Google Chooses An Underwriter For Upcoming IPO

PenguinSix writes "Bloomberg and a bunch of others are reporting that Google has hired Morgan Stanley and Goldman Sachs Group Inc. to arrange its initial public offering. This follows literally years of rumors and stories about a Google IPO. About a third of Mountain View, California-based Google may be sold in the IPO, giving the company a market value of about $12 billion, the bankers said." Google has become so invaluable to many people (like me) that they could probably raise just as much money with a blackmail scheme.

Comments

Google - "Pineapple-Upsidedown-Beans"

[ackthpt]

Buy Google Stock!

I'd prefer to see Google sell shares right over the internet through their website, maybe allow you to buy via an online payment service or other immediate means, such as credit card (with a validation period or something like that to prevent fraud.) I'd probably buy a few shares just 'cause I think they'd look cool in frames and would make great geek gifts! :-)

Google's geek following is strong, it would be a shame if a bunch of suits were owners. Good idea to keep it to only 1/3, but how long will that last?

GOO appears available as a stock ticker symbol.

Regarding blackmail, how so? Hasn't Google already been under the scope for fixing searches? Seems a dodgy thing to do once you're publicly traded, but fine as long as you're privately held.

I want it.

[ActionPlant]

I'd buy some.

Even at the possible 7% mentioned, I'm sure it wouldn't take long to make a lot of money considering how ridiculously well-established google is in so many homes and businesses. One wonders how inflated they could wind up looking though. Could the google stigma raise their own market value above what it will be able to maintain? I guess this is why they're selling that 33% and not 49.

Damon,

They might as well...

[El]

According to silicon.com:A private company must report its finances once it has more than 500 common shareholders - or stock-option holders - and $10m in assets, according to section XII(g) of the Securities and Exchange Act of 1934. That means a private company must file forms with the Securities and Exchange Commission (SEC) each quarter that disclose operating expenses, profits, partnerships, shareholders and many other details - a laborious process that can cost as much as $2m annually.

In other words, since the SEC is forcing them to behave like a publicly held company and publish quarterly reports, they might as well take the money and run -- much as we'd like them to remain privately held.

Who are they planning to buy?

[JonMartin]

Myself and a few co-workers were just talking about this. You see, Google's financials are excellent. By all accounts hey are making serious profits, all while doing R&D and maintaining infrastructure. So why the hassle of an IPO? We came up with two possibilities, one boring and one intriguing.

First explanation, their VCs have decided that now is the time to make some money and move on (markets looking up and such). Boring, but very likely.

Or... Google wants to buy somebody. They see an opportunity to do something big. We thought maybe they want to buy a big media company and become the defacto place to buy digital media. Everybody and their cousin seems to be starting online music stores. Maybe Google figures they can leverage their infrastructure and search market share to sell people music in the same place they search. But just another online music store is also boring. What if they bought MGM? Or a big slice of Vivendi? Music and movies.

Think about it.

IPO == VC Exit Plan

[dhwang]

No necessarily good for employees either. Good for VCs, Kleiner Perkins in Google's case. They'll cash out at IPO. Most employee options have a lockout period where they cannot cash out (e.g. six months after IPO).

For all of you hyping Google's IPO, just ask yourself these questions: Who has the most to gain by Google's IPO? And does that entity have any vested interest in Google's continued success? Seriously, what purpose is there to Google's IPO other than paying off Kleiner Perkins?

This is probably the debate that has been going on inside Google for quite some time now (just my educated guess):

Google: Why go public? We're already profitable; we don't need to raise cash; we don't need to be beholden to stockholder whims. Going public will kill us. Just look at <just about every other internet stock>!

VC: We didn't invest in you to build a search engine. We invested to make a return on our investment. An IPO is going to provide the best return on our investment. The market is ready, dying really, for Google to IPO. We'll make a killing. Don't complain. You can make a bundle too, after your six month lockout ends.

Google: Well, what if our stock crashes before our lockout ends?

VC: That's too bad, but what do we care? We'll have cashed out on Day One.

Financials and dutch auction

[0WaitState]

It will be interesting to see the financials in the prospectus. Everybody "knows" that Google is profitable, but by how much? How long? What are the main sources of income?

Another thought, the smart thing to do would be a dutch auction, where every interested party posts blind bids in advance for lots of stock, with the highest bids being filled first, then next-highest, etc, until all the stock is sold. This means Google gets every penny they should and prevents investment bankers from underpricing the IPO to create a first-day "pop" in share value, where the IB and favored clients get to flip the stock for the difference between IPO price and pop price.

The problem is

[dnoyeb]

Unfortunately once they do this the companies worth will be based on its stock price instead of vice versa. And its stock price will be based on public opinion instead of tangible assets and the like..

Thus, while the original owners will maintain the appearance of control, the value of the company will fall into the realm of public opinion. As a result, in order to maintain company health it becomes necessary to start bullshitting (considering public opinion is based heavily on marketing)...

Et tu Google.