many of these companies(not pointing at any in particular) that do IPO can't get loans because their cash flow is so poor. If their cash flow is so bad that they can't get a loan then I must ask how is an IPO going to help them?

Re:Surely the entire sector doesn't rely on this

[TopShelf]

The one thing you're forgetting is that you don't have to spin off controlling interest in the company via an IPO, so the insiders could still retain control if that is their wish. Of course, that would limit the amount of capital that they'd raise, but that's part of the decision-making that goes into an offering. As far as the "least expensive way to get capital", I'd venture a guess that issuing bonds is cheaper, at least for those companies that are rated investment-grade or above.

Whether to IPO or not isn't a simple matter of finding the easiest way to get cash, it's a fundamental restructuring of the finances and culture of a company. For many, an IPO becomes the means to achieve a level of operation that provides greater economies of scale, and helps the company better position themselves in the market. For Google, this may or not make sense, but it's much more than a simple cash-grab...

Re:Surely the entire sector doesn't rely on this

[EastCoastSurfer]

but it's much more than a simple cash-grab...

I agree, the cynical side of me was thinking about all the high flying IPOs of the late nineties. Sometimes a huge influx of capital is what you need to get you over that hump and become successful. The problem is that many companies now IPO just so that the angel investors and the like can get their cut and get out. They are not really doing that well and the capital they receive from the IPO isn't going to change anything.

venture a guess that issuing bonds is cheaper

In my comment I consider bonds and loans to be one in the same. Each is debt as far as I am concerned. It is cheaper in the long run to carry debt than to give away equity for capital. Of course you must be able to service your debt.

Re:Surely the entire sector doesn't rely on this

[TopShelf]

The problem is that many companies now IPO just so that the angel investors and the like can get their cut and get out. They are not really doing that well and the capital they receive from the IPO isn't going to change anything.

This was definitely typical of the late 90's bubble, but in the last couple years there have actually been record numbers of IPO cancellations - a good sign that common sense appears to be returning to Wall Street...

Re:Surely the entire sector doesn't rely on this

[weston]

An IPO is not the only exit strategy for investors. A private buyout by other shareholders or investors is always a possibility, especially if the shares held by other Google investors/founders are appreciable.

In addition, private investors may have concerns other than ROI. It may be everyone who invested with Google bought into "don't be evil." At the very least, I'm sure there was some due dilligence where that core philosophy was noticed.

The realities of economics do not have to be the real bottom line, and while they may turn out to be here, it isn't a sure thing.

Re:Surely the entire sector doesn't rely on this

[leviramsey]

Yeah... the main thing is that when your shareholders are various company insiders and a few VC's, it's a lot easier to call them up or meet them for a luncheon meeting or whatnot and convince them to take the longer term view. You can't do that when you have thousands of shareholders (many of whom, being on Wall Street, don't actually know the first thing about running a business).

Re:Surely the entire sector doesn't rely on this

[ckaminski]

And there's an answer to employee pressure, it's called PROFIT SHARING, something very few companies do these days.

Instead of paying dividends to public shareholders, you pay them to your private employees. The problem with most small companies though, is that employees cannot be shareholders. Most state laws have strict restrictions on who can be a private stockholder in a "C" corporation.

Either way, the company would be better served doing profit sharing, than going public if it wants to retain employees.

Going public is good only for raising capital from the public. It's actually a pretty sad way to make shit-loads of money (in a normal non-hyperinflated trading world).

-Chris

Re:Surely the entire sector doesn't rely on this

[Anonymous Coward]

a war over oil (oops, I mean freedom!)

You mean French!

Re:Surely the entire sector doesn't rely on this

[Anonymous Coward]

google's benefits include:

- on-site doctor two days a week
- free gourmet food for lunch and dinner
- facilities for personal mail and packages
- dry cleaning service, delivered to your desk

personally i think that massages are pretty nice

Re:Surely the entire sector doesn't rely on this

[Iainuki]

At the risk of being rated redundant, another high-rated comment linked to this page: http://www.google.com/jobs/benefits.html. It looks like they have almost everything you list.

Re:Surely the entire sector doesn't rely on this

[xtal]

Incredible benefits would be in-building healthcare clinics, a childcare center, a credit union and maybe a post office or mailing center, a decent cafeteria, along with generous time-off and flex-time (I'm sure they have this kind of arrangement already). These are the kinds of resources adults need but have a hard time getting access to due to operating hours and work hours not always meshing.

Not to sound harsh.. but those benefits suck. Pay me more and I can afford all the health insurance I want, it's cheap, and if you can't afford kids or can't afford to look after them properly, don't have them. I certainly don't want to pay for them. You certainly don't -have- to have kids.

How about a company store, while we're at it?

The ultimate benefit - pay me more and I can do with that money what I want. Most benefits, IMHO, are bullshit. Cut me a cheque, or stock, or profit sharing. Those are real benefits.

Re:Surely the entire sector doesn't rely on this

[milo_Gwalthny]

"Making the equity liquid" certainly has more than one form--an IPO, a sale, large dividend payments, etc.--but the VCs certainly need one or the other of these eventually. Your "don't be evil" comment implies that going public or making money on an investment is wrong, for some reason. I don't believe that: in a normal capitalist environment, a company should be run no differently when public than when private, just with more public disclosure. Although that environment almost disappeared in the boom years, I believe it is coming back. I don't think investors are as concerned with short-term profits right now as much as they are with long-term prospects. On the other hand, they need credible evidence that the company is, in fact, worth what they are paying for it. The burden of credible evidence versus the boom mentality of any evidence, credible or incredible, means valuations are lower, and will be until the next mania in twenty years or so.

VCs have a definite mission and a limited timeframe in which to accomplish it: they are playing with other peoples' money, and held accountable for it. Even if they decided they were a charity, they could not opt for a less than optimal return on investment and hope to have a career for more than a few more years.

Re:Surely the entire sector doesn't rely on this

[swb]

Much of the benefit I listed was not so much cost but proximity that matters. No matter what an employer pays me, I can't create *time*. Going to the clinic, the store, childcare is *time consuming*. Even if you have carte blanche to leave work whenever to deal with these things, you still end up making up the time elsewhere. Having these commonly used resources at work would pay huge dividends in saved time.

Employees that don't use it, don't have to pay for it -- I'd be fine with surcharges to use the company facilities. It still provides the time dividend.

Re:Surely the entire sector doesn't rely on this

[sp0re]

The key element here is the size of the venture capital firms' stake in Google. The only numbers I've been able to track down indicate that Sequoia and Kleiner invested $25 million for a combined stake of 40 percent. So that's not enough to force Brin, Page and Schmidt to go public or sell out if they don't want to. Of course, if the V.C.s could win one of those guys over to the go-public cause, it would tip the balance...

Re:Surely the entire sector doesn't rely on this

[milo_Gwalthny]

VCs are usually smarter than that; they don't want to get stuck with an illiquid investment when the life of their fund ends. Most venture capital contracts are written with one of several possible liquidity-forcing clauses, like demand registration (forces company to register shares for an IPO) or redemption rights (forces company to buy back VCs' shares at purchase price, often plus an accumulated dividend). Not all shares are created equal.

A good reference and surprisingly representative of what was actually being used at the time (they are significantly more punitive, er... conservative, now) is this term sheet. Free registration required.

Re:Surely the entire sector doesn't rely on this

[Anonymous Coward]

They actually have a doctor who is onsite 2 days per week, and a free cafeteria that serves lunch and dinner. The food is actually quite good too. I don't think all these perks would last too long after an IPO because shareholders would not want to pay for them.

I'd like some

[lindsayt]

I think a lot of techies would jump at the chance to buy google stock. However, there's a lot to be said for the freedom that being private gives them. I'd hate to see google turn into a big Evil corporation...

BTW, I think I'm fp.

Re:I'd like some

[zeoslap]

Nah the fp was me :)

Re:I'd like some

[lindsayt]

Yup. You beat me by just a few seconds - I would have typed faster if I hadn't cut my finger yesterday. So near, yet so far. :-P

Re:I'd like some

[Anonymous Coward]

I'd hate to see google turn into a big Evil corporation...

You mean like VA did?

Obligatory

[telstar]

It had to be done:

Google IPO

Re:Obligatory

[FosterSJC]

GoogleNews's spidering of this slashdot thread is already listed as the first "match". That's pretty cool. Maybe Google should offer an IPO. hehe.

Re:Obligatory

[JJAnon]

Hmm.. According to that link, there is pretty good coverage of the story here

Re:Obligatory

[Anonymous Coward]

Actually, it's now ipo.google.com

Re:Obligatory

[Anonymous Coward]

News: Google Tries To Silence IPO Rumours - Slashdot - 1 hour ago
Try Google News: Search news for Google IPO or browse the latest headlines

Re:Obligatory

[TheKubrix]

I think this link would be better..... Google News: Google IPO

IPOs ain't for everyone

[Erwos]

Google shouldn't bother with an IPO unless it becomes really apparent they need one. Money ain't everything, and if the employees are happy with the way things are now, why bother?

Certainly, R&D will suffer if an IPO happens and the focus of the company becomes delivering the almighty dollar to investors. However, if they find their good employees leaving for greener pastures (ie, more money), it might be time for that IPO to raise funds to keep them.

-Erwos

Re:IPOs ain't for everyone

[Anonymous Coward]

It's not about the employees. There has been quite a bit of money invested in google and the investors need to have some sort of happy ending. I think the investors have been pretty lenient with those guys so far considering how often they turn away cash in favor of the moral highroad. Of course that tide is turning...don't say I didn't warn you.

Re:IPOs ain't for everyone

[Billly Gates]

Quite the opposite. The investors would love to can the current employees and replace them with Indians to increase profits.

Its about the CEO getting a big fat check.

I personally think it would be a mistake to go public. Investors are crazy and expect companies to grow by %20 annually or quarterly if this company is doing well indiffinetly! This is impossible to maintain. A fast company like McDonalds is different since they can just keep creating restuarants to make bigger profits but a search engine is quite limited in how it can grow.

Its not how rich a company is but how much richer it can get in the IPO world.

Very unlike Google.

Troll Tuesday and April Fools MERGER

[Anonymous Coward]

Happening tomorrow.

Re:Troll Tuesday and April Fools MERGER

[Anonymous Coward]

Heh, geocities? if you sneeze too hard they go over a bandwidth limit, and this is SLASHDOT for crying out loud!

Re:Troll Tuesday and April Fools MERGER

[Anonymous Coward]

That idea has been bouncing around the troll community for a while. It would be totally awesome, but I don't think we'll see it. Basically, most trolls are lazy and stupid, and would be unlikely to pull off such a stunt.

Re:Troll Tuesday and April Fools MERGER

[Anonymous Coward]

Already done. SomethingAwful redirected Slashdot-referred users to goatse.cx a couple of years ago.

Re:Troll Tuesday and April Fools MERGER

[goldspider]

Just you wait... the CLIT founder is coming back for one more miracle troll...

Re:Troll Tuesday and April Fools MERGER

[Anonymous Coward]

Oh goodness, that's what happens when ya put two alike-looking checkboxes next to each other! Mods, be gentle on the ole ass, will ya? Was never meant to be posted logged-in :(

Stay private and free.

[BoomerSooner]

You may not make as much cash as you would from a successful IPO. However, you're only accountable to a few owners instead of 10's of thousands of owners.

Yay

[B3ryllium]

This just in: new socks could rejuvenated my sock drawer!

I'd buy a google IPO if I had any money, but ... I think their QoS would go waaay downhill :(

Private companies = freedom

[davejenkins]

Q:What does the richest private company in the world do?
A: Anything it wants.

When a company seeks a wide consumer base, especially from the financial sector itself, it makes sense to go public. However, when a company is heavy on R&D, needs to be nimble, and supplies directly to other corporations, there is no _need_ to go public.

Re:Private companies = freedom

[hrieke]

Tell that to Bill Gates and Company.

Re:Private companies = freedom

[squaretorus]

Private companies rule! Stock market pressures have knackered so many decent companies because their focus shifts from TRUE value to PERCEIVED value.

Its the same in politics and war mongering now - better to be SEEN to be doing good than to actually do any good.

Stay private google. Please

Re:Private companies = freedom

[davejenkins]

Tell that to Bill Gates and Company.

Well, if you think that M$ is rich because of their stock price, you're grasp of economics is slim.

