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

Blackmail.. maybe worse...

[grub]

..they could probably raise just as much money with a blackmail scheme.

I was thinking along the lines of:

Dearest Sir or Madam,
Our names are Sergey Brin and Larry Page. We created
Google. This letter may come as a suprise to you
being as we have never met. A mutual friend, however,
suggested we contact you. There is an impending IPO
which will make our firm worth 12 BILLION U.S. DOLLARS
($12,000,000,000). To release this money, we ask that
you join us in a business partnership....

Re:Blackmail.. maybe worse...

[gantrep]

How is it "insightful" to totally ruin the joke by making it painfully obvious what he was referring to?

Re:Blackmail.. maybe worse...

[ctxspy]

Hah..

I was going to post something pointing out how it was ironic that a person with a sig poking fun at president bush would himself also be rather retarded.

Re:Blackmail.. maybe worse...

[Senator_B]

thats a spoof on the Nigerian spam letters, not black mail.

Re:Blackmail.. maybe worse...

[dubiousmike]

"Google has become so invaluable to many people (like me) that they could probably raise just as much money with a blackmail scheme."

They have - its called Froogle and thousands of shady SEOs will be paying them in Adwords.

This is so 5 years ago

[ObviousGuy]

I'd buy that for a dollar!

Re:This is so 5 years ago

[dreamquick]

No, no, no... You buy for $15 dollars and then once the hype wears off and the price has crashed you end up selling for $1 if you're lucky.

Thats the way it worked with my lastminute.com and boo.com shares so that's how it's supposed to work right? :)

(and before you ask, yes I am joking)

Find MCP, MCSE, MCAD and A+ certifications in your local area

Now all we have to do...

[lasmith05]

Is figure out a way us regular mortals to get in on the IPO. :D

Re:Now all we have to do...

[inode_buddha]

Heh, I'm *still* pissed at myself for missing RedHat's IPO. Also Harley-Davidson in 1983, but that's another story. I could have retired by now. For sure Google's gonna be interesting because more people know about it and Wall street is buzzing with it.

Re:Now all we have to do...

[Tibor the Hun]

maybe we could google for it?

Re:Now all we have to do...

[MerlynEmrys67]

Very simple - wait for the first day run up in price, then sell it short like hell... Has worked for every other Internet IPO I have tried (RedHat, Netscape, yada yada yada)

Just kidding of course - they tend not to let you short the stock for a couple months until after the insiders are selling out

Re:Now all we have to do...

[dnoyeb]

Regular mortals will be in on the IPO. Somebody has to pay for the fall.

Re:Now all we have to do...

[hdparm]

Shit. I thought we sorted that one already:

1. Whatever
2. ???
3. Profit

Didn't we?

Re:Now all we have to do...

[bagsc]

In Hambrecht's Open IPO process, you can.

The system goes basically like so:
Everybody and their uncle places a bid.
Bids are taken from the highest price to the lowest price at the end. So bid high, and you'll get in.

If a histogram of bids looks like hyperbola, the lowest accepted bid is k, the shares outstanding n for p percent of the company, and the "market cap" is then nk/p. And the money raised is the area under the histrogram right of k >nk. Sounds egalitarian, but its pretty sneaky actually.

Now all they need to do

[Anonymous Coward]

is weed out the search engine spam links, and we'll be set.

Of course, IPOs have destroyed more companies than helped, in terms of the customer experience, so I'm not counting on it.

IPO: It's Probably Overpriced

[Tackhead]

"IPO: It's Probably Overpriced"

Then again, if offered a chance to buy some, and assuming it's not being done by auction, sure, I'll take some. And I'll flip it the first day. Without shame. Bring it on!

Re:IPO: It's Probably Overpriced

[Nasarius]

"IPO: It's Probably Overpriced"

That would have been funny five years ago.

Re:IPO: It's Probably Overpriced

[Anonymous Coward]

What exactly do you mean by "assuming it's not being done by auction"?

It's being sold on the stock market someone would naturally assume, which is albeit a complex auction; it is what I would categorize as an auction.

What do you think makes the price of a stock go up or down? Essentially when people want to buy the stock it goes up and the more people are willing to pay for it, the higher it goes. When people won't buy the stock for the offered price then it drops until people will buy the stock...

While this is not the Economics 101 definition, I think I speak for more than myself...

-Anticranium

Re:IPO: It's Probably Overpriced

[daveo0331]

Traditionally IPO shares are initially sold at a fixed price, which tends to be below the price it will sell for in the first few days on the open market. The insiders then have a tendency to allocate IPO shares to their buddies, or family, or the bank handling the IPO, or whoever. Therefore people with "connections" can (essentially) get free money by buying IPO shares and then selling them quickly. If you are lucky enough to have access to this free money, it's in your best interest to take it.

Since the Google IPO is being done differently, there's no opportunity for insiders or anyone else to buy shares below fair market value -- buying IPO shares during the auction gives you about the same price you'd get on the open market 5 minutes after the auction ends. Therefore, nobody gets "free money" as is usually the case in IPOs. This allows Google to raise money more efficiently which, incidentally, is the point of holding an auction in the first place.

