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Google Considering IPO Auction Online
HackerStickers writes "An article in the Financial Times states that Google could be considering doing their IPO online via an auction versus the standard methods of raising funds early next year. The article points out that auctioning it could bring in a larger chunk of cash for the company. Would you bid on a piece of Google?"
I think not. These shares are indoubtably going through the roof, so they'll be way too expensive for me. I mean, Google is supposed to be worth about 15 - 20 billion!
Auctions are an interesting way to do this but I expect that as usual with auctions the hype will cause the price to jump higher than it might otherwise. Then it will fall to a "normal" level (at which point I will buy some stock if I have any money left from selling my second Porsche), before gradually climbing up to dizzy heights (at which point I will sell my stock and buy three new Porsches).
Ceci n'est pas une signature
By becoming public, google loses the ability to continue with constant steady growth and innovative R&D. These things will invariably lead to short sighted planning by the management to "make the numbers" for the next quarter, 6 months, or year. "Growth" will be expected year after year - the innovative ideas that have made google so successful will give way.
No, I won't bid on a share. I would hope that the IPO never happens, as google is still a quality company. I would hate to see that all change.
Stop corporate
I'd pay $20 a share for a stake. Uhh, I mean $22. No, wait, make that $24. Did I say $24? Darn, I meant $26. No, I take that back, what I really meant was...
"Accept that some days you are the pigeon, and some days you are the statue." - David Brent, Wernham Hogg
When you open up your company for outside investment, that's when a lot of companies go to shit. When you're privately-owned, you can be content to simply turn a nice profit every year.
When you have an IPO, though, your company is worthless to investors unless you continually grow and grow and grow.
Google could continue doing what they're doing right now and maintain a constant level of profit (assuming they're profitable right now, which they supposedly are). But if they hae an IPO they're going to have to try more and more ways to wring more and more money out of investors and users. Get ready for what may be the slow degradation of one of the last "pure" and amazing things on the web...
OtakuBooty.com: Smart, funny, sexy nerds.
With all the trouble they're having with blog noise and all that? Google have alredy done their "grow". They may grow a lot during the IPO too, but after that they will go down, most likely, when people start realising that it's not really going anywhere that fast and it's been over-rated during the IPO. the shareprice will readjust to a strong value, but not a strong growth.
Daniel
Carpe Diem
Every day punters are likely to want a piece of Google in a big way. The global reach of the brand and the sentimentality with which the everday web user regards it mean that folks are likely to think that it is worth investing in. But this is where where the auction model completely falls down.
The article states that the price could get pushed up as high as $100 billion in an auction - for a company that makes $150 million a year??! This is complete
Google directors get to save a small percentage of the billions they are going to make by skipping on underwriting charges, but the potential for the price being pushed to an artificial high in a auction before a catastrophic crash are large.
- "They could get a $100bn" stock market value, said one person involved.
- "It will be worth $15bn-$25bn," said one person who has been involved in the process. "This has never happened before."
Next, more hype:Though the company does not disclose financial information, its profits are growing rapidly and are reckoned to be running at an annual rate of about $150m on revenues of $500m.
Anybody got a name??
but only on the L or the E.
:-)
There are 2 of the G and O, so they'll be less valuable over time.
Unless those disappear one day. But then you ogle
While interesting, this isn't the first time a company has done this. In April, 1999 a company called Ravenswood sold 1,150,000 shares online in an IPO auction. Several other companies since have, including Salon.com and Andover.net. Here's a summary of how they went.
Request: ECM unit, 1000 km fullerene cable, 1 tactical nuclear weapon. Reason: Birthday party for foreign dignitary.
Not only are public companies responsible to their shareholders first and foremost but they can only work in quarterly increments because that's how shareholders will judge them. Yesterday Macromedia dropped 34% after announcing quarterly earnings. Do you think the execs at Macromedia are thinking long term plans at this point, or are they wasting all their time trying to organize a fire sale and save their asses so they can stay on the treadmill?
...would be a one with one hundred zeros following.
Google is one of the few companies that regularly and consistently produces USEFUL functions for the world on a large scale. No one competing for the same market segment even comes close at this time.
Unfortunately when companies IPO, that means that they lose control over company direction and quality. As soon as people have a vested interest in the company, the race to profitability is on. This hurts the development cycle and the processes which control the quality of product. Investors are very demanding and GREEDY. Greed always rears its ugly head and forces companies to release more quickly and with lower costs to attain the extreme profitability that is required by the public.