M$ got it's riches from lucrative licesnsing deals and then a monopolistic position in the marketplace. Their stock price is actually a security liability to them, and much of their 'wealth' is virtual (in options unable to be excersized): witness Gates' loss of billions in equity when their stock took a fall a couple of years back. One could argue that he would have just as much 'actual' wealth if they never took the company public...

The employees were lured with huge options-- which does help get good talent when the price is going up. However, that was before the bubble popped-- there is no such illusion now, therefore there is no cache in the options.

Re:Private companies = freedom

[ucblockhead]

Microsoft was one company that waited a very long time before going public. This is one reason why it is the founders who are still in control today.

Re:Private companies = freedom

[xA40D]

well put.

Re:Private companies = freedom

[Anonymous Coward]

you're grasp of economics is slim.

And you're grasp of grammar is slim to none.

Re:Private companies = freedom

[Anonymous Coward]

And you're grasp of grammar is slim to none.


You're is a contraction of "you are". Surely you meant "your", which is the second person singular possessive adjective instead of "you're".

Re:Private companies = freedom

[hrieke]

I guess irony is truly dead.

Re:Private companies = freedom

[Anonymous Coward]

Irony is dead.

Re:Private companies = freedom

[winkydink]

Wow! Google is richer than Bechtel?!?!

Be Pessimistic for a minute...

[FortKnox]

However, many analysts believe a successfully Google IPO could rejuvenated Internet-company investments

And an unsuccessful Google IPO could make things worse.
With the war and the volitality of the market right now, I say "Stay Lazy for a While Longer, Google!"

Re:Be Pessimistic for a minute...

[rbolkey]

Plus, the sector STILL appears to be overvalued. Amazon and Yahoo! are all still priced at over 80 times 2003 estimated earnings. That needs to come down significantly more before I'd be happy to see it start going up again.

Re:Be Pessimistic for a minute...

[asparagus]

Exactly.

I really don't understand their logic. Why should one company try to make a quick buck/die instantly in the IPO game so that others can have a chance?

Google should do what is in google's best interests, not that of analysts. Too many people listen to them. They're just men with calculators, something people continually forget. If said analysts really knew how to make money in the business world, they'd be out there.

Re:Be Pessimistic for a minute...

[Anonymous Coward]

They are, their making money as analysts, dumass.

Re:Be Pessimistic for a minute...

[rbolkey]

I'm not sure if you're agreeing or disagreeing with me, but for a market to be efficient, it assumes a rational valuation of the commodity. P/E multiples at that level still echo more of gambling to me than sound analysis.

Re:Be Pessimistic for a minute...

[thogard]

Google would go through the roof. Then anyone with any clue on how to buy stock would sell out. A few large holders selling out and then the price would drop based on the selling. The result is google would go from a $20/share price to about $600 in the 1st week and end up under $1 by the end of the quarter. I figure will mirror Yahoo but in a very compressed way. Far more people world wide know about google than knew about Yahoo or even Netscape when they IPOed.

Google can only keep doing what its doing if its in private hands. If it goes public, someone else will come along and out do them. Kind of like what happened with Altavisa. Many people know how to duplicate a great deal of what Google is now doing. It took Google about 20 people to out do Altavisa. I suspect it would take less to build a very good search engine. Right now that won't work because google works well but once they have to keep their new investors happy, they might get sidetracked.

Yikes

[flynt]

However, many analysts believe a successfully Google IPO could rejuvenated Internet-company investments.

There are more grammatical disagreements in that sentence than I've had good days!

Re:Yikes

[The AtomicPunk]

It was suggested a while back that editors reject articles with poor grammar. Unfortunately, they decided it wasn't feasible because the editors couldn't come up with any reasonable way for them to figure out if a submission had good grammar. :)

Re:Yikes

[Anonymous Coward]

However, many analysts believe a successfully slashdot sentence could rejuvenated internet writing.

Re:Yikes

[tunah]

Well, given slashdotters' treatment of linked articles, reading doesn't really seem a reasonable way, does it? ;-)

Obligatory

[Anonymous Coward]

... Step 4: Profit!

So, in otherwords

[Anonymous Coward]

It sounds to me like they're saying "Google, sacrifice yourself to prop up our flawed ( ie:"??? Profit!") economic model"

Or am I missing something here?

So...

[digitalsushi]

Let me ask one of those laymen/borderline stupid questions that are insightful as long as someone answers it. If google does an IPO and becomes a publically traded company, in time that will make them suck, right? Cause then they'll have to listen to investors? Do companies ever go "we dont care what the investors want. We will do what pleases us, not them."

Re:So...

[nagora]

Do companies ever go "we dont care what the investors want. We will do what pleases us, not them."

It's illegal; companies have to act in the interests of the shareholders and the shareholders get to vote on what that interest is. If they vote that Google needs to break into the pork-belly market then the management have to do it. If they don't and they can't show that it would have harmed the shareholders to try then they can be prosecuted. Regardless, they are likely to get sacked at the next AGM for defying the shareholders.

TWW

Re:So...

[2short]

I think it would clear things up if you re-read your questions, replacing the word "investors" with a phrase that means the same thing: "people who own the company".

So, do the people who run the company ever say "we don't care what the people who own the company want, we'll do what pleases us, not them." Sure, it happens all the time. Then they get fired.

Re:So...

[Orne]

Q: Do companies ever go "we dont care what the investors want. We will do what pleases us, not them."

All the time.

"Going Public" basically means that you, the owner, are offering a percentage ownership to the public in exchange for the public's money. On the plus side, you get a fresh infusion of money to do research, increase inventories, hire more employees, etc. On the flip side, you are now responsible to the investors to keep the company profitable, and every now and then kick back a slice of your earnings to your investors as dividends.

Shareholder rights are managed like a pure democracy -- majority rules. This is why you usually see that "Pres So-and-so" owns 51% of the stock in the company... so their vote can always override whatever the public decides, providing that they disagree with the public. This is where stock options have an effect; directors giving themselves gobs of company stock in place of salary.

Now, it's not a good idea to piss off your investors, because they'll just turn and sell your stock, and you have to pay that capital back. That's why there are quarterly reports (you know, those big books you throw away every 3 months) that tell the public the state of the company, and whether your staff is doing a good job making money (price to earnings ratio). And, like most of the IPOs of the late 90s, your up the creek if that investment capital is your operations budget, and people want their money back, because then *poof* you're bankrupt.

Re:So...

[Anonymous Coward]

And, like most of the IPOs of the late 90s, your up the creek if that investment capital is your operations budget, and people want their money back, because then *poof* you're bankrupt.

What the heck is this? No company is ever obliged to redeem their shares for cash. People who want to sell their shares sell them on the public market, to other people, not back to the company itself. That's what the stock market is about.

People "wanting their money back" from stocks has no effect on a company's bottom line. Your suggestion otherwise is completely mistaken.

Re:So...

[Xenna]

Mod parent up or I'll never read Slashdot again...

Cum on guys, you *know* this don't you???

This is taught in American schools?

Re:So...

[DoNotTauntHappyFunBa]

Now, it's not a good idea to piss off your investors, because they'll just turn and sell your stock, and you have to pay that capital back.

I don't think that's correct. If a current investor sells your stock, a new investor (the buyer of that stock) is the one that is "paying capital."

Re:So...

[milo_Gwalthny]

Ha ha ha ha ha... plus 5 funny to the parent!

I especially liked the part about being sacked at the annual general meeting! Like that has ever happened in the entire history of corporate America!

Seriously, the shareholders own the company and, classically, the company is supposed to do whatever is in their best interests. But there are numerous caveats, including but not limited to:
- The "agency" problem: the people deciding what is best for the shareholders are not the shareholders and not chosen by the shareholders (voting yea or nay for a single candidate for a board of directors is as much a democracy as Stalinist Russia was);
- The board of directors is protected by the "business judgement rule": any decision they make, however wrongheaded, can be justified by the fact that it was their business judgement, as long as they show they had the necessary information and actually deliberated;
- Companies can't be prosecuted for screwing shareholders, they can only be sued--of course, they are sued for pretty much anything and everything anyway, so a few extraneous lawsuits resulting from truly egregious bad behaviour probably doesn't really deter them;
- Shareholders almost never have a shot at putting items on the agenda of the board or of the AGM--even if they are and are approved, they are almost never legally binding: they are "taken under advisement" by the board.

Remember Ovitz' $90 million severance payout on being fired as CEO of Disney? That was the subject of an unsuccessful shareholder suit. Why was it thrown out?--business judgement rule. What shareholder in their right mind would have given $90 million to the guy being pushed out the door?

Corporate governance in this country (and every other, as far as I know) is horrendous. The only protection a shareholder has is voting with his feet. The concept of actual "ownership" has become a sham. And, unfortuneately, Congress has decided it is in the better interests of their constituents to hold meaningless hearings and pass useless, redundant rules (Sarbanes-Oxley anyone?) than to try and correct the real deficiencies in the system.

I guess I should add, IMHO.

Re:So...

[gatekeep]

Sadly, American schools spend little time teaching how the stock market works. For that matter, they don't even teach how compounded interest works or how to balance a checkbook. And then we wonder why we're up to our eyeballs in debt.

Re:So...

[Anonymous Coward]

How did this get modded +5 informative? "Pres So-and-so usually owns 51%" of the typical publically traded company? Companies pay capital back when investors trade stock? Maybe I'm just not understanding what Orne is saying, but it doesn't make sense to me.

Re:So...

[milo_Gwalthny]

Okay, this shouldn't be +5 informative. It should be -1 Wrong.

"Going Public" basically means that you, the owner, are offering a percentage ownership to the public in exchange for the public's money

Most IPOs are for "primary" shares: shares that are issued by the company for cash, not by management or the owners. If management or the owners are trying to sell their shares in an IPO, they better have a durn good reason or nobody else in the world is going to buy them.

Shareholder rights are managed like a pure democracy -- majority rules.

This is hialrious, see my previous post.

This is why you usually see that "Pres So-and-so" owns 51% of the stock in the company

The president owning 51% is very unusual, and really unheard of in venture backed companies unless the president was already rich and famous when he started the company.

Now, it's not a good idea to piss off your investors, because they'll just turn and sell your stock, and you have to pay that capital back

As noted in a previous reply, this is just plain wrong. If people sell your stock, the stock price goes down, shareholders are angry and you have a hard time raising more money (because investors are leery of your stock going down again.) Companies never have to buy their stock back, except in certain Preferred issues.

Please don't get your financial education from /. (well, except from me, of course.)

Re:So...

[tireg]

"because then *poof* you're bankrupt."

Crap! Un-poof! UN-POOF!

Re:So...

[mfrank]

Wrong. If you own 51% of a publicly traded company, yes you can decide who runs the company and you can make the company go in whatever direction you want. If you take the company in a direction that doesn't increase shareholder value as much as possible, the other 49% *can* sue you for damages (for the hit on their stock price). Remember "the dentist" from Cryptonomicon?

Re:So...

[odin53]

A lot of what you say is completely wrong.

All the time.

I'm not sure what you mean by this. While you're right that companies "ignore" what their shareholders want "all the time," this is mostly a function of the fact that shareholders have nothing to do with the day-to-day business operations of the companies in which they hold shares. In the end, though, every company is accountable to their shareholders. Piss enough shareholders off, and the board will be replaced (and, consequently, the management). Google, as a company, is certainly not immune to this. In fact, it's more susceptible to it because of the amount of capital it has gotten from the powerhouse venture funds Kleiner Perkins and Sequoia Capital; Kleiner and Sequoia are certainly substantial shareholders.

On the flip side, you are now responsible to the investors to keep the company profitable, and every now and then kick back a slice of your earnings to your investors as dividends.

Like I said above, you're ALWAYS responsible to your investors; whether you're public or private is irrelevant.

Shareholder rights are managed like a pure democracy -- majority rules. This is why you usually see that "Pres So-and-so" owns 51% of the stock in the company... so their vote can always override whatever the public decides, providing that they disagree with the public. This is where stock options have an effect; directors giving themselves gobs of company stock in place of salary.

Yes, it's a democracy of sorts, but no, you don't usually see presidents or CEOs of companies own 51% of a company (for example, Larry Ellison holds about 25% of Oracle; Bill Gates holds about 12% of Microsoft) and no, this is not where stock options have effect (they would have effect if they were exercised. However, for SEC reporting purposes, these percentages will include VESTED options -- which gives you even more of an idea of how much less than 51% big shareholders hold).