Re:IPO: It's Probably Overpriced

[Sivaram_Velauthapill]

What do you mean that the Google IPO is being done differently? It seems that they are just like any other IPO. There were rumours on Slashdot before about ebay auctions and stuff but they don't seem to be true. Reading that article, it seems to be a typical IPO.

Assuming that this is just like any other IPO (I think it is), what you said in the first paragraph is how things will work out. Google will sell to the investment bankers, who then sell to the public. It is almost always like this. If the IPO price goes up, Google will not make more money on it (although it is still good for the firm since its valuation just went up).

The reason the insiders get the stock at a fixed price is because it benefits the company. The company gets a fixed amount of financing while the burden is on the investment bankers to sell the stock. If the stock doesn't sell (which does happen--especially to less "sexy" smaller companies), the bankers take the "loss".

Sivaram Velauthapillai

Re:IPO: It's Probably Overpriced

[Iamnoone]

Although it is not perfect, I think that the Hambrecht Open IPO system is a good attempt by one of the most "inside" insiders to reduce the inequities :) of the equities IPO market.

I would be interested in the learned opinions of some of the IANASB's out there.

Thank you and I'll take my answer offline....

I think I'll buy some

[arnoroefs2000]

"On any given day there would be a line of 200 investment bankers that would kill their mothers to get the Google deal,"
said Reed Taussig, chief executive officer at Callidus Software Inc., a San Jose, California based company that plans to sell shares in an IPO.

I think I will be SELLING my mom to buy some stock :)

Re:I think I'll buy some

[psychogentoo]

Is she cute?

Re:I think I'll buy some

[I Be Hatin']

I think I will be SELLING my mom to buy some stock :)

I've had your mom... you better hope they price the IPO under $10...

Re:I think I'll buy some

[Anonymous Coward]

Why would you sell her outright? That's not very smart.

Every smart capitalist knows you make more money in the end with evil RENT SEEKING BEHAVIOR.

Re:I think I'll buy some

[Monkelectric]

I really wouldn't buy GOOGLE stock. Aren't their profits reported to be somewhere in the 200 million dollar a year range? A 12 Billion dollar IPO is designed to do one thing: allow those who issue themselves the stock before hand to become wealthy.

This is another netscape boys, and a sign that the powers that be have decided to cash out on google.

Re:I think I'll buy some

[tekunokurato]

Well perhaps when they release audited financial statements at least 30 days before the IPO, you can determine for yourself what they're actually worth. But I can almost guarantee they're waaaay underscoring the market value with $12- it's standard practice in an IPO, especially a highly-visible one like google's.

Re:I think I'll buy some

[EverDense]

I think I will be SELLING my mom to buy some stock :)

You can't, she was "publicly offered" more than 20 years ago.

Re:I think I'll buy some

[seanadams.com]

Is she cute?

MILF!

Shall we start the bidding at $5,000?

Re:I think I'll buy some

[TopShelf]

$200 million profit on a $12 billion market cap in and of itself points to an absurdly overbought stock. The only thing that could possibly justify such a valuation would be an expectation of rapid earnings growth, of the kind that everybody knew was "right around the corner" in the late 90's...

Re:I think I'll buy some

[HEbGb]

You're absolutely right. But the other thing that justifies a valuation like that is that there are a lot of suckers still out there ready to buy the stock. Several posting on this very board.

It's the same song, folks. Didn't you learn anything in the 90's? Google isn't worth anywhere close to this.

Re:I think I'll buy some

[js7a]

This is another netscape

Except with a reliable, recurring revenue stream, instead of only a few hopeful licensing deals with some Fortune 500 companies.

Re:I think I'll buy some

[11223]

I think you are confused. Valuation has nothing to do with yearly profit - it is possible for a company with a very large valuation to do very poorly, just as much as it is for a small company to make a spectacularly large profit. Valuation is simply reflective of the company's assets minus its liabilities - if I'm sitting on the wealth of Ft. Knox but making a profit of only a buck a year, my valuation is still equal to the valuation of Ft. Knox (assuming I have no liabilities).

Whether Google is actually valued at $12 billion is another matter.

Re:I think I'll buy some

[sql*kitten]

A 12 Billion dollar IPO is designed to do one thing: allow those who issue themselves the stock before hand to become wealthy.

Aye. There are 3 (and ONLY 3) reasons to own a stock:

1. You want a say in how the company is run (which you won't get, because insiders are keeping the majority of the shares)
   
2. You want a share of the profits (and 200M/12B is a terrible return on capital, you would be better off with a savings account)
   
3. You want to sell the shares to a sucker
   

Remember what they say in poker. If you look around the table and you can't tell who the sucker is... it's you.

Re:I think I'll buy some

[notcreative]

Someone thought so, or he'd never have been born.

say good bye

[GoatPigSheep]

Google will cease to be of any use once they have to satisfy a bunch of share-holder's demands.

Guesse it's time to find a new search engine

Re:say good bye

[Coryoth]

Google will cease to be of any use once they have to satisfy a bunch of share-holder's demands.