Sure if you buy in then you can get a cash cow and end up sitting pretty for a while. Just know that over time people always want more money faster than it is currently being earned. This results in unrealistic schemes to achieve such goals.
Some would argue that more money means better product, but I know first hand that more money means more greed and investors would rather have money than good product. This means more regular changes internally to keep up with good profitability ratings.
Fortunately others are starting to compete for this space as well and even if Google looses it's cool due to investor demands, others will be ready to seize opportunity for improvement. Too bad it likely won't be the same Google that we (everyone I know) love today.
-BJ
Don't do it google! Sure, you'll get a bit of cash but you'll be selling your soul. Once you're in public ownership the only thing that is allowed to matter is shareholder returns, which will inevitably mean you turn into some sucky kind of portal with online shopping, instant messaging and all the crap I don't want from a search engine. This will happen regardless of whether the current people want it to or not - they'll just be voted out at an AGM, or sued for failing to maximise shareholder value.
So: google, consider this a plea. Remain smaller than you undoubtedly could become through an IPO, but retain your integrity and the essence that makes you great.
"'I pass the test,' she said. 'I will diminish, and go into the West, and remain Galadriel.'"
- JRR Tolkien.
It -sounds- like he's saying that he's worried about the Public actually using their purchasing power. God forbid we take the future of something we value out of the hands of the people who brought us Enron, Worldcom, and other such unmitigated disasters.
-theGreater.
Of course they'll make more money with a Google-run auction:
"I bid twenty dollars per share"
Did you mean: thirty dollars per share?
Believe me, I'm as surprised by my comment as you are.
Personally, I don't buy all this hipocrisy outside money supposedly destroying the company. Google would probably be long overtaken by some other company had it not gotten outside capital to fund growth and we would not have one of the coolest web-services around.
And although the dot.com-boom is over, the fundemental paradigm of web-services still exists: practically no barrier to entry. So if google dies (which I don't expect), another better search engine will take its place. That is the cherrished capitalism for you. :-)
OTOH, if they can use the money to expand their business (and reap some rewards for their cool work), I'm all for it. In the end it's and always has been a business decision.
cheers,
Roland
I want it NOW
This is not a reference to the Google stock, but rather to the pervasive attitude in today's society that is leading to our downfall as a civilization.
I want it NOW - as in, "I am unwilling to wait, and do the sensible thing, so I will do something completely stupid to get this right now."
Rather than waiting to earn and save enough money to buy (that plasma display|that new video card|that big SUV|...) people just charge it on the ol' credit card. Result - most of their income goes to servicing their debt.
Companies are like this, as well. Rather than borrowing money from a bank, or folding some profits back into R&D, they look for the immediate solution - "Let's sell off part of the company!" Unfortunately, unlike a bank debt which is designed to go away after a time (when you pay it off), selling off part of the company as stock is almost impossible to reverse. True, a company can try to buy back the outstanding shares, but as they do so, the cost of the outstanding shares will rise, and they are unlikely to ever be able to buy them back.
And I am sorry, but any employee who is swayed by stock options IS A TOTAL FSCKING MORON. The only way stock options are valuable is if the stock price of the company significantly increases from the time the options are granted to the time they are vested. As other posters have pointed out, this leads to a company trying to grow continuously, which is simply not possible. As a result, eventually you will get stock options that don't significantly appreciate in value.
There are better ways to "incentivize" an employee (that was the very term that was used by my boss as I was offered stock options - which were so far under water when the company was bought out that I was offered one whole dollar for the lot). A profit sharing plan, in which a percentage of the company's profits are credited to an account in the employee's name, with a vesting period, is FAR MORE effective at giving a key employee a reason to stay than stock options - the employee can SEE the value, can SEE the exact amounts of money he is walking away from, and that value DOES NOT FLUCTUATE as the market varies - hence the employee is unlikely to walk away at an uptick, as upticks and downturns simply don't happen.
Lastly, the whole purpose of playing the stock market has changed. It used to be a means by which you invested you money in a stock in return for dividends - converting cash into an annuity, thus attempting to guarantee youself an ongoing income, while still having the money available for use if needed. In that mode, the stock market is a non-zero sum game - you can gain value without somebody else losing value.