Now, it's not a good idea to piss off your investors, because they'll just turn and sell your stock, and you have to pay that capital back.

What in the world? To whom would you have to pay the capital back? This is just wrong. You (the issuing company) sell stock to the public, and then that ends the relationship. All subsequent stock transfers have nothing to do with you. All sales on the stock markets (NYSE, NASDAQ, etc.) are essentially person to person (for practical purposes, it's not, but legally it is), definitely not company to person.

Re:So...

[nagora]

Everything you say is true for small shareholders. Big shareholders are a totally different ballgame. Part of the problem being that the really big shareholders all know each other and look after each other's interests in the old boys' network and are often interrelated with the members of the boards of companies like TW and Disney.

TWW

Re:So...

[Piquan]

People "wanting their money back" from stocks has no effect on a company's bottom line. Your suggestion otherwise is completely mistaken.

Theoretically this may be true, but a company usually has large holdings of their own stock. When people want their money back, they start selling it. The price falls, the company's equity drops, making the share price drop further.

It's not enough to bankrupt a company in and of itself, but it can start something nasty.

Re:So...

[Piquan]

This is where stock options have an effect; directors giving themselves gobs of company stock in place of salary.

I was under the impression that stock options are typically for common stock, not preferred. Common stockholders don't get to vote.

Re:So...

[darkmeridian]

The board of trustees of a publicly traded company do not necessarily have to do the best thing for the company's stockholders. Investors might be in it for a short term, but the company must take a longer-term view, and this may result in differences. Basically, the board just has to get an outside auditor to make sure that the deal is "fair." This has been problematic because the auditors are not always impartial (Worldcom, Enron, etc...)

Re:So...

[milo_Gwalthny]

There is some truth in what you say, but keep in mind that the big shareholders in our economy in companies like TW and Disney are mutual funds. For Disney, there are no owners of more than 5% of the stock of the company so there is no public disclosure except as to officers and directors (who own about 2.6% of the company, as a group), but I would venture to guess that the largest holders of the stock are Fidelity and Vanguard through their various funds (mainly the index funds, again a guess.) For AOLTW, the management owns about 4.6% and the largest non-management holders are Capital Research (owns 7.1%) and FMR Corp. (owns 5%.) Capital Research is a mutual fund company. FMR is Fidelity.

Mutual funds do not want to get involved in the management of the company. Index funds even less (they are an index fund, after all, they hardly care what happens to the company and if they spend money trying to influence it, their expense ratio rises.) For instance, the heads of Fidelity and Vanguard wrote a letter to the WSJ saying that public disclosure of their votes on proxy statements would be bad because, essentially, they didn't want the responsibility of having to run the company well.

There are investors that buy large blocks and try to reform the company, with varying degrees of success--they are often derided as 'breakup artists' (ie. destroyers of value) or 'greenmailers.' But Deleware corporate law discourages these by allowing things like staggered boards and poison pills. The rush to entrench management through state law that happened in the '80s in response to the 'greed is good' perception of LBO shops is one of the causes of the current dismal state of corporate governance, the others being the unbridled use of stock options to avoid compensation expense and the use of fallacious measures of value by investors (ie. 'did the company make their whisper number?')

Re:So...

[johndiii]

You have it reversed. Common shareholders vote; preferred shareholders typically do not. "Preferred" means that holders of those shares have precedence in the distribution of assets if/when the company is liquidated (not an insignificant privilege, these days). Preferred stock is sometimes convertible into common (convertible preferred).

Of course, option holders don't vote - until they actually purchase the stock. And there is an income consequence, depending on how the options are priced and valued. So you really don't see company officers being given large gobs of company stock. The goal of giving options is to give key employees an incentive to maximize company performance, and to help employee morale in general. The latter goal sometimes backfires, though - it does not help morale much if everyone has $20 options and the stock is selling for $2. Options are most valuable when they are issued prior to an IPO, typically for a strike price much lower than the anticipated IPO price.

Popularity

[dogbox]

I like the way google operates now. I hope that something of this type doesn't affect the users.

Just you wait

[ccnull]

A Google IPO is inevitable -- but Sergey Brin (the brains behind the company) is not going to be the one that spearheads an IPO, it'll be Eric Schmidt, former Novell CEO and current Google boss.

Also, in the short run, though Brin says laziness always wins out, in the long run, it's greed that always does the winning.

Gimme

[Egekrusher2K]

If google went public, I would start trading stocks. Right now, the market is so horrible that I'm afraid to get into it, even though I have the money to invest. I'd like to go for some high risk stocks, but there's a difference between high risk and losing your nuts in one day. Google would be my only investment. Until then, or until our economy improves, i'll stick with bonds.

Google.

[sporty]

Google, amazon.com and pets.com, do something VERY well. Google does searching, amazon.com and pets.com sold pet stuff. One out of the two sales sites survived. Google doesn't have much in the way of multiple forms of revenue. They have a search appliance, yahoo-like searech contracts and ad services and possibly other minor services.

If inktomi comes around and does something better than google, google will turn over and die unless it can one-up inktomi.

Amazon survives because it sells physical things, and not services (contracts/licenses). It's also the bigger sales company. If you dont' buy a segway, it won't go out of biz. If you don't by electronics, it has other revenues in other areas of merchandise.

Google NOT IPO'ing has its strengths. No investors to try and please. Being public means you are even more watched than ever, since you now have shareholders. If one scandle comes about, GOGL (google) could tank.

Sometimes, it's easier to be a humble celebrity than a flashy one.

Re:Google.

[lindsayt]

I would argue that pets.com did not do anything VERY well - I was a former customer of theirs, and I can assure you they were bound for trouble, based on my experience. My wife and I got a coupon (ironically from amazon.com, I think) worth $20 of free stuff with free shipping from pets.com, with no requirement to buy anything. So we bought a couple toys for our cats. They arrived the next day in a gigantic box - literally big enough to fit a mid-sized dorm refrigerator in (you know, the little 4.4 cu. ft ones). The products were small - a toy mouse and little plastic cat toy - so about 90% of the box was little bags full of air. The shipping cost $25, was delivered overnight, and the plastic toy was broken. So I called them up, and they overnighted me a new one. All told, they spent about $65 on a promotional gift that I could have bought locally for $6. Of course it didn't cost me a dime, but it didn't make me want to use their service, and it wasted their IPO money. THeir business model seems to have been very far from sound.

So amazon.com succeeded because their business model was sound and their products reasonable, whereas pets.com failed because their business model was unsound and their products not the sort of thing that can generate huge revenue.

Of course google doesn't directly sell a product anyway - they give their main product away in return for ad revenue and the like - so really they're not even directly comparable anyway. Slashdot's "business model" is much more like google, but of course groups like yahoo are probably the best comparisons.

Re:Google.

[Anonymous Coward]

If inktomi comes around and does something better than google, google will turn over and die unless it can one-up inktomi.

I don't think that this would necessarily be the case. Part of the reason Google is so successful is that it has permeated the public consciousness-almost EVERYONE has heard of google. Even my mom who doesn't know how to double-click has heard of google. There was an article in the Arts&Leisure section of our local paper about how young singles are "googling" possible dates to find out more about them.

Even if Inktomi came up with a slightly better search algorithm, would regular people really notice? Would every Joe Schmoe suddenly realize that Inktomi returned a search .02 seconds faster and switch over? Not likely. Google has gained the confidence of the public--unless someone else comes along with a change equivalent to the Google:Yahoo coup, and markets it well, Google is sitting pretty.

Re:Google.

[sporty]

Isn't that partly the reason why everyone left altavista? Google did a better job and with less advertising. Everyone likes free beer.. especially when it's really good. And if there's a better free beer, then we'd go to that.

Re:Google.

[thogard]

Amazon only exists today because too many stupid investment bankers dumped billions of retierment funds into Amazon.com. The result is they had enough cash to keep wasting money for years. That had a bad effect on many other book stores (how can you compete with someone giving stuff away). Now matter how you cut it, Amazon was a very bad investment.

Stupid Analysts

[xjerky]

Why the hell are they assuming that one company's successfull business plan automatically means that every one else in the same industry has a financially sound plan?

Re:Stupid Analysts

[Tired_Blood]

I ANALyst - or is it I am not an analyst - whatever...

An analyst's job is to read into statistics. With that, I'd like to mention the following:

• Homer: Aw, people can come up with statistics to prove anything, Kent. Forty percent of all people know that.
• Mark Twain: There are three kinds of lies: lies, damned lies and statistics

Also, analysts get paid to comment on things - mostly things people WANT to hear. Therefore I'm not surprised by the statement.

The only reason I pay attention to analysts is because I know that many other people do. Since most markets are trust-driven (ie. many trust the Yen less than the Dollar, so the Dollar goes up), popular opinion is VERY important. Then again, wrt finance, I seem to also say, "Thus far, laziness has always won out. There are so many better things to do."

rumor mill

[Anonymous Coward]

Is there any truth to the persistent rumor that Google is going to switch to FreeBSD at their biggest customer's (Yahoo) insistence?

Re:rumor mill

[Anonymous Coward]

What are they using now? I thought it was FreeBSD, maybe I'm thinking of Yahoo, not Google.

Re:rumor mill

[RLiegh]

You're thinking of Yahoo. I have been under the (mistaken?) impression that Google uses Linux.

Re:rumor mill

[Anonymous Coward]

is yahoo still using google? i thought there was a story a while back about them going to something cheaper

Re:rumor mill

[Anonymous Coward]

acutally i just searched for it, and it seems like yahoo bought Inktomi, and there was some speculation about them droping google soon.

Why should they?

[garyevesson]

If the company is profitable, and they have no real need to raise money, why should they?

To make the market less anxious - that's an exercise in futility... To save the sector - bit late for that I would have said...

Huh?

[Anonymous Coward]

"...could rejuvenated Internet-company investments." Jeez. Doesn't anyone proofread their stories before they post?

Man, way back when...

[MoeMoe]

Remember those days when IBM and Cisco were selling at the IPO, where one little piece of paper like that would return you millions of dollars in your later years if you would have just bought it? WELL I DON'T! I'm only 20 for CwbyNeal's sake! Now-a-days you have penny stocks from companies that crumble like flies! Forgive me, I hear the calls of the bears in the horizon....

Seriously though, companies like Google are such amazing innovations that it's hard not to want just a small piece of it, yet at the same time there is so much corporate internet garbage flooding Wall St. that it makes you think twice.

It's not the Google lovers who really want this.

[Wattsman]

The statement the NYPost made about investors not being too interested in a pure R&D company is right. Investors want to see their money make money, right now. They don't want to wait 5 or 10 years for possible results (congrats to the 10-second sound bite generation). And even though it's making money now, if it misses the market forecast, the stock tanks.

Here's a really telling part:
"The sector really needs Google to go public," a veteran investment banker said.

It's not those people who want Google to get more funding. It's everyone who lost money in when the Internet stocks collapsed. They're hoping that something like Google will go public, draw money into other Internet-related stocks (halo effect), and then take out their money for less of a loss.

My US$0.02. Google seems to be doing fine without needing to get money from Joe Sixpack.

Don't do it, Google!

[The G]

Don't do it! Google is too good to be public, too innovative to be tied down to corporate short-termism and profit-seeking. Google is too clever, too innovative, too simple, and too sensible to survive the public sphere and its short-term-profit-at-any-cost shit-where-you-eat demands.

Google is better with its current benevolent dictatorship than with a democracy of ignorant stockholders.

That said, if they do IPO, I know I'll be among many others asking, where can I get some?
--G

Re:Don't do it, Google!

[supremebob]

I'll put up a prediction now:

If Google goes public, investors will force it to become yet another huge and bloated "portal site" within 18 months. Fast and accurate searches will no longer be the priority, and the site will deluge you with Flash animation, pop-up ads, and Spyware downloads every time you do a search.

Don't believe me? Look what going public did to Excite. It was a pretty good search engine in it's day, until the company got greedy.

Re:Don't do it, Google!

[Billly Gates]

Ask any financial anaylist about if stocks are supposed to be long or short term?

They are long term 5-10 year returns.

I agree %100 on what your saying. The problem is joe six pack is giving money to the investment firms and demanding a return every 6 months. It just can't happen without long term profitable being affected ( eg. Firing good employee's and replacing them with Indians, Cutting R&D, etc).