They are only selling 1/3 of the stock, which means they will be maintianing full control themselves. I think we have much more to worry about from all the people trying to spam googles page ranking system. And even then, they seem to be making some progress with that.

Jedidiah.

Re:say good bye

[Tackhead]

> Google will cease to be of any use once they have to satisfy a bunch of share-holder's demands.

Only a third of the company is being sold. The principals who made Google what it is will retain a controlling interest.

And since they'll have enough money to buy anything they could ever want for the rest of their lives, up to and including sending a probe to Mars, so long as they retain a controlling interest, it's highly unlikely that any price will cause them to fuck up the wonderful thing that is Google.

The management of Google is responsible for seeing to the best interests of Google's shareholders. So long as that team holds 51% of the shares, the interests of Google's geeky management are the interests of the shareholders.

It's called shareholder democracy. You vote what you own. If the thousands of fund managers and people who buy stock in the market (who will, collectively, own 33% of the company) try to change the direction of Google against the wishes of the few dozen founders and managers (who own the remaining 66% of the company), the owners of the company can tell the fund managers to go straight to hell, and there ain't a damn thing the fund managers can do about it.

It's strongly rumored that Microsoft made a buyout offer to Google, and was turned down. The founders of Google aren't in it for the $12B because there's not much that Google does that requires $12B of paid-in capital. They're going IPO to make sure they, and those who helped build the company with them, get a good payday out of it. They built something wonderful, and they're now being rewarded for their efforts, and they're doing so without compromising a damn thing. To all three of those things, I say more power to 'em.

Re:say good bye

[meme_police]

I think you're a little naive about what that 1/3 means.

Re:say good bye

[larry bagina]

like Red Hat and VA Linux?

Hmm, I think you have a good point after all...

Re:say good bye

[iminplaya]

"...the owners of the company can tell the fund managers to go straight to hell, and there ain't a damn thing the fund managers can do about it."

They can take their "ball" (money) and go home. I'm not sure what Google can do after the investers demand their money back if it is already spent on other "investments".

Re:say good bye

[Elwood P Dowd]

the owners of the company can tell the fund managers to go straight to hell, and there ain't a damn thing the fund managers can do about it.

Then what's all this about shareholders suing companies because they don't act in their shareholders' best interests?

Re:say good bye

[Anonymous Coward]

You're naive. That works if there's one person with 66% and the rest of the world with 33%, but in reality, it's more like 33% for the world, 10% for director A, 15% for director B, 20% for director C, etc. All the 33% has to do to get their way is present an idea that C likes too and they are the majority.

Re:say good bye

[FireAtWill]

1/3 is a relatively minor percentage, but could wind up to be a major pain. With that 1/3 comes fiduciary responsibilities, probably external board representation, and government oversight.

I think the key question is: Why? Ashamed as I am to say it, I haven't RTFA, but I've just watched a favorite company of mine pretty much ruined after going public. In this case, they raised a bunch of capital and then just sat on it. It became clear that they never needed it in the first place and then the downsides of being a public company stated to appear. It now trades for 1/60th of its peak and is being taken private again in a much weaker position.

If Google has a plan for the capital, fine. But if it doesn't, this could be very bad.

Re:say good bye

[MadCow42]

>> They built something wonderful, and they're now being rewarded for their efforts, and they're doing so without compromising a damn thing.

Not quite... with a huge payout like that, they're probably setting up a good portion of their key staff to retire. I'm not sure how much that staff is key to the continued success of Google, but it sure as hell was key to them getting to where they are now.

If any of the instant-millionaire-retirees is crucial to the business (continued growth, etc.), then they are compromising something. How much, who knows...

MadCow.

Re:say good bye

[nelsonal]

Keep in mind that Sergey and co. don't own the remaining 2/3, well more than half the remainder is owned by VCs who will be selling as soon as their lockout ends. Float will probably be well over 60% once the selling insiders make their move. I guess this means the market has recovered offically, it will be interesting to see if another bubble forms.

Re:say good bye

[dnoyeb]

1/3 of the companies value, or 1/3 of the available shares will be floated?

Or both?

If they are not floting all the shares, then whats the point, your value will be reduced by 2/3 when they float the rest of the shares considering most people wont be paying much attention until the shares hit the open...

Re:say good bye

[beta21]

You mean like the search term miserable failure.

If are to lazy to look it's dubya's page

Re:say good bye

[dnoyeb]

And since they'll have enough money to buy anything they could ever want for the rest of their lives, up to and including sending a probe to Mars, so long as they retain a controlling interest, it's highly unlikely that any price will cause them to fuck up the wonderful thing that is Google.

The argument that people become good when they become rich is oxymoronic.

Re:say good bye

[YOU LIKEWISE FAIL IT]

If Google has a plan for the capital, fine. But if it doesn't, this could be very bad.

I am told that U.S. companies with more than a certain number N private investors ( 500? ) are required to open the door to all and sundry. I've also heard this is why Google is going to IPO - as a regulatory requirement.

True story? I don't know anything about the US Stock Market.