But now, the stock market is played like a trading card game - the idea of holding a stock for years is gone, buy it today and sell it tomorrow, lather rinse repeat. When it is played like that, the stock market becomes a zero-sum game - if I make money on the market somebody else had to lose - if I bought it low from you, then you lost your chance to make money, and if I sell high to you, you are losing money to me.
As a result, since in a zero-sum game everybody is in direct competition with everybody else with little motivation to co-operate, you get the "dog-eat-dog" mindset we see today.
No, I hope Google does NOT IPO. Yes, it would be nice to be able to buy a few shares of a well-run company who's management is planning for the long term. However, the odds of Google remaining such a company after IPO are vanishingly small. To paraphrase Marx (Groucho, not Karl) - "I wouldn't want to own stock in a company that would sell it to me."
www.eFax.com are spammers
... particularly after reading what those offering-banks were doing during the boom.
.com with no revenue at $20/share, one normally assumes they know something you don't).
Not only were investors dumb with their money, but there was a sea of illegal under-the-table action building up those numbers.
Recap: When Amazon does an IPO, they get a bank to handle the deal. That bank first sells shares in large chunks to other very large banks, who then sell to other less-large banks, who then sell to you and me.
Brokers at the offering bank would cut deals with would-be 1st tier purchasers, offering them a chunk of shares for a good price, but only if they agreed to buy more shares at the inflated price (illegal) - further inflating the perceived value (if you see smith barney still buying a
The would-be purchasers wouldn't want to back out on the deal, after the good price, or else they'd be cut off from getting in early on other IPOs offered by that bank. (few banks actually do IPOs) Similarly, they sure wouldn't want to take a hit for their own company (it'd be their ass) if that second block of shares turned out to be overvalued - so they gussied up their forecasts to convince other investors that a company really -was- worth the secondary inflated price (illegal).
They made millions on everyone else losing billions.
Given that, if Google does their own IPO straight-to-the-people, day-traders and herd mentality could easily drive the prices up to bubble-era prices. Of course, on the other hand, it's much less likely that there's shady deals going on.
Though I'd imagine they'd only sell a small block of shares that way. One doesn't usually turn away a billion dollar brokerage firm who wishes to purchase in significant quantities.
// "Can't clowns and pirates just -try- to get along?"
Google isn't as effective today as it was a year ago today. Their searches are screwed up with innane irrelivant material.
Couple that with an IPO auction, and soon, we'll need to be a subscriber for "premium" features on Google, such as the ability to put an "and" in your search, or post on the Google "forums" where you can chat with your friends about how great Google is.
In my opinion, IPO doesn't mean better at all.
the differences for the same search term between MSN and Google are TERRIFYING!!
Google search for 'linux'
MSN search for 'linux'
Who watches the watchmen watching the watchmen?
Speak truth to power.
I've felt for a long time that this is an affront to capitalism (yeah, I'm a capitalist... go ahead and mod me down). The only people who make big money did essentially nothing to earn it, besides the company founders who took big risk and make less than they could since the banks keep the price down to make sure they sell the whole float.
At the same time, we've been here before, as this Forbes article from early 2001 describes. Earlier efforts to make IPOs more efficient and democratic failed. It's not clear to me whether this was due to the coincidental collapse of the tech IPO market, or whether it was the result of a coordinate sabotage effort by the big investment banks. (Or maybe, just maybe those banks really do add some value by getting their big customers to serve as market makers).
Google has about as much market clout as I can imagine, so if they decide to go for it, this will serve as a good acid test. If the IPO goes off successfully as an online auction, this probably means that the earlier efforts were just bad timing. If it fails, I might smell a conspiracy.
Peer Pressure
-
Dr. Eric E. Schmidt, Google Inc. Chairman of the Board
- Sergey Brin, Google Inc.
- Larry Page, Google Inc.
- John Doerr, Kleiner Perkins Caufield & Byers
- Michael Moritz, Sequoia Capital
- Ram Shriram, private investor
The sole reason that Kleiner Perkins, Sequoia, and Mr. Shriram are represented on the board is that they invested millions in Google. I sincerely doubt that they do not want a return on that investment (especially with the millions they likely lost when the bubble burst). Google had already sold out long ago.Not that wanting an ROI is a bad thing (that is what make the US economy great). But assuming that a privately held company is any more or less profit driven than a publically held one is a very bad assumption indeed.