Its wrong and hurting innovation. It also encourages enron and worldcom style math and accounting.

IPO v. Censorship

[onthefenceman]

It'd be interesting to see if going public brings Google Censorship to a shareholder vote...

question

[Kallahar]

A big question would be: "What would Google gain by going public?"

Most companies go public when they need to raise immediate cash. For example, Company XYZ wants to launch a new product, but it will take 20 million to set up the equipment and such to do it. Since they can't just increase sales, they have to find investors. They could do it in private, and solicit people individually, but that's why the stock exchanges were created in the first place -- for the free exchange of investments in one centralized place.

So, unless Google needs immediate cash to launch a product, I think they should stay private.

Travis

Absolutely

[pheph]

I, for one, have believed Google will be going IPO for several months, between overzealous aggression against similiar domain names, patenting their search algorhythm, and other odd actions, I just don't know what to think anymore :( ... Good bye the Google we all used to love...

Re:Absolutely

[Loosewire]

didnt they have something about not being evil in their business objectives?

Hmm

[Nexum]

However, many analysts believe a successfully Google IPO could rejuvenated Internet-company investments.

However, many english teachers believe a succesfully readed slashdot articles could rejuvenated the art of grammar.

Don't do it!!

[robbo]

However, many analysts believe a successfully Google IPO could rejuvenated Internet-company investments.

Umm, you mean "could destroy the one internet company whose business model wasn't dependent on overvaluation." Google is successful because they eschewed the cash-cow growth models that other internet firms depended on. Instead they focused on the quality of their product. My sense is that injecting a few hundred million dollars of strings-attached funding into the life-cycle of a software project is a sure sign that the creators have lost faith in its ability to sustain itself. I sure hope google sticks to focusing on providing superior search technologies and avoids the tyranny of the shareholder.

Google's Pre-IPO Trademark Vigilance?

[markkellman]

In the latest chapter of Google protecting their trademark, they even asked the dictionary folks at Wordspy to change their definition of the word "google" to prevent it from becoming a generic word. All this has caused mixed reactions and lots of news coverage by microdocs (formerly Google Village), Search Engine Watch, and Internet.com. Their latest target seems to be the Google Web APIs-based automated search service Googlert, who changed their name to "Google Alert" and explain that they were asked "politely" and have been "sympathetic" to Google's concerns. All this recent activity might be in the spirit of shoring up the Google brand and business image before an IPO...

Re:Google's Pre-IPO Trademark Vigilance?

[manmanic]

... though I do wonder whether providing the Web APIs altogether is a very smart move from a purely commercial brand-building perspective. There are tons of Google add-ons floating about the place. GoogleAlert is a relatively new kid on the block.

Re:Google's Pre-IPO Trademark Vigilance?

[Tailhook]

Indeed. The trademark is clearly the motivation IPO. However, other forces are at work.

The Race Masters from planet Zoltar wish to manipulate Google and send subliminal messages to billions of unsuspecting food beasts. To do this they must gain control of the Google Master Facilities. Once Google is vulnerable to the Zionist stock market, the RM consortium will step in, replace the Google staff and begin manipulating.

Don't be surprised if you begin to feel slack jawed and bovine, and perhaps even crave being slaughtered, soon after the IPO. I know that happens to me a lot when I watch Bush administration officials on the television...

Re:Google's Pre-IPO Trademark Vigilance?

[WallaceSz]

I think this is definitely positioning for an IPO -- why else the sudden trademark enforcement campaign? Many of these Google-esque sites have been up for a while and only recently has Google started to approach them.

Been there, done that

[los furtive]

p> However, many analysts believe a successfully Google IPO could (sic)rejuvenated Internet-company investments.

You mean rejuvenate over-valued internet-company investments. Am I the only one who paid $85 for Palm stock? No way I'm falling for that one again.

Re:Been there, done that

[2short]

"Am I the only one who paid $85 for Palm stock"

Not remotely. But excuse me if I laugh at the lot of you a bit. At its height Palms market cap was an order of magnitude bigger than that of 3Com. 3Com owned 90% of Palm. Unless you believed the rest of 3Com had a hugely negative value, buying Palm directly was not remotely rational.

Re:Been there, done that

[los furtive]

Why didn't you tell me that two years ago!! :-)

Re:Been there, done that

[nelsonal]

It has to do with the IPO market which is very cyclical and depends greatly on excitement, everyone wants in on the next offering when the last one made investors 45% in one day. Currently there are few offerings, and few companies that can generate any enthusiasm. Google is likely to be one of the more exciting IPOs in the year it happens, and investment bankers have been licking their chops in anticipation of it. After Google, you can send a more marginal company through and get a nice bump from it, and the sucessful bank will reap a healthy chunk of fees. Investment bankers get a standard 12% of the value of any offering they make, and they almost never discount their fees.

Re:Been there, done that

[los furtive]

12% Holy somalia that's a lot of pahoyhoy! Next time I get in on an IPO, it'll be as an investment banker.

Re:Been there, done that

[2short]

I would have if you'd asked. As would a dizzying array of easily accessible sources. I mean, you did find out the most basic information about what you were buying before you spent piles of money right?
Sorry.

Re:Been there, done that

[los furtive]

I was young and foolish, and a strong believer who wanted to see Palm succeed. I only owned 3 shares. They were more symbolic than anything else.

Not anytime soon... I hope

[ktorn]

We shouldn't expect to see a Google IPO anytime soon. The timing just doesn't seem to be right.
They are still on their way up while focusing on R&D and we're all happy about that.
It's when R&D stops producing results that they'll look into an IPO, and that'll probably be bad news for the founders, their bright engineers, and all of us, because Google will not be the same again.

Maintain the status quo

[TastyWords]

Google has already shown they can "do the right thing." Better to sit tight in today's market. IPOs aren't going to fare well in today's economy. Google isn't going to tank any time soon. And before anyone says, "techies would buy it." techies are never the ones who purchase a large portion of [other companies'] stock. The people who have to be convinced are the high-level suits (see: Business Week, Forbes, Fortune, IBD, WSJ, et alia) Google is already a winner in their book (esp. heavy coverage in many recent issues and on the covers of said publications). IPOs are like telling jokes: although the content is *very* important, so is timing. You only get to swing the bat one time, so pick your pitch.

Isn't the stock market a scam?

[DG]

(slightly off topic)

Isn't the stock market, at least the way it is operated these days, more of a scam than an investment?

Perhaps some business major can explain this to me.

As I see it, here's the problem:

1) I buy x shares of stock in SomeCompany, at some price n.

2) I want to sell this stock at some point in the future for some price y > n.

3) In order for the price of the stock to increase, it must be "worth more".

4) Assuming no further stock is issued and that I purchase no additional stock, that means my stock constitutes a fixed percentage "ownership" in the company.

5) Given that my percentage ownership is fixed, in order for the stock to be worth more at some time in the future, the value (read: size) of the company must grow.

Well, that's fine and dandy for a small company, but that seems to assume that any given company will grow without bounds pretty much forever (especially when we start talking about options)

But the "economy" is a bounded system. Those bounds may be high, but they DO exist. So the fundamental premise of "stock price increases with time" seems fundamentally flawed to me. What do you do with a successful company that produces a flat amount of profit each year, and does not seek to grow?

Now DIVIDENDS, THAT I understand. I own some share q of the company, the company produces w amount of profit, so I'm entitled to a dividend w/q - that makes sense.

But this whole speculation thing I just cannot wrap my head around. It looks like a pyramid scheme (with a gentle slope) to me.

Somebody want to explain?

DG

Re:Isn't the stock market a scam?

[ReidMaynard]

revised #3

3) In order for the price of the stock to increase, buyers must be willing to pay more.

This can be based on anything, as we have seen in the 1990's.

Re:Isn't the stock market a scam?

[Anonymous Coward]

5) Given that my percentage ownership is fixed, in order for the stock to be worth more at some time in the future, the value (read: size) of the company must grow.

The company can grow and/or become more profitable. Either way earnings go up and the company is a more attractive investment and the price of shares go up.

The become more profitable they can lower costs in a number of ways: find cheaper labor, improve business processes or become more efficient. Becoming more efficient through technological gains is the backbone of our economy.

Re:Isn't the stock market a scam?

[Frostalicious]

Well, that's fine and dandy for a small company, but that seems to assume that any given company will grow without bounds pretty much forever.....What do you do with a successful company that produces a flat amount of profit each year, and does not seek to grow?

That is why "growth" companies, where you want the stock price to grow, tend to be smaller companies. If the company approaches a point where further growth becomes increasingly unlikely, the company starts to rely on dividends to support it's share price. You can see this with a lot of large banks. A huge bank probably isn't going to grow 7% a year, but they still justify their share price with a dividend. Between future growth potential and dividends, everything can make sense.

On a related note, Microsoft recently announced their first ever dividend!

Microsoft Dividend

Re:Isn't the stock market a scam?

[slimemold]

While your pyramid scheme analogy is fairly accurate (your stock sells for what someone else will pay for it, completely independent of the actual worth of the company), there are two flaws in your argument.

1. The economy is not necessarily a bounded system. The GNP grows, on average, about 3% per year. While it has always been a mystery to me why stock gains and GNP gains are not in the same ballpark, there is no evidence that there is a ceiling to GNP.

2. Even if an individual company does "max out" its profit potential, that just means it is time to convert from a growth stock to a dividend stock. If you are so inclined, you can think of non-dividend-paying stocks simply as stocks that could potentially pay dividends in the future, and those dividends will be roughly the size of their net profits. Thus, you're speculating on what those net profits will be in the future. This is only slightly riskier than speculating that a dividend-paying stock will continue to pay the same (or better) dividend in the future.

Re:Isn't the stock market a scam?

[dtfinch]

It looks like a pyramid scheme to me as well, at least for the stocks that don't pay out dividends.

You buy these little sheets of paper (read: shares) that say "Microsoft" on them so that you can sell them for a profit to someone who plans to do the same, even though they're really nothing more than little sheets of paper. Their only connection to Microsoft is that they have the name Microsoft on them and if you own enough of them, you can help decide the future of the company, but unless you're a billionaire to begin with, they have absolutely zero value unless you resell them to someone who plans to resell them for a little more.

Re:Isn't the stock market a scam?

[DG]

But there are fixed bounds to this process.

Assume that I produce widgets, and that my profits are tie to widget sales.

So I can:

1) Sell more widgets - this is fine, but bounded. Eventually, EVERYBODY has a widget, and, assuming that widgets have an infinate life, that means my market shrinks with time.

(Of course, one can sidestep this by building a fixed life into widgets - perhaps an ever-decreasing life - but there are problems with this approach too)

2) As you mentioned, get more efficient at widget production, so that the overhead-per-widget falls with time, leaving a greater difference between price of sale and cost of production (ie, increasing profits)

But this is bounded too! Assuming perfect efficiency, eventually you get down to cost of raw material + cost of energy (at 100% efficiency) and can go no further.

So while for any given company, there may well be room within the theroretical bounds of market size and efficiency of production for some pretty sizeable growth, eventually you MUST hit a limiting factor. Then what?

DG

Re:Isn't the stock market a scam?

[Illusion]

Recently I was graphing some US economic numbers and came to the conclusion that our whole economy is something like a pyramid scheme:

• We've never actually paid off the national debt, just waited for population growth to dull the per-capita debt load. The population doubles every 60 years, so the debt per-person will be cut in half by just waiting 60 years.
• Even adjusting for inflation, the average amount of money earned and spent per person has gone from $15k/year to $35k/year in the last 50 years. This is basically from paying for and getting paid for things that we used to do without money. (Paying for child care instead of having one parent stay home is an obvious example.)

Its expected that companies properly taking advantage of both population growth and "new markets" (getting people to pay for things that they never have before) will be able to sustain modest growth.

It would be interesting to see what would happen if the US population ever flattened out or started declining.

Re:Isn't the stock market a scam?

[dtfinch]

Hey, Microsoft's paying a dividend. I should have read more before posting. So just substitute the name of some other company in the place of "Microsoft".

Re:Isn't the stock market a scam?

[Anonymous Coward]

Ah, the truth has started to dawn on you. I would estimate that you are 33 years old.

Re:Isn't the stock market a scam?

[driverEight]

I think a couple of your assumptions are off and that is confusing you.

1.) When you say "the value (read: size) of the company must grow" you should mean the value (read: dollar value) must grow.