YLFI

Re:say good bye

[RedWizzard]

You're naive. That works if there's one person with 66% and the rest of the world with 33%, but in reality, it's more like 33% for the world, 10% for director A, 15% for director B, 20% for director C, etc. All the 33% has to do to get their way is present an idea that C likes too and they are the majority.

You idiot. The 33% owned by the rest of the world is even more fragmented than the 66% owned by the current shareholders.

Re:say good bye

[Otter]

Shares will be floated representing 1/3 of the company as a whole. (If the total of shares is worth $4B, the company as a whole is worth $12B.) The percentage of the company represented by a single share doesn't change if they decide to offer additional stock! Otherwise, as you say, no one would buy stock for a partial issue.

Re:say good bye

[odin53]

Google has ALWAYS had to "satisfy a bunch of shareholders' demands." It's a corporation with shareholders. It doesn't matter if the company is public or private; fiduciary duties to shareholders (and the company) are fiduciary duties to shareholders and the company.

The only difference after going public is 1) there will be a lot more shareholders and 2) Google might end up with some significant minority shareholders whose behaviors it can't predict or control. (VCs are a lot more predictable than a random shareholder, if only because VCs usually sit on the board of directors and are otherwise used as close business advisors.) Other than that, the fiduciary duties have always and will always exist.

Re:say good bye

[yourmom16]

That's not spam, it's perfectly relevant to the search.

Re:say good bye

[yourmom16]

The idea is that its in the best interests of the majority of the shareholders.

Re:say good bye

[Sivaram_Velauthapill]

You won't get another bubble... The tech bubble was something special--something rare. It doesn't happen very often. You likely won't see it happening in the tech industry ever again in your life. However, the bubble may occur in other industries (one prime candidate IMO is biotech)...

Sivaram Velauthapillai

Re:say good bye

[Sivaram_Velauthapill]

huh? Demand their money back? What money? If you own a share, you can't ask the company to pay back that in dollars? The investors are not LOANING money. Instead they are buying an equity (ownership). You can't ask for your money back. At best what you can do is to sell on the market and hope that someone else buys it. If no one else wants to buy it, you will end up with ZERO.

Sivaram Velauthapillai

Re:say good bye

[Sivaram_Velauthapill]

Stop callling people idiot...

Anyway, you are right that the 33% public share will be owned by tens of thousands of people. BUT his point is still somewhat correct. The 33% may be fragmented, but they often act similarly and have almost the same interest. For instance, nearly all institutional investors act the same way. If one mutal fund, for example, wants something done, it is more than likely that other mutual funds want the same thing done.

Sivaram Velauthapillai

Re:say good bye

[Elwood P Dowd]

I don't think that flies in court at all.

My understanding was that if an owner of a single share can prove in court that the CEO or board of directors acted in a way counter to the companies charter (I'm sure there are further requirements of poor behavior) then they can sue for damages.

Re:say good bye

[Tackhead]

> The argument that people become good when they become rich is oxymoronic.

Never said they would, only that they could.

To turn things around - the argument that people become evil when they become rich is equally ridiculous.

Goodness or evilness is orthogonal to net worth.

Re:say good bye

[dnoyeb]

If the stock is not liquid enough, floating the rest of the shares will destroy shareholder value. (even if company true value is unaffected)

But when companies start trading stock for assets in other companies, the whole thing gets quickly very messy.

Wonderful.

[vegetablespork]

Now they'll have to "monetize" the search service. Then the pay for ranking results move up and webmasters start blocking the crawler because they charge. And it goes to shit.

Re:Wonderful.

[Coryoth]

Now they'll have to "monetize" the search service. Then the pay for ranking results move up and webmasters start blocking the crawler because they charge. And it goes to shit.

I gather Google does quite well with it's present money making schemes: text ads, and licensing the search technology. They aren't exactly printing money, but they are comfortably in the black from what I hear. As long as it only stays at 1/3 of stock sold and the current people remain in control, I very much doubt Google will have to monetize anything.

Jedidiah

Re:Wonderful.

[vegetablespork]

Hope you're right. But I don't have much faith in the vagaries of publically traded companies. And even if 2/3 of the stock is held by insiders, they aren't immune to shareholder lawsuits and the like from people who don't understand that charging a subscription fee would be like killing the golden goose.

Re:Wonderful.

[jrockway]

Before you know it, they're going to sell ads at the top of the page that come up when you type keywords. Then they're going to add some to the side of the results pages! Then everyone will stop using google because it sucks so much.

Oh wait. They did that, and it works wonderfully. Google is already profitable. They don't need to (and won't) screw themselves with fake results (*) :)

(*) Actually sometimes the results are pretty bad because of annoying people link-spamming things. Like getting Bush's Bio to be the #1 result for miserable failure. Not that I like Bush or anything, but they should have made an I'm feeling lucky search of "George W Bush" go to this site instead. (SAFE FOR WORK, heh)

Re:Wonderful.

[vegetablespork]

The current ads, as you've noted, are text-based and unobtrusive. Under pressure to make the next quarter's earnings numbers, I doubt they'll stay that way. As I said to the other gentleman, I hope you're right.

Re:Wonderful.

[rodgerd]

Public companies are operated in order to maximise revenue quarter on quarter. Google's decision making process around, eg, dealing sanely with revenue streams that would erode long term value of the search engine (selling rankings and so on) will have a head on clash with the requirements of being a publicly owned company.

Ivestment managers don't give a shit if maximising their investment in your company thise quarter has long term repercussions that cause you to go broke in a year's time. By then they will have sold up and moved on to another company. That's the way it works.

Re:Wonderful.

[thrillseeker]

Under pressure to make the next quarter's earnings numbers, I doubt they'll stay that way.

Why on earth would they change something that is working well? If google thought it would maximize their earning to have gaudy ads then they'd already have them - they don't because they have been smart enough to stick to what works and to introduce change after careful analysis.

Google going public and gaining access to significant cash while the present proven managment and relationship to the public is allowed to remain will give the company great maneuvering room to make the search engine that much better.

This is a good thing for the company and for their users - the people that worked hard will be well rewarded - the users of the search engine are more than likely to see more improvements in the future.

Re:Wonderful.

[gcaseye6677]

Once Google starts showing banner ads, popup ads, screen covering ads, and other MSN-like junk, they will have completely lost their competitive advantage. Any company with a little spare cash can make a search engine, but google is what they are because people generally like using it since its fast, effective and trouble free (minus the link spams of course).

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.

Re:Google - "Pineapple-Upsidedown-Beans"

[larry bagina]

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

There are a lot of SEC type problems with that sort of scheme. Being practical, most investors are institutional, mutual funds, etc, not geeks that might buy 1 share. If you want, there are various services that will sell you 1 share, but it usually costs $25-$50 to have the share issued to you.

Regarding blackmail, how so?

Maybe timothy doesn't want the whole world to know what phrases/images he searches for at 3 AM?

Re:Google - "Pineapple-Upsidedown-Beans"

[mumblestheclown]

I'd probably buy a few shares just 'cause I think they'd look cool in frames and would make great geek gifts! :-)

ah, idiot investors--the boiler room of modern economies. Once thought extinct after 1999, it seems they were just hiding. And I don't mean the garden variety idiot investor that ran from stocks to mutual funds because they were 'safer'--I mean hard-core idiot investors who yearn to buy stocks online!

Unless, of course, the parent post was entirely in jest.. but i dont see any evidence of that.

Re:Google - "Pineapple-Upsidedown-Beans"

[Lord_Dweomer]

"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.)"

On that note, does anybody know if Google tends to offer some form of DRiP (Divident Reinvestment Plan) or something similar where you can buy shares directly from the company instead of through a broker?

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,

Re:I want it.

[Coryoth]

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.


Unfortunately high usage does not immediately equte to high revenue. Not that Google is doing badly - I expect they do quite well with the text ads and licesing the search technology, but neither of those represent massive revenue generators. What Google hopefully gains from its ubiquity is stability - hopefully we can expect it to be solid, and around for sometime.

Well, we hope we an - there are always plenty of new search engines in the wings (though the ones posted today certainly both sucked).

Jedidiah.

Re:I want it.

[ActionPlant]

Unfortunately high usage does not immediately equte to high revenue.

Very true. I have a feeling though they're counting on that geek factor to carry them through any potential tough times (like perhaps a downswing after some fast initial sales). The trick now is to simply stay true to their roots. Don't worry about impressing investors. It was those decisions from the gut that got them where they are today.

Damon,

Re:I want it.

[psyence_phixion]

About the 'new search engines in the wings'. I read in Business Week recently that Yahoo has been buying up smaller search engine companies and plans to challenge Google soon with their own version.

Re:I want it.

[kaisyain]

considering how ridiculously well-established google is in so many homes and businesses.

Yep, just like altavista. Business changes, you can't be "sure" of very much. That's why there is this thing called "the equity premium". Even Google has it. If it was a sure thing they would make a lot of money you would get the risk-free rate of return on your google stock, which isn't going to make you a lot of money.

Re:I want it.

[HEbGb]

Right on. Google isn't any more stable, in essence, than any of its predecessors. They're just as vulnerable. Look at what happened to CMGI (AltaVista). It's going to happen again.

There are so many suckers out there it's amazing.

Please stay private...

[GuyMannDude]

Is there anyone else here who is thinking that having such an invaluable internet tool now subject to the whims of public investors is not such a great thing? I would have rathered that Google stay private forever. That way they can make decisions based on what they think is best, not what will increase their stock price the most next quarter.

GMD

Re:Please stay private...

[davejenkins]

hat way they can make decisions based on what they think is best, not what will increase their stock price the most next quarter.

Fortunately, those are one and the same most of the time. If a company cannot make money consistently, it will go out of business, and thus fail itself, its employees, investors, and customers.

If Google-- or any public company-- makes a mistake, its stock price will drop, middle managers will get fired, and the company will (hopefully) learn and do better.

Private companies often fall to the whims of the owner/executives, and no one can stop their madness or kooky schemes. Private companies are more apt to fail from poor execution because there is no check or balance (execs delude themselves that they know best).