I'm intrigued that google is still interestted in going public. Being a public company means that google will be working for the investors rather than doing what google does best.
My guess is that they:
1.go public
2. gets lots of cash
3. Buy back company and privitize after price comes back down.
I also think that google is using the muscle to hopefully make some good changes to Wall Street.
Even when things were good in '97 and '98, Wall Street's actions always looked criminal to me.
Wall Street consistantly ended up giving companies going public only a fraction of the price that the company closed at after the first day of trading.
Why is this a problem?
Well a company going public is essentially selling a % of their company to raise capital.
Let's say we have a company that we are willing to sell 20% to raise $20 million.
To do that, I have to sell 2 million shares at $10 a share.
If the stock closes at $20 at the end of the first day, as the IPO'd company we still only raised $20 million dollars.
If the I-bankers did their job correctly, we could have only sold 10% of the company and still raised the same amount of cash ( $20 million ). Instead, we were forced to sell 2x as much ownership of the company as we should have.
The investment banks pocketed all the additional money. The most common structure of an IPO is that the underwriters purchase all the stock from the IPO company and then sell it from their books as trading occurs.
As I understand it, the biggest task a IPO underwriter performs is evaluating what a share of a stock will trade for in the market. If you look at their historical accuracy of doing this, you'll see how poor a job they do at this.
Why does Wall Street still exist?
Legislation
Look at the effeciency of NYSE vs Nasdaq. No comparison.
Laugh at my ignorance while I learn Rails - a Real ne
The community or the people. Not the rich or the powerful or the corporate or corrupt.
This kind of attitude is indicative of a major cultural and societal problem: the idea that individuals are somehow not worthy, that they're dumb or inconsequential somehow. That only the interests and concerns of the rich, the powerful, the famous, or the corporate really matter.
This makes me sad and angry.
(I know I may burn some karma on this, but it is worth it if I can contribute to putting an end to Everyman's lies about Google.)
Warning: Before modding the parent post, you should know that "Everyman" is the Slashdot alias of Mr. Daniel Brandt, who owns google-watch.org.
I have pointed out many times that google-watch.org is a site full of lies and deception. The reason the site was set up in the first place was that Mr. Brandt didn't think that he got a high enough PageRank, and that his obscure pages about various subjects should rank above other, more informative and popular sources of information on the same subjects. When his obscure site with a page about Donald Rumsfeld did not get a high rank on Google for obvious reasons, he set out on a personal vendetta against the search engine.
In other words, he is not making that site for the good of us all, but to spread FUD about Google. It is a good thing to keep an eye on powerful companies, but this is over the top - it is ridiculous.
Before falling for Brandt's lies and deceptions, please visit Google-watch-watch.org, which exposes his misleading site for what it is.
This latest post on Slashdot is just the latest post in the series of strawman arguments Mr. Brandt is using to try to destroy Google. Also, he still hasn't answered my last reply to him, where I pointed out his hypocrisy, when he complains about how Salon writes a misleading article about him (yeah, right...).
Clever signature text goes here.
Actually, quite the opposite. By staying private they lose the ability to keep the talent on board by issuing those high-valued employees stock in the company.
That's the kind of thinking that killed the tech boom. The way to keep employees is to pay them what they are worth, treat them well, and be honest with them. You may lose the ones that would rather by treated badly and lied to, but you are actually better off without them.
On the original point, you may also lose the potential for unrestrained growth, but (IMHO) this is also a good thing. I tend towards the medical view of that kind of unplaned exponential growth.
-- MarkusQ
This has got to be a Troll.
An employee of Google wrote an article to Slashdot and suggested that Google favors H-1B workers over Americans.
Read the entire post you linked to. Not only are your statements incorrect about the content of the post, but the post was even deliberately written to refute arguments like yours.
The poster you link to states, "I'm not involved in the hiring process at all, and I have no information on Google's hiring policies (except that we only hire really good people)."
The poster stated that when she hired for IBM, that they only hired the absolute best engineers, whether they are American or not.
The poster does not anywhere state that IBM favors H-1Bs or Americans. He/she only stated that when they find an exceptionally good engineer, IBM will go out of their way to do whatever is necessary to hire him/her.
As far as google, the poster says very little, because he/she is not responsible for hiring at Google. But her post does suggest that they also only hire the absolutely best talent, which implies that they may do the same as IBM.
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