2.) The economy is not bounded in the terms that you are thinking; over the last 200+ years the GDP has continued to grow, and there is no reason to think it will stop.

3.) A company that produces a flat profit each year is increasing in value as long as it dosen't give back all the profits as dividends.

The whole speculation thing is essentially a bet as to future profits a company will make.

Re:Isn't the stock market a scam?

[brauwerman]

You are precisely correct. Once stocks became a pop-culture phenomenon, it became the same "sit dow, shut up, and fork over your dollars for pretty pictures and rationed suspense" that is the cinema, television, AOL, and newsmedia.

Re:Isn't the stock market a scam?

[mfrank]

You must not be old enough to remember all the "hostile takeovers" in the eighties. Check out "Wall Street" with Michael Douglas and Charlie Sheen. The market wasn't always overvalued.

If the stock price is too low, somebody can tender an offer, buy up the outstanding shares, and either reorg the company till you make money or sell off the company's assets (physical, IP, etc.).

How much is MS worth? Let's see: 35 gigabucks in the bank, IP and market position out the wazoo, and plenty of congressmen in their pocket. It's overvalued now (like all the tech stocks), but if it ever gets too low, they *could* get taken over.

They aren't just "slips of paper". You are part owner of the company. You get to vote for who runs the company. Bill and Monkeyboy are, essentially, *required* by the stockholders to be evil. If they aren't, they can lose their job, or even be sued. Shareholders get to determine whether the company pays dividends or not (by not paying dividends, the money can go into growing the company). If a company is becoming more efficient, or increasing market share/revenue/profit, it's reasonable to think that the stock price should go up.

Microsoft didn't pay dividends when they were growing. Now it's hard for them to grow any more, and it's hard to justify not paying dividends when you have that 35 GB in the bank.

Granted, most tech companies are overvalued, and it's unlikely they will gain value worth a crap for the next ten years. The P/E ratios are still too high.

Re:Isn't the stock market a scam?

[xenocide2]

The stock market is currently a game of investor psychology. The value of a stock is equal to the potential of the stock for various things like dividend payouts, or a buyout. People also look to the growth of this potential, as new products appear, etc. The thing to recognize is that the economy is not bounded by time. We don't measure profits in percentage of GDP, because it doesn't make sense as a measurement. The number of people employable grows with time. The amount of wealth they can create then grows. There are additional theories that businesses and processes become more "streamlined" with time, reducing costs and improving efficiency, as evidenced by Moore's Law. I stress this, the real economy grows with time.

The one thing that does seem like a scam is the claim that the stock market reflects the economy. In time this results in policy that affects the stockmarket rather than the economy as a whole. One idea that comes to mind was Bush's presidential campaign to let taxpayers put some of their federal pensions into the stock market or some such. I suppose that could result in im proved consumer confidence, but onl y if the pension grows. Consumer confidence is a self fullfilling prophesy, and the market can make no guarentees. Witness the .com bust and the fraud scandals. Another bad policy would be the Microsoft and DoJ issue. Anyone remember what the settlement with MS is? They don't appear particularly hurting over it, with that 40 billion or whatever increasingly/arbitrarily large number is in the bank. There is indeed no guarentee that a large company will grow with the economy, but the economy will grow.

Re:Isn't the stock market a scam?

[mfrank]

> It would be interesting to see what would happen if the US population ever flattened out or started declining.

Watch western Europe for the next 30 years. It will not be pretty. At least England isn't totally hosed; Maggie bought them some time.

A vicious circle. High unemployment, high taxes, little opportunity create financial and emotional disincentive to have children, who will be future workers, taxpayers, and caregivers. Repeat a few generations and let simmer.

Re:Isn't the stock market a scam?

[Anonymous Coward]

good guess. I just had the same realization last year and I am 29.

Re:Isn't the stock market a scam?

[2short]

In practice, widgets do not have an infinite life, so you can sell replacement widgets, though this market will be of a fixed size (well, increasing with the widget-needing poulation, but let's assume that's pretty slow). Your company could still grow by expanding into gizmos. But let's assume you don't and your company is just going to stay in widgets, selling about the same number every year, at about the same efficiency, and not really growing. Does this make your stock worthless? Not if you're making a profit. Say for example you are making enough money in the ultra-stable widget market to pay out 1 dollar in dividends for every share of stock. Then I as an investor have to ask myself: "How much will I pay today in exchange for your paying me a dollar a year forever?" The answer is certainly not zero.
This is the reasonable way to expect to make money in the stock market: Invest in solid companies that earn money in boring ways and give it to you.
Trying to make money by buying stocks that you expect to become more valuable is less reasonable. It's a complicated game where you don't win unless someone else looses, and the vast majority of the pieces (investment dollars) are controlled by people who play it for a living and have extensive research staff (fund managers).

Re:Isn't the stock market a scam?

[C32]

The GNP is limited by enviroment, natural resources and population growth, all of which will certainly begin to manifest themselves well within our lifetimes..

Re:Isn't the stock market a scam?

[Watts Martin]

You've actually hit a big problem (at least the big one in my book) with fundamental assumptions underlying our whole market economy. Not a problem with the concept of markets or capitalism, lest anyone assume I'm making a more sweeping indictment than I am, but a problem with the idea that companies must constantly grow.

The problem with that idea is obvious to me, although I guess many economics majors would dispute it: it forces companies to behave badly. Merely becoming and remaining profitable isn't good enough. Your profits must increase year over year or The Market will punish you. Eventually, the markets for your products or services will be saturated--but that's not good enough, no matter that everyone in your company and all your investors should do quite well at that point. You must now try to completely dominate your market--if you don't try to squash all your competition, you will be punished.. If you don't move into other markets, you will be punished. And if you don't start cutting back on your costs, you will be punished, even if that means reducing work force and quality--after all, if you've successfully squashed enough competition, you'll have made it difficult both for consumers to find alternatives to you and for potential new competitors to enter the market.

So the drive is to create monolithic companies with poor service, poor quality and with terrifically high barriers of entry for competitors. And this is supposed to be good?

I'm all for Google staying out of this mess. In the long run, I'm all for the market getting a collective clue that maybe a steady-state economic model has some advantages over a relentless-growth one.

Re:Isn't the stock market a scam?

[C32]

Come come you imbecile, what do you think will happen to America in 60 years? If the grandparent poster is correct you will be living in a disgusting malthusian anthill.
The earth is not infinite, and humans are rapidly filling up all available living space.

Re:Isn't the stock market a scam?

[mfrank]

Yeah, yeah, yeah, the Club of Rome said the exact same thing 40 years ago. Ehrlich lost his little bet to Simon.

BTW, the parent poster was wondering what would happen if populations *declined* in America. Hard to reconcile with "Malthusian anthill". The latest estimates I've seen show the total human population peaking at under 10 billion, then declining. America's population would be declining if it weren't for immigration; the problem is the rest of the world needs to get their crap together.

I think this makes sense

[dwdyer]

Once they start down the IPO road, there's going to be demands the they start making money not by creating something that's useful, but by something that appears to be useful. Stuff that sells, or if it doesn't sell, it at least looks good in CBA meetings with MBAs. Endless personalization, tracking based on user profiles, custom emails, etc.

All of that sucks up design time and development time that could be spent on better things.

Crazy English

[dietlein]

However, many analysts believe a successfully Google IPO could rejuvenated Internet-company investments.

A little excited about the 'ly' and 'd'?

Why?

[The AtomicPunk]

A successful PayPal IPO didn't rejuvenate it...

As you may very well presently be aware now...

[SirTwitchALot]

my grammar sucks

Re:As you may very well presently be aware now...

[The Cornishman]

Great news for your grandad.

Google+Blogger+IPO=Go_Ogle, Online Dating Search

[fruscica]

Online dating is big business. Consider:

• 26M Americans visited an online dating site during 12/02

• "Personals Comprise the Largest Paid Content Category on the Internet: According to a [12/02] study...the Personals category grew 387 percent to become the largest online paid content category among consumers in the third quarter of 2002, surpassing Business Content." (source: comScore Media Metrix)

• "'I have 43 employees, and we'll bring in $43 million this year. That's $1 million per employee,' [uDate president Martin] Clifford said. 'We have zero cost of sales within our business...The margins are almost super-margins.'" (source: MSNBC.com)

Google+Blogger is an ideal combination for serving this market.

Once Google goes public, here's how I think Go_Ogle will happen:

Soon, Google will improve the searchability of "blogspace" by making it easy for bloggers to annotate their blogs with information about themselves and their blogger friends. This information will be encoded in an RDF dialect called FOAF (Friend of a Friend).

It will then dawn on people that the FOAF file is effectively a static online profile, while the associated blog is akin to a living profile (in the 'living document' sense).

With this, Googling people will come to encompass both researching people you have met -- already a common practice -- and researching people you would like to meet.

The upside potential of this, as introduced above, will prove too substantial for publicly held Google to ignore. (In addition, I believe leadership of the market for online matchmaking software is the gateway to early leadership of the market for lifelong learning and career services, which will be worth hundreds of trillions of dollars in the coming decades. Toward understanding the relationship between the two markets, consider: according to a recent American Demographics survey, couples in the U.S. meet primarily at work (36%) or school (27%). More on 'online dating software -> LLCS' here ).

Google will then acquire the best makers of RDF query tools and launch Go_Ogle, the mother of all online dating sites.

Thoughts?

investment banker suckage

[whovian]

Well, in the days of the disasters known as Worldcom and Enron, here is a company (Google) that has money that the bankers and stockbrokers can't whore, pump up the stock price, and get out while the gettin' is good by selling off to an unsuspecting public.

Google, please please just continue to do good things. And stay private.

And, no, I am not just being cynical.

IPO's aren't a requirement

[swngnmonk]

IPO's are simply a way for the company to raise money, in exchange for (partial) public ownership of the company. The fact that insiders usually get rich in the process is incidental, but Silicon Valley has now been operating for years on the idea that this is how you get paid when you're a rank-n-file employee at a startup.

Microsoft's IPO in 1986 is an interesting case - they were dragged to the IPO kicking & screaming. Think about it - Apple started in 1976 and IPO'ed in 1981 (at the time, one of the most successful IPOs in history). Microsoft started in 1975, and still hadn't IPO'ed by 1986. So what made them do it? Their employees had been using their vested options in lieu of cash when buying houses, cars, etc. For a privately held company, that's completely illegal, and as a result, the SEC forced them to go public. Even at that point, Microsoft didn't need to raise capital publically, BillG and company wanted to retain complete control of the company.

Re:IPO's aren't a requirement

[JoeBuck]

Actually, there are two "exit strategies" that venture capitalists think about when they fund a company; an IPO is one, an acquisition by a large public company is another. In the case of Silicon Valley, the latter possibility is actually more common.

Re:IPO's aren't a requirement

[Anonymous Coward]

Microsoft was indeed dragged into an IPO. But I read in High Tech Startup (the IPO bible) that it was caused by a little-known SEC rule stating you can't have over 500 shareholders in a privately held company. I don't doubt your explanation though - perhaps a series of events caused it.

Re:IPO's aren't a requirement

[Anonymous Coward]

That isn't quite right. Once you have over 500 shareholders you have to report to the SEC just like a public company. You don't have to actually go public though.

Who needs Google to go public?

[Tim Colgate]

"The sector really needs Google to go public," a veteran investment banker said. "I don't think the market conditions matter."

So which sector is he talking about? The investment banking sector?

Re:Who needs Google to go public?

[Tailhook]

So which sector is he talking about? The investment banking sector?

Yes. The washed up, middle aged, "missed the .com boom" investment banker sector.

WTF is a "sector" anyhow? Google is a collection of NOCs with a bunch of almost racked PeeCee boxen herded by some R&D geeks. It could be cloned in short order with a minuscule amount of capital. There is no investment value here. How does this constitute a "sector."

F*cking money pundits. They dream their warped little dreams and spew it to the public in vague, undefined notions such as "sectors." Magic words.

Abracadabra!

consider the source

[asv108]

The NYPost is not exactly known for its award winning journalism, if you need business news, I would stick to the Wall Street Journal or IBD. If your looking for news on the latest J-Lo gossip, use the NYpost.

I'm curious about their business model

[Anonymous Coward]

How do they make money? It seems to me like the amount of bandwidth, server costs, and power costs would cost far more than any money they could make with advertising. How would they make any money? Last I checked, showing a profit is required to make a successful public company.

oops

[asv108]

The correct IBD link.

Trademark Protection

[manmanic]

For a company "focused on R&D", they seem to be taking lots of care over their trademark - lots of discussion about this, for example here. Recently, Googlert which is one of the better known Google APIs services was also asked to change its name. Don't see why GoogleAlert is any better, so maybe they'll have to change it again...

Re:Google+Blogger+IPO=Go_Ogle, Online Dating Searc

[Anonymous Coward]

Personals Comprise the Largest Paid Content Category on the Internet ...

Spam much? Porn probably has some insane and just as irrelavant numbers as well. You're suggesting Google take up selling porn because there's some pie-in-the-sky?

Whatever.

R&D incompatible with public stocks???

[Ars-Fartsica]

Don't tell this to IBM, Microsoft, Intel, Merck, Pfizer...all of which spend a hundred times what Google does on R&D.

They don't want to go public because they don't have to, period. Their venture funding still has miles to go.

Google IPO could...

[Tailhook]

Google IPO could rejuvenated Internet-company investments.

OMG. Please, lets not piss away a good thing on some vague notion of how IPOing Google and having the stock price balloon for two days is going to turn anything around. The simps that promulgate such things are the very same people the created the .com bubble in the first place.

Post IPO Google would be subject to a board. These folks, recognizing the "vast marketing potential," will have more pop-ups flying around then you can even imagine. They'll make AOL look good.

Google isn't worth much. It's appeal is it's effectiveness. It's effectiveness is due, in part, to it's high degree of impartiality, and simple focus on results, as opposed to "eyeballs." Yes zealots, I know, Google isn't 100% impartial. Post IPO Google would be 100% partial. Users would abandon it as competition filled the void.

Get this straight you .com losers; Google isn't worth much as an investment and, in the end, the stock price will reflect this. So will your losses.

Translation into English...

[dasmegabyte]

"Google's focus on R&D doesn't really mesh with the financial accountability of a publicly traded company"

"Modern shareholders are chickenshit squatters who care more about their liqudity of their portfolio then they do about the future of the company or its products."

True innovation and really new developments will always come from small business, where commitee thinking is almost non existant and against the grain geniuses are considered an asset and not dangerous dead wood.

As soon as the head of a company gets his eyes on the prize of some arbitrarily huge number of lucrative options, you can pretty much forget about taking risks. Every company I've worked for that's gone IPO has very suddenly switched into maintenance mode, treading water in a market they were breaking records in with a casual sidestroke. Red tape increases and so does the ratio of useful hours to administrative BS. And strong, brave CEOs easily cave under the heel of a room full of industry delphis with the power to fire indiscriminately.

Product failures mean firings of smart people to appease the same. And there's always the chance that some rogue company with a discordant worldview will take you over, complete with more firings for "redundancy" and to afford bullshit multi million dollar "Good Faith" payments. Can you imagine Google owned by Inktomi...or Slashdot owned by Microsoft?

Google doesn't seem to be struggling. They have the position and the clout to manipulate the fund -- repay -- fund cycle necessary to afford new development. So who cares if you want a framed Google OneShare?

This is better for you. It's better for us. It's better for them. (With all due respect to Cap. K)

Heh - "many analysts"

[legLess]

However, many analysts believe a successfully Google IPO could rejuvenated Internet-company investments.

Here's the full text:

However, many [former] analysts [polled at the local homeless shelter] believe a successfully Google IPO could rejuvenated Internet-company investments. "It'll be a brand-new economy!" they said. "Based on unshakeable principles of eternal growth, eyeballs, mindshare and synergy. Oh, God, please give us one more chance!"

Yes, but...

[nochops]

"However, many analysts believe a successfully Google IPO could rejuvenated Internet-company investments."

Yes, but many analysts also believe that a solid understansing of the English language and grammatical profeciency are even more important...

Re:Yes, but...

[Anonymous Coward]

Yeah like using the word understansing.

Fucking dickwad. Go fuck yourself with your stupid little corrections.

Re:Yes, but...

[Anonymous Coward]

Yes, but many analysts also believe that a solid understansing of the English language and grammatical profeciency are even more important...

understansing?? profeciency??

You really are fucking stupid aren't you?? At least learn how to spell if you are going to be one of those whiny grammar freaks. Better yet don't bother being a whiny grammar freak they aren't needed.

Re:Yes, but...

[usr122122121]

Yes, but many analysts also believe that a solid understansing [sic] of the English language and grammatical profeciency [sic] are even more important...

Too easy.

Not their decision

[Ars-Fartsica]

Ultimately the owners of the company will decide if it goes public. Venture Capital firms are not in it to make the world a better place. They are in it to make a lot of cash. When the time is right you can be assured that the Venture firms will hold back funding and request Google go public. That is their business model kids. This is where they get the money to go back and fund the company that will kill Google, and the company that will kill that one..etc etc etc.

Go for it!

[Anonymous Coward]

Imagine how much better Google will be when the programmers get snazzy new offices and Aeron chairs.

LOL!

[Boss, Pointy Haired]

However, many analysts believe a successfully Google IPO could rejuvenated Internet-company investments.

I think the last 4 years have proved that analysts know shit.

Inevitable? No. Probable? Maybe.

[Xtifr]

A Google IPO is inevitable

Inevitable? I don't think so. There are some pretty big companies out there that are privately held, e.g. DHL. Whether Google IPOs is going to depend on the people involved and what they want. And even if Schmidt really is in favor of the idea, it's still possible that he'll get ousted before any such move occurs.

In a business discussion, the phrase ...

[burgburgburg]

"The New York Post suggests" doesn't really inspire that much confidence.

Wacky headlines and sports coverage, however, are their forte.

Re:In a business discussion, the phrase ...

[egoff]

The NY Post was the first and earliest mainstream newspaper to cover the Wachovia-Prudential brokerage operations merger.

Re:In a business discussion, the phrase ...

[Brendan Byrd]

Wasn't the NY Post leftover from WRH's domain of newspaper control?

They are using Linux

[leerpm]

See this slashdot article. Check the 3rd question.

nope

[SweetAndSourJesus]

Google uses the world's largest commercial linux cluster.

Really, I don't think there's any truth to this rumor. They've got a great setup, and I doubt they'd change it, even at Yahoo's request. Granted, FreeBSD would be just as viable for their needs, but they've invested heavily in their Linux solution, and if it ain't broke....

They are already enslaved to Venture funds

[Ars-Fartsica]

It is too late for Google to be "free" - they are already beholden to the masters of greed - the Bay Area venture capital industry. Rest assured that Kleiner and Sequoia will put this baby on the market when its ripe. This is what they do. They do not feed the poor or care about your search results. They care about making a lot of cash. They need a Google IPO to rebuild the gutted venture market. They are not waiting out of goodwill - they are waiting until the pig is ready to be slaughtered.

Re:They are already enslaved to Venture funds

[glitch!]

It is too late for Google to be "free" - they are already beholden to the masters of greed... They are not waiting out of goodwill - they are waiting until the pig is ready to be slaughtered.

I cannot argue with your observations at face value. They are essentially correct. And yet I feel the need to counter your dark outlook. Isn't it funny that these greedy butchers decided to make their fortunes by giving us a really useful, superior, and inoffensive alternative to the other search engines? Maybe "enlightened greed" isn't as bad as it may seem at first glance :-)

Re:They are already enslaved to Venture funds

[enjo13]

The goal of venture capitilists (as you say) is to make money. However, it is not nececesarily to take a company public. Every quality VC firm has a stable of private companies that serve as dependable cash producers. Once a company is public, the worth of the company to shareholders is in the stock value. This represents risk to the VC portfolio, as the stock price is not necceasrily a rational measure of business success. As a private company, the value of the company to the share holder is primarily through the dividends the shares pay.. which is much less risky as it solely depends on the performance of the company.

A common financial strategy for VC's to employ is to keep a company like Google (assuming that is particularly profitable)private, as a hedge against volatility in the market.

One question: other than AdWords...

[MORTAR_COMBAT!]

What does Google really sell?

Answers:
1. Intranet search appliances
2. Search hosting solutions

To be a successful publicly traded company, Google would need to sustain year-to-year growth, year after year, etc, etc. They are not selling the kinds of things which support that goal.

Personally I would keep Google privately held. What are they going to do with more capital, anyways?

Re:One question: other than AdWords...

[greymond]

Thats a good point. I think Google is great, but other than being a "search" company and having "news" they don't do anything like say... Yahoo who has all kinds of things like free email, groups, chat, web hosting, etc... all things that can keep a larger group of people coming and paying you more.

Although if Google started offering services like Yahoo, but would stay true to the "google way" I think I'd be down to try a Google Chat Client or a Google Group.

Re:One question: other than AdWords...

[Drakonian]

Although if Google started offering services like Yahoo, but would stay true to the "google way" I think I'd be down to try a Google Chat Client or a Google Group.

Actually, you can try quite a few of them right here!

Re:Google+Blogger+IPO=Go_Ogle, Online Dating Searc

[fruscica]

I'm suggesting that when it comes to delivering profits to investors, giving customers what their behavior tells you they want is a pretty sober approach.

And what does online dating have to do with porn?

Re:It's not the Google lovers who really want this

[jasonrocks]

The only problem is that many of the stocks that lost are no more. We don't need another round of companies which have heavily inflated stock prices without a sliver of a chance of turning profits. Those at the top will get rich and many more will get poor. Say no to another .com era.

Uh, look at the Google board

[Ars-Fartsica]

And even if Schmidt really is in favor of the idea, it's still possible that he'll get ousted before any such move occurs.

Wrong! Google's board is weighted with two of the biggest VCs in the valley. These boys are all about taking companies public. Why do you think they funded Google???

Re:Uh, look at the Google board

[arkanes]

I know it's stupid and naive, but maybe they learned something from the 90s and are happy with Google being quietly and consistently making them money directly, rather than making a bunch of short term profits in an IPO then tanking and the massive geek userbase flees for the first google clone to come along?

Re:Uh, look at the Google board

[nelsonal]

They are holding out for a better price. Currently public investors are smarting from the losses they took over the last three years, and are not wanting anything to do with any internet company. The venture capitalists are happy to wait for the mood to improve before bringing a "profitable, different" dot com to sell. The venture investors have no problem with an IPO investment tanking, since they are happy to be out about six months after the IPO, when their lockup contracts have expired.

Re:Uh, look at the Google board

[Anonymous Coward]

Who says Google is making money directly?

With their tiny little "geek-friendly" ads, I sorta doubt it.

Grammar

[Anonymous Coward]

However, many analysts believe a successfully Google IPO could rejuvenated Internet-company investments.
Huh??

or...

[nocomment]

"...However, many analysts believe a successfully Google IPO could rejuvenated Internet-company investments."
or, it would kill off the best search engine around thus far.

Re:It's not the Google lovers who really want this

[MadFarmAnimalz]

I agree with most of what you say.

My personal theory is that it's the popularization of stock trading/ownership which has dumbed down market reactions and behavior.

Just look how the market reacts almost instantly to any development in Iraq, no matter how trivial.

VC Push Companies to Go Public

[Qwest94]

Whether Google goes public or not is less a question of whether it makes sense for them to stay private--clearly staying private has many many benefits strategically (treat employees better, don't have to disclose financials, not beholden to quarterly results), and such a private company could produce enough cash for the founders to live very comfortable lives. The real driver of a push to go public will be the venture capitalists that invested in Google. They have to get their investments liquid so that they can return money to their limited partners. These VCs likely have the voting power and/or legal clauses in their investment documents to force Google to go public, whether the management wants to or not.

Publicly traded vs Privately held

[Squash]

Having worked for both, I agre. Privately held companies are driven by one thing: Generating Profit. Publicly traded companies are driven by something else: Stock Price.
Publicly traded companies change thier focus from development of newer/better/cheaper product or service, to generating press releases showing partnerships with other publicly traded companies that may or may not actually have a worthwhile product/service. Publicly traded companies are just fine with skipping a partnership and announcing layoffs to achieve the same goal.

This seems to be a relatively new function for business, but one that has been true in my experiences. Hats off to Google for fighting the urge to IPO.

Squash

Re:Publicly traded vs Privately held

[invenustus]

Privately held companies are driven by one thing: Generating Profit. Publicly traded companies are driven by something else: Stock Price.

Yeah, that's become a bug in our system, and you only have to glance at a newspaper to see that people are getting hurt by it. Someone compared it to paying a doctor based on the beeping of a patient's heart monitor - it's not a bad way of judging the patient's health, until the doctor starts dreaming up ways to make the monitor beep that don't make the patient any healthier.

I'm hoping that when we eliminate the tax on dividends, stockholders will start focusing more on profits and less on stock price.

in a world looking for a savior

[kraksmoka]

other than a cash out . . . what reason does google really have for an IPO? what do they care about reviving the IPO market?

to answer the first, NO LEGITIMATE REASON. speaking as an entrepreneur, one of the greatest rewards of owning a (i like to think for myself as well) successful business is the control over one's own life that accompanies the independence of private ownership. when you go public, you must answer to the market as a whole and your major investors one a time to justify your business planning. that is a time consuming affair. frankly, i'm amazed that publicly held companies get anything accomplished considering they spend a large portion of time and resources answering the built in second guesser's forums that public ownership holds.

second question. google's prior actions show more concern about their own profitability and integrity, than what is happening to the world that they are cataloguing.

in a world looking for a savior (as always), they aren't the one.

Google is my religion

[daharzi]

i really wonder this behaving.. hope im not praing the demon..

Sports Coverage?

[jvalenzu]

Sports Coverage is their forte? They cover The Knicks for goodness sake. You must be thinking of a more reputable news source that coverages legitimate franchises.

Re:Sports Coverage?

[leviramsey]

LA's not a sports town. Period. No city for which it's oldest team was there in 1957 can be considered a sports town. No city which has no interest in getting an NFL franchise can be considered a sports town.

I'm not saying that New York is a great sports town (it really isn't...) but if it were anywhere other than the Northeast corridor (where Philly and Boston are true sports towns), it would be like a monolith of sports fans rising from the plains.

GO PATS!
GO SOX!
GO BROONS!
GO CELTS!

Re:Sports Coverage?

[jvalenzu]

I'll try to remember that at the next Lakers parade. I got a real sunburn last year.

Re:Sports Coverage?

[leviramsey]

The only true sports fans in LA are Clipper fans... That's dedication...

Re:Sports Coverage?

[jvalenzu]

Don't forget the Halos! Sucks to be on the east coast this sports year.

Greed

[ucblockhead]

An IPO is basically selling part of your ownership in a company for money. As with any stock, if you think the company will be worth more money in the future, and you don't need the money you'd get from the sale, you are better off not doing it.

Putting off an IPO can be the greedy thing to do.

Keep your damn hands off of my Google!

[TrentC]

Google is one of the best things about using the Web right now; reasonably accurate search results, simple design that keeps loading time/bandwidth down, NO POPUPS, and useful free addons such as the Google API and all of the trinkets it exposes.

If the company goes public (or should I say "goes .com"?), except all of these to change. Maybe not overnight, but they will change.

And all so some investors who aren't tired of the pump-n-dump can try to make a few bucks.

Jay (=
(who longs for the good old days when people wanted stocks for the divdends they paid, not so they could trade them like Pokemon cards...)

Other reasons to remain private

[Agar]

Besides R&D costs and the market's focus on short term results, Google needs to remain private to retain its very employee-focused culture. See this long list of benefits for employees. Very impressive, but not costs that Wall Street analysts would have much patience for.

In a strong market, employees will see more potential upside to their stock, and will be willing to trade a great culture for riches. But today, Googlers are happy with a job, ecstatic with the free meals, and are willing to bank on the currency being valuable (maybe even worth more) later.

Re:Other reasons to remain private

[roskakori]

See this long list of benefits for employees.

from the list:

Maternity leave: A total of twelve weeks off paid at 75% of your salary, plus $50 a day to spend on Waiters On Wheels for the first two weeks that you are home with your new baby.

Paternity leave: Our new dads receive two weeks off paid at 100% to be home with their new baby. They also receive up to $50 a day to spend on Waiters On Wheels for the first two weeks that they are home with their new baby.

75% * 12 = 100% * 2 ???

maybe they do this to get more chicks with big bazookies to come to their interviews?

and the last thing the industry needs...

[knowledgepeacewi]

is a google-dot-bomb....which is why they should avoid it. The internet is a horrible business model.

So let me get this right....

[Richy_T]

Google will not survive an IPO yet you still want to buy stock in it if it does IPO?

Y'know, it's really beyond me how that whole internet bubble thing occurred.

Rich

Going private

[Animats]

Much of this depends on the details of the agreement between Google and their venture capitalists. But the founders may well have good terms, because they started small and grew while profitable. They didn't have to go for a second round when in trouble.

It's entirely possible that the founders might take on debt and go private. Interest rates are so low right now that's a very real option.

As for "rejuvenating the market", Google just isn't very big. After all, it's almost fully automated.

Any story that quotes a "financial analyst" as an anonymous source is probably bogus. They're not insiders here; they can speak publicly. The ones who like being on Squawk Box are best ignored, of course.

We have years of depression ahead. Years. The market is still way overvalued. P/E ratios are still far too high. See the chart I put on Downside. for July 22, 2002. The bubble still hasn't fully deflated. Stocks have another 40% or so to fall to get back to normal P/E levels.

Look at Japan, where the stock market has been in the tank for a decade now. That's happening to the US. The peak was three years ago, after all.

Why the rush to IPO

[wowbagger]

Why would anybody want to IPO their company?

Consider the purpose of an IPO - in exchange for selling off part of the company, you get a temporary influx of capital.

Unless you NEED capital, why do this?

If you need capital, you can incur debt to get it. When you pay off the debt, you OWN your company.

The only reason I see to IPO is for the company founders to make a quick buck off the IPO. Once they have done this, there is little incentive for them to stick around.

Consider it like this: I just bought a house. Would it make more sense for my to finance this by a) incurring debt (a mortage), or b) selling 49% of myself into slavery. Remember, my new owners will own 49% of me until such time as I buy myself back. But since they own me, they will do their level best to see to it I never buy back that 49%.

privately held and profitable, why IPO?

[Anonymous Coward]

they're a private company that is profitable, why the hell would they want to become a bitch to public investors?

A company shouldn't go public until it needs to

[sjbe]

The vast majority of the Fortune 500 companies were not venture capital financed. Most of them also did not go public at the earliest opportuntity. Quite frankly for a small company, going public is usually more of a distraction than a benefit. The important thing to think about is why would they need the cash from an IPO?

I suspect Google does not need the money from equity financing. If they can fund all their business with cash from their ongoing operations and don't need equity financing for future growth opportunities, why would they want to go public? (other than greed) An IPO would be pretty much a cash grab at this point, not a useful strategy for growing the business.

Google looks like it is a well run company but I don't really think it's clear that its future growth prospects are such that I'd be willing to purchase its stock. No, I think Google would be much better served by keeping their current path and focusing on developing their business. The company clearly has a great product, they have improved it steadily, and have done well by being focused on that. The growth expectations of equity investors could only hurt that focus at this point.

dept. of redundancy dept

[endoboy]

the first and earliest ???

YES, actually. Sports coverage

[burgburgburg]

Considering the day, there is one team that they have written a story or two about that you might have heard of.

Re:YES, actually. Sports coverage

[jvalenzu]

Baseball. How quaint. I'm sure the cricket match coverage is riveting as well.

Inevitable?

[Kevin Stevens]

"A Google IPO is inevitable."

I am going to have to disagree here. From what I have seen, Google is not a company with huge (IE potentially disastrous) type dreams of putting search engine capability into your refrigerator. As such, they do not need IPO type cash to finance their operations. Google is very focused on being a search company, and while it has branched out into research, catalog indexing, etc... it has all fit into its main strength- searching. When I think of companies going public, I see CEO's dreaming of taking their chain of 15 stores and going nationwide, or a manufacturer that wants to go into retail. I am not Google's CEO, so I could be dead wrong on this, but based on their past behavior, I would be surprised if Google went this route. They just seem too level headed, and judging from their extensive R+D, not hurting for cash.

huh?

[Jim Morash]

many analysts believe a successfully Google IPO could rejuvenated Internet-company investments.

Why would Google want to do this? "Hi, we're responsible for triggering another brain-dead bubble!"

The market

[forkboy]

When exactly did the stock market turn into a bunch of fat white guys telling companies how to operate?

I can remember a day when you invested in a company and let them do what they needed to stay afloat. Financial accountability? A company didn't USED to have to be financially accountable to shareholders, they could just take their money other places if they didn't like how things were going.

IANAMA (I am not a market analyst) so someone tell me when exactly shareholders took over corporate america...I'd really love to know. It seems like maximizing profits for shareholder benefit is the embodiment of everything that is soulless and evil about corporate America.

Re:The market

[smack_attack]

It's because our philosophy of a socialist capitalism, or mixed economy as many like to call it, has failed.

The name of capitalism has been hi-jacked since the industrial revolution and it's finally catching up with us. Companies don't owe a damn thing to anyone, and demanding that they do will only cause them to seek ways to subvert this Robin Hood mentality. Mostly by sticking it to the consumers.

Humorous

[coolmacdude]

Apparantly the Slashdot grammer checker broke on the last sentence of this article.

Re:Humorous

[Anonymous Coward]

"Apparently" so did yours.

Re:Humorous

[coolmacdude]

lol, i guess it did.

alternative

[sjanich]

An alternative to going public would be to set up an ESOP trust. The Founders could keep keep X% of the company. An ESOP trust is created. The ESOP trust borrows money from an insurance company or pension fund, etc. The ESOP trust uses this money to buy 100-X% of the stock from the founders. Employees get units of the trust. They can only sell units to and from the trust, etc. There is more to it then this. But it is a way for folks to cash in on there options, yet the company doesn't get lost.

Re:It's not the Google lovers who really want this

[Elwood P Dowd]

congrats to the 10-second sound bite generation

What generation do you think that is? If you're implying that it's people younger than you, I'll point out: We don't watch the news.

Hope They Stay Private

[CowboyBob500]

The company I work for went public a couple of years ago. Now it's going down the pan. It's all about projected sales. The sales force are making sales for software that isn't even written yet just so it can get on the balance sheet before the end of April. And some of the "customers" are expecting deliverables as soon as September.

When it was a private company no-one had to sell anything until it was ready. We went from being R&D led to being sales led. We used to have great products. Now quality is suffering because of the drive to get everything out in time to make those sales figures look good. It can't and won't last. A successful company has been driven into the ground by the money men.

Bob

And no, I can't tell you who I work for ;-)

Re:Hope They Stay Private

[Jesus IS the Devil]

That's only ONE company in a world of "exceptions". How about Walmart? Following your logic they shouldn't be succeeding so wildly.

And they need the capital for what?

[Presence1]

There are two good reasons to go IPO.

The main one is to raise capital, e.g., for expansion. Since the company is profitable, and seems to have most of its infrastructure built, this does not seem to be a pressing need, unless they wanted to implement some major business change.

The other is to gain liquidity for the current stockholders such as the founders, initial investors and stockholding employees. The employees' and founders' liquidity interests can be handled with buyback provisions. If there are other investors, it depends whether they are majority or minority and whether there are any specific exit ageements (and the evidence indicates that there arent).

Moreover, there are many risks to the IPO, starting with a failed/undersubscribed offering, and the loss of autonomy.

So, it seems that the comment that "there are so many better things to do" is exactly to the point.

Words from my friend's friend who works at Google.

[FreshFunk510]

They're making money hand-over-fist on ad revenue.

Isn't this more appropriate...

[s88]

http://news.google.com/news?hl=en&lr=&ie=UTF-8&oe= UTF-8&q=Google+IPO&sa=N&tab=wn

Google should NOT IPO!

[Anonymous Coward]

Why would the owners of such a delightful and profitable company suddenly want to drown themselves in debt, especially with a market on the verge of complete collapse? Illogical. I hope they don't do it.

In soviet russia...

[bani]

google searches YOU

You can't know that

[Anonymous Coward]

The only way you could know that would be if you knew what the capital structure of Google is: specifically, how much equity Kleiner and Sequoia have. If it's a majority, you might be right; if it's not, you are probably wrong.

Of course, since Google is a private company, you don't have access to that information, unless you are an insider, which I can tell you aren't.

Re:You can't know that

[Anonymous Coward]

its on their website dipshit

Don't go public, guys!

[Brendan Byrd]

Once shareholders are in control, there's a much bigger chance that they'll eventually stop doing what's right, and start maximizing profits.

Agreed. Don't do it, guys! Don't sell out! Once you start going public, you will be a slave to people who only care about numbers going up and down. The maximum profit margin will be your only goal, and your customers and employees will be merely an obsticle to this goal.

Don't do it. Don't ever go public. This is the one thing that has caused the downfall of many a company.

Redundant.

[Anonymous Coward]

Google goes public, I find a new search engine.

Why?

The minute that Google goes public, it'll thus be returning results based on bribery, and chock full of banner ads.

Screw the 'sector' and the 'VC'. (A term which reminds me of a certain other type of 'VC'.)

Re:It's not the Google lovers who really want this

[mfrank]

You're right.

Heard a story once (don't know if it's true). In 1929, Joe Kennedy (JFK's father, who made a fortune in bootlegging then went legit in the market) was walking to his office in NYC. He stopped to get a shoe shine. The shoe shine boy started talking about the stock market and what stocks were hot. When the shoe shine was done, Joe gave the kid a good tip, walked to his office, and sold every stock he owned.

When the shoe shine boys start following the market, it's time to get out.

No, they will take Google public

[Anonymous Coward]

A high profile firm like Google is their best chance to recoup funds. It is exactly the firms like Google that are pushed to market and not kept in reserve.

Several ways to increase valuation

[Anonymous Coward]

5) Given that my percentage ownership is fixed, in order for the stock to be worth more at some time in the future, the value (read: size) of the company must grow.

I'm not sure what you mean by "size", so let me break this down in at least two ways...

Commonly, a company increases its value by increasing revenues. Company valuations may be set by the market by a multiple of their annual revenues. 2x, 5x, 10x, sometimes more. The company does not necessarily need to grow in order to increase its revenues, though it often will. Filling up a sales pipeline and then eventually closeing deals can do it. Working smarter can do it. Even if revenues stay constant for a year or two, but a company can show reduced expenses, then profits increase and this can also increase a company's value. To answer your question, companies of nearly any size can do these things.

Another way to increase a company's value is to collect and retain more long-term customers. Long term contracts, new revenue streams off existing customers, increasing the total amount expected from a lifetime customer, etc. Sometimes this means increasing a company's size to do this, and sometimes it doesn't. Both large and small companies will look to sell products, services, upgrades, etc into their existing customer base. Once R&D has paid off, more and varied subscriptions or upgrades or adding new product lines can make their sales jobs very easy if they have a base of happy customers to hit on.

Hopefully this sheds some light on the 'bounded' issue you were having.

Public company = obligations

[the grace of R'hllor]

As I recall reading somewhere, somewhen, a publically traded company has a duty to its owners (the stockholders) to maximize its stockvalues. If they don't, they can be sued by the stockholders.

Is this true?

Re:Public company = obligations

[2short]

Stockholders in company == owners of company

The officers of the company can be sued if they don't do what the owners want.

does this mean ... ?

[deaton]

Does this mean that Slashdot made first post on Google?

Another benefit of an IPO

[Jesus IS the Devil]

Thus far all I've been reading is how Google should stay put and refrain from an IPO. Most people seem to believe that IPOs are about greed.

Well here's another view. I see it as a great marketing tool. I remember when eBay after their IPO. Not only did their value shot up, they suddenly had a huge surge in traffic from all of the chit chat, rumors, and hype about them. Till this day, eBay, Amazon, and a few others remain the true gems of the dot com industry. While guys like Aol are tanking year over year, their stock prices have shot up.

Better to keep the company privately held

[Anonymous Coward]

"The New York Post suggests that Google's focus on R&D doesn't really mesh with the financial accountability of a publicly traded company"

I do not see how a publicly traded company has more "financial accountability" than a privately held company. All you got to see is the Enron's, Kmarts, WorldCom, and the untrustworthy auditing companies like Authur Anderson to see how publicly traded companies are no better than privately held companies.

At least with a private copmany, I do not have some two-bit CEO come in, steal money, run the company down to the ground, and then jump off the sinking ship with his/her golden parachute.

I encourage many technology related companies to stay private because you see what happens when you go public. This is the same with non-technology companies too because the CEO (corporate theifs) steal the company blind.

Why Would I Want In Now?

[istartedi]

Why Would I Want In Now? I mean, "to google" is already a verb. How much more growth can this thing possible have left in it? Sorry folks, the money (if there is any to be made) has already been made, but then, that was the dirty secret of IPOs that nobody knew in 1999, but anybody with half a brain should know now.

Re:Google+Blogger+IPO=Go_Ogle, Online Dating Searc

[JahToasted]

Not sure if online dating is the be all and end all, although I'm sure google will be offering it. look at news.google.com and froogle.com. Google is definitely becoming more Yahoo-like. And now they're getting into blogging. The next move would be, like you imply, a sort of web of trust type system so you can discuss things with your peers, whoever or where ever they are. If done right (like they did their search engine), it could be really cool. Discussion (and dating too i guess) seems to be where the interent is going.

How many analysts to screw in new light bulb?

[danmorg]

How many analysts does it take to screw in a light build? None, because they can't. They don't know how. They're all full of hot air.

Not that simple

[fm6]

Uhm, you did notice that one of the benefits on the list is stock options? Which, being pre-IPO, are particularly valuable. But they're not worth anything if Google never goes public. If Google employees have to choose between free catered lunches and 6- or 7-figure payouts, which do you think they'll choose?

Anal...ysts

[Infonaut]

"... many analysts believe a successfully Google IPO could rejuvenate Internet-company investments."

Then again, many analysts are the same self-serving fucking morons who assisted the Dot-Bomb Economy.

A Good Idea?

[aerojad]

Check out Amazon, AOL, and who can forget Dr. Koop.com for examples on why this could be a bad thing.

Yes they do

[fm6]

It's a little sad that this guy thinks the entire sector hinges on this one company.

He's probably right. How many really successful Dotcoms are still out there? Being able to trade even one more promising stock would make a lot of difference. There's a lot of punctuated equilibrium in the stock market.

Amusing that Brin attributes the IPO delay to "laziness". Lazy people don't produce the kind of technology Google keeps coming up with! I think the real story is that they're all enjoying themselves too much to worry about cashing in. Refreshing that somebody isn't obsessed with retiring at 35 -- which Brin certainly could.

$0.85!

[autopr0n]

lol. That would make ESRs 'vast fortune' what, $10k or something?

Re:$0.85!

[rodgerd]

Funny how he's not writing essays castigating people for not being as rich as he is!

Interesting also that we have an analyst whining that google won't do something that isn't in their own best interests!

That's not the point

[autopr0n]

The point is, dispite being publicly traided, they can still prettymuch whatever they want.

And that is why we still burn petrol

[ottffssent]

"The New York Post suggests that Google's focus on R&D doesn't really mesh with the financial accountability of a publicly traded company."

Phrased differently: "The NYP suggests that doing research to make a better product isn't financially sound for a publicly traded company."

Or: "Companies investing in their future are seen as worthless by investors."

Myopic MBAs with their heads in the sand kissing someone's ass are why Bell Labs got gutted. They are why US colleges stamp out more and more lawyers and fewer and fewer engineers. They are why not-CDs exist, why ReplayTV is out of business, and why it's illegal in Michigan to provide internet access to a school lab through a cable modem with 1 IP.

Would you ever hear the following in a boardroom meeting?
"Let's phase out our coal-fired plants and replace them with solar."
"But sir, that would cost $100 billion!"
"Who the fuck cares? We'll spend that in the next 10 years buying coal anyway - might as well buy solar panels instead."

And won't you ever hear that? Back to the chickenshit MBAs. There's an enormous fusion reactor in our backyard that hits us with over 6.5 billion watts of energy per square mile and the MBAs would rather spend endless effort securing regulatory approval for another coal-fired plant or nuclear reactor than spend their money buying up plots of the cheapest land they can find in the middle of sunny Nevada.

I've strayed a bit, so I'll sum up my point here. The same thinking that suggests Google abandon improving their product so they'll make more money is why we still burn things to make steam to run generators, why we have no base on the moon and barely have one in orbit, and why we're willing to spend $200 billion (yup, you heard that right) to bomb the shit out of some poor country unfortunate enough to be situated on top of a sea of hydrocarbon ooze.

*takes breath* *steps off soapbox*

Re:And that is why we still burn petrol

[Stalcair]

to add my own bit (a small bit at that) to what you said, I think that it is interesting that these myopic MBA's simply do not understand investment theory. You do NOT go into a high risk investment venture without being able to loose ALL the money you are putting in, much like any gambling. They take this wisdom and try to cram it into mid and long term investment as well. I would on one hand never expect a company like General Mills to go outside of its very stable market for some large hair brained idea. It is simply not what they do. However, setting up a venture capitalist subsidiary or fund would allow them to use a portion of their massive, stable capital inside a "disposable" safety box (like what a bomb squad will place a potential bomb into whilst the robot sadly pokes and prods it (poor robot :)). If it bombs then it does not affect the rest of the business.

These MBA's should not apply the same frightened-schoolgirl strategies to every market. If they want to be in a more stable market, then get into precious metals and groceries. They should then proceed to do so, IMHO as quickly as possible to make room for those with vision backed with a bit of greed.

But as others have pointed out...

[orichter]

Greed doesn't always do the winning. The bursting of the tech bubble shows that greed often does the loosing.

Lies, damn lies, and statistics.

[JKConsult]

Don't tell this to IBM, Microsoft, Intel, Merck, Pfizer...all of which spend a hundred times what Google does on R&D.

I have no interest in looking the actual numbers up, but all the companies you named have enormous (or my favorite word, ginormous) market caps. They probably spend more on office furniture than Google does on R&D. But what about expenditures on R&D as a percentage of overall spending? I'd wager that only Pfizer spends more than Google.

Where?

[SuperKendall]

Where would that be Mr. Coward? Going here I see that venture firms, along with other people were involved in raising the initial funding - but no-where does it actually say who has how much a share of what.

I notice you didn't provide a link so your argument is pretty suspect.

Search solutions... like for China, perhaps...

[aquarian]

Don't forget the internet is global. Many companies, and government entities, would gladly pay lots of money, perhaps *billions*, for customized search solutions from Google -- the only company that can do certain very valuable things on a large scale. It is rumored that Google sold some kind of search solution to the Chinese government, which blocks sites they don't want their people to have access to. This sounds evil, but it may very well be the compromise that allows the Chinese people to have internet access at all. I can envision deals like this being worth billions.

So maybe there's actually money to be made here. If something's that good of a cash cow, why sell it?

Another reason for Kleiner Perkins etc. to want to hold onto Google is in courting future clients, or as a tool to compete with. A new startup may benefit from Google's technology, and by having that "in-house," KP may be able to offer a better deal -- or stiff resistance if that client signs with someone else.

v_v

[Ayanami Rei]

What do you mean say not to another .com era?!
I want my free mountain bikes that I used to get when I appeared at trade shows.

::bawls::

Please google, PLEASE!!! Rei needs a pretty new one with the claw tires and sports bottle holder. ^_^,

Rejuvinate the tech sector?!?!?

[samdu]

However, many analysts believe a successfully Google IPO could rejuvenate Internet-company investments."

It's this kind of thinking that caused the debacle the last time. A successful IPO for Google would be a good thing for Google (more specifically, its owners). That's it. They wouldn't drag any other tech companies along with them. Those times are gone.

CAN I GET AN AMEN!!

[Wolfrider]

--The company I used to work for *used* to be privately held. It was a great place to work. Then, shortly after I left, they sold their souls to Wall Street.

--Now they've outsourced almost everything, the management is evil, morale is in the toilet and the whole place is so bad from what I've heard (former coworkers that are still trapped there) - I wouldn't go back for TRIPLE what I used to make there. It's not worth the hassle.

--If you can make it on your own as a privately-held company, DO IT!! Don't sell out! Because if you do, unless you get a sweetheart deal like the Slashdot boys did, control of your company will almost invariably be taken away from you - and the end result is that it's no longer a company worth working for, or doing business with.

pets.com

[Cato the Elder]

At one point, you could buy Iams premium dogfood, delivered to your door, for less than what pets.com was paying wholesale. (According to an aquaintance of mine who was a Iams salesman).

Last Post!

[alpg]

Audience: What will become of Linux when the Hurd is ready?
Eric Youngdale: Err... is Richard Stallman here?
-- From the Linux conference in spring '95, Berlin

- this post brought to you by the Automated Last Post Generator...