Re:Please stay private...

[Saeger]

I'm guessing a lot of people are thinking that. But knowing Google and their "Don't Be Evil" motto, the downward greed spiral should be much slower than most.

Anyway, Google won't last forever, IPO or not; I still think distributed search will win in the end.

--

Re:Please stay private...

[jmoriarty]

I would have rathered that Google stay private forever. That way they can make decisions based on what they think is best, not what will increase their stock price the most next quarter.

Nice, but not realistic. Google has come to thrive under our glorious capitalistic marketplace that rewards entrepreneurial efforts. People who have the fire in their belly to sweat and claw to build the #1 search engine on the Internet are rarely the sort altruistic souls who will suddenly stop short of fully reaping their rewards to keep their endeavor "pure". Give them props for proceeding carefully and not selling off the whole company, but don't expect much more than that.

It reminds me of people who say "If I had as much money as Bill Gates, I would stop working", to which I always reply "And that is why you will never have as much money as Bill Gates."

Re:Please stay private...

[miyako]

Google won't last forever

*makes a face like a child who first hears that there is no santa clause*
b-b-b-b-but google is my friend

*runs away crying*

Re:Please stay private...

[reidbold]

The stock market is not about making a profit, that isn't good enough. There needs to be ever raising profit for the stock to grow. Which is where the problems everyone is worried about are coming from.

Re:Please stay private...

[EastCoastSurfer]

There needs to be ever raising profit for the stock to grow.

Exactly. Stock prices represent possible future earnings. Growth is key. We all know that Google is a great search engine, but what are they going to do to continue to grow earnings 1/5/10 years from now?

I, for one, google our new morgan stanley overlord

[billstewart]

Google got about 1,270,000 hits, starting with the correct www.morganstanley.com, so I feel lucky about that.

12 billion dollars for Google, though? Yowza.

Probably a solid investment

[Wingchild]

While it's been our experience that a lot of tech companies run IPOs for fast cash and then wind up dying shortly afterwards (think of the dot-com bubble bursting), Google is more like investing in your infrastructure; it's an invaluable tool used by a huge segment of the net-aware population, and thus is probably a very safe bet.

For contrast, you can ask yourself how badly those investments in Yahoo! turned out, years after they started themselves as a category-based alternative to the search engines available in the mid-90s.

Who knows..

[phaetonic]

For those who remember how crazy the IPO prices were back in the dot come era, do you think google's IPO will be as crazy as, lets say, RedHat? I can't even recall the last IPO I've heard about.

Re:Who knows..

[jasonditz]

China Life is the last one I heard about...

Google to be sold online

[Matrix2110]

I have heard that they are going to selling shares on E-bay. I have alerted my E-bay friends.

Hmm

[mgcsinc]

Anyone have any idea about the validity of the earlier rumor about the IPO taking place with an online auction-type offering? This is what had always intrigued me about this potential IPO - it would seem to open up the possibility of early investment to the average Joe and I bet it would guarantee a pretty penny for Google...

Re:Hmm

[Tackhead]

> Anyone have any idea about the validity of the earlier rumor about the IPO taking place with an online auction-type offering? This is what had always intrigued me about this potential IPO - it would seem to open up the possibility of early investment to the average Joe and I bet it would guarantee a pretty penny for Google...

I've heard nothing either way.

Note that if it's done traditionally, there'll likely be a huge opening pop. GS and MS will price the shares high, but there'll be enough retail investor demand (read: "sucke^H^H^H^H^Hpeople like you") to push the price to stratospheric levels at the opening bell. That's good if you've done enough business with the underwriter that you're allocated shares. It kinda sucks if you're the retail investor, and it really sucks if you're Google, because you didn't get all the cash you could have. You got $12B, but the market (however irrationally) priced your 33% stake at $20B. That's $8B you left on the table.

The auction is the other way to play it - there's no opening pop (ideally), and Google gets every penny of the (irrational) price the bagholder^Wretail investor's willing to pay for part of a 33% stake in the company. That could mean more underwriting fees (7% of $20B versus 7% of $12B) for GS and MS too. It's fantastic for Google, but it really sucks to be the bagholder.

Rule of thumb: If every average Joe can get a piece of a "hot IPO", it's not a hot IPO. Google may be an exception to this. If the IPO is done traditionally, and I had an opportunity to buy shares at the issue price, I'd give my left nut for the opportunity to piss off my broker by flipping my shares in the first few minutes of trade. As a retail investor, however, I would not choose to participate in an auction process.

As always, this ain't investment advice. Do your own due diligence. Whatever your decision, good luck, and good trading to you.

And turn down 12 billion?

[g00bd0g]

riiiiight. I mean altruism has it's place, but no-one on this planet can resist that kind of cash.

Re:And turn down 12 billion?

[Flumph]

And more importantly, why would you want them to? Do you hate money, or think that the Google founders should?

The stock price fluctuations that are inevitable will only matter to the current stock owners if they choose to let them. If they're getting a $12B market cap, they'll have "fuck you" money; they'll be able to make whatever decisions they think best.

Have some faith, man.

Flumph

Re:I, for one, google our new morgan stanley overl

[ackthpt]

Google got about 1,270,000 hits, starting with the correct www.morganstanley.com

Probably 75% by black suits at the SEC.

Re:Suck.

[GuyMannDude]

I can't see how an IPO is good for the company. Good for the employees, but not good for the company.

It's a one-time huge infusion of cash into the company. That money can be used to purchase equipment and hire new employees. So there can be plenty of good for the company.

The bad news is that you have to sell your soul to get the money. As I mentioned above, you are no longer in complete control of your destiny. I'm worried what will happen to google. Did they really need the money that badly?

GMD

Blackmail OF Google, perhaps?

[Ying Hu]

Is there anyone besides me that thinks this might not be such a Good Thing? How long will Google remain good with [some unknown number of] rich investors snapping constantly at their heels to make PROFITS!, PROFITS!, PROFITS!

Might be time to begin comparison shopping on just how well the other search engines do their jobs.

This is going to get ugly.

[SexyKellyOsbourne]

Google is already employing many unscrupulous tactics -- just see how they ruined this guy's website here, for example:

http://www.google-sucks.org/

They're also blocking out blogs in favor of commercial sites, not to mention the spamvertising, blatant manipulation of searches, and the introduction of the google toolbar spyware.

But that's just the beginning. When a significant portion of the company is no longer controlled by the founders and their vision, and is co-opted by a greedy, profit-driven board of directors, things are going to get much worse. Instead of being a fair and useful tool for the community, all the creators will care about is monopoly and money.

Google, welcome to the wonderful world of turbo-capitalism.

Re:This is going to get ugly.

[geogeek6_7]

That guy's site was unpopular, and now he is mad about it. Most of it can be attributed to his whiny attitude and immature approach to life. Google requires your site to gain popularity through channels other than itself.

Re:This is going to get ugly.

[Bert690]

Hah.. the fact that this site is the first hit on Google when searching for "google sucks" pretty much defeats his entire argument.

Google Sucks Search on Google

Re:This is going to get ugly.

[Animaether]

Oh please. Where've we seen *that* before ?

Before somebody else does it :
http://www.google-watch.org/
http://www.google -watch-watch.org/

The first is from an equally pissy person complaining about not being ranked where they would like to be, and the latter is somebody telling the first "tough shit".
The google-sucks.org person is in the same situation, and I must say that their "we have proof" (and subsequently not showing us that proof) hasn't instilled any level of trust in their story with me.

On blocking blogs - can you say "GoogleBomb", and even just the natural skewing of results thanks to blogs ? If I ran a search engine, I'd block them from the main results too. I would also check into a Blog-specific search. What's your problem with that ?

Spamvertising - Google added ads. So what ? Are they in-your-face ? Are they flash-based ? Are they obnoxius ? Are they difficult to recognize ? The answer to all is 'no', which you can't say for a whole lot of other search engines. Not to mention that I -have- actually clicked Google-served ads because the ads are dynamically loaded based on the referring page's content.

Manipulation of searches is blatant ? Well excuse me for liking that they manipulate search results to keep things, for the most part, fair. Maybe they have a hidden agenda - I wouldn't know. But if AssCorp decides to syndicate their store-content so that whenever I search for a particular product, I get 200 pages of different 'vendors' all serving up the exact same content and linking to eachother, then I 'm all for Google saying "Hey now - that shit looks a lot alike, maybe I'll bump down the ratings there some."

As for google toolbar 'spyware'. Whatever ?
This doesn't ship with some other application where you get tricked into it. You have to actually download it yourself. Then when you install, you get fully warned about what the Pagerank and the like options will do - send back information to Google. If you don't disagree with that, then either A. disable pagerank (and other features that cause information to be sent back) or B. don't install the Google toolbar.

As for what an IPO will do to Google - we honestly can't tell. Yes, it's easy to think that they'll cave in to demand from the public shares holders to allow rankings to be bought so that their shares go up. So what if that happens ? Is Google to blame for that - or the greedy public shares holders ruining things for the entire rest of the population ? Think about that for a minute.

Regardless.. there's other search engines. You don't like Google ? good for you - use a different one, and quit whining.

Re:This is going to get ugly.

[198348726583297634]

now watch as all leap to google's defense. it seems our critical judgment facilities go out the window when google or linus is on the line - thinking is replaced by blind love!

Re:This is going to get ugly.

[curunir]

Please...I see this all the time.

Whenever I mention Google to friends who have a website, the reaction is always the same, "Oh yeah, I love Google. I find almost always find whatever I'm looking for on the first attempt. One thing that bothers me...my site doesn't show up very highly. Is there something I can do to get it higher in the rankings?" Anyone else see the disconnect?

Face it webmasters...Google is not your friend. Websurfers are your friend and Google is their friend. Please web surfers and Google will reward you. But if you don't put content online that people want to browse to, don't expect Google to link to it (unless you buy a text ad, but how dare they think that a webmaster should actually pay to promote their site!)

Re:This is going to get ugly.

[yeschat]

sorry about your problems with google, but you seem to list a lot of your own predictions in your comment...and anyways even if you did have some facts from the future like you say, i'm still using it. looks to me (from your nice url) like you are more interested in switching people to other search engines.

sorry i don't mean to troll i really don't, but your little problems shouldnt ruin google for the rest of us. you are not going to take down google from your basement or that url. if you ask me protesting anything with a site that includes soandso-SUCKS.com/org/net sure as hell won't get my support. grow up. whoever modded up your comment as interesting must like the future a lot too.

oh and we all know search king was crap btw so dragging up that in your "examples" won't help. did you used to work for search king or something?
we will see if google sucks once it's bigger but quite frankly i doubt its going "suck" :) cheers!

Re:This is going to get ugly.

[happy_place]

Now that I've read about How Google sucks, I want to buy Phentramine(sp?) from this guy... because I feel sorry for him... ;-)

Re:This is going to get ugly.

[Tony-A]

Face it webmasters...Google is not your friend. Websurfers are your friend and Google is their friend. Please web surfers and Google will reward you.

Therein lies the value of Google.
If, when, to the extent that (insert your favorite weasel words here) the technology can be applied to a corporate intranet, there should be some extreme value attainable. Google's bias and integrity are essential for this.

Stupid move

[bitty]

The second they go public, they start their downward spiral into mediocrity. They will be subject to the rule of money for the investors, and to hell with what's right or good or innovative. They won't even be able to take a dump without permission. Stupid, stupid move.

Re:Stupid move

[swordgeek]

First of all, they're already going to be forced to pay for being a public company, so they might as well make some money from it.

Secondly, they're selling significantly LESS than majority ownership in the company, which means the same people will call the shots. The only thing that will change them, is if the call of money becomes too strong for the people who brought the company this far.

Re:Stupid move

[bitty]

The only thing that will change them, is if the call of money becomes too strong for the people who brought the company this far.

Do you honestly think they're going to stop selling stock once they see the feeding frenzy that will be their IPO? As soon as they see that they can become instant billionaires, it's all over.

Re:Stupid move

[zcat_NZ]

Google has already lots their edge.

Despite the much-touted 'pagerank', they've had real problems with people making linkfarms and even more trouble with blogger googlebombing.

Trying to combat this has resulted in glitches where thousands of perfectly good results vanish on some queries. But they won't take the (quite obvious IMHO) step of providing a blog-related filter, which would surely be easier to impliment than their existing adult-content filter.

They haven't updated google images for well over a year.

They used to source google diretory from dmoz, but they haven't synced them for close to a year.

They're still far ahead of most other search engines, but nowhere near as good as they used to be :(

Re:Stupid move

[Scareduck]

They are being nudged in towards an IPO anyway by security laws. The reason is that they have over 500 shareholders, which means they have to perform $2 million worth of paperwork each year anyway. It's not a overwhelming task, but it is one factor.

Re:Stupid move

[evilviper]

They will be subject to the rule of money for the investors, and to hell with what's right or good or innovative.

One thing you don't seem to consider, is that they are only selling-off 1/3rd... That's right, share-holders can vote, but they can't win on their own. They can't force anyone's hand, unless many of the private owners also want to go the same way.

For the work impared

[Araxen]

Morgan Stanley, Goldman Sachs to Manage Google IPO (Update1)

Jan. 5 (Bloomberg) -- Google Inc. hired Morgan Stanley and Goldman Sachs Group Inc. to arrange its initial public offering, a sale that may raise as much as $4 billion, a banker involved in the transaction said.

Morgan Stanley and Goldman Sachs will lead a group of underwriters that includes Citigroup Inc., Credit Suisse First Boston, J.P. Morgan Chase & Co., Thomas Weisel Partners LLC and WR Hambrecht + Co., two bankers in the sale said. They spoke on condition they not be named.

The sale by Google, the world's most used Internet search engine, would be the biggest IPO since CIT Group Inc.'s $4.87 billion deal in July 2002. It ``will certainly be the deal of the year,'' said Sanford Robertson, who founded San Francisco-based investment bank Robertson, Stephens & Co. before starting private- equity firm Francisco Partners LP.

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. The company will probably register the shares for sale with the Securities and Exchange Commission this month and sell them by April, they said.

Google spokesman David Krane, Morgan Stanley's Melissa Stonberg and Goldman Sachs spokesman Andrea Rachman declined comment. Citigroup spokesman Duncan King, CSFB spokesman Pen Pendleton and J.P. Morgan spokesman Brian Marchiony declined comment.

Thomas Weisel Chief Operating Officer Blake Jorgensen and Hambrecht spokeswoman Sharon Smith didn't return calls seeking comment.

Fees

The fees generated from Google's IPO may be as much as $280 million if the company raises as much as $4 billion based on a 7 percent fee. Fees for IPOs in the U.S. are the most lucrative in the securities industry at between 6 percent and 7 percent compared with about 0.9 percent for corporate bonds and about 0.3 percent for advice on mergers and acquisitions.

``On any given day there would be a line of 200 investment bankers that would kill their mothers to get the Google deal,'' said Reed Taