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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."
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.
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
Plausible conjecture should not be misrepresented as proof positive.
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.
davejenkins.com |
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.
filmcritic.com - Movie reviews on Internet time
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 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
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
"Encyclopedia" is to "Wikipedia" what "Library" is to "Some people at a bus stop"
(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
Want to learn about race cars? Read my Book
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.
I did not design this game/I did not name the stakes/I just happen to like apples/And I am not afraid of snakes-AniD
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.
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.
"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)
Hey freaks: now you're ju
Wacky headlines and sports coverage, however, are their forte.
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.
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
Listen to my latest album here
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.
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Then again, many analysts are the same self-serving fucking morons who assisted the Dot-Bomb Economy.
Read the EFF's Fair Use FAQ
"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*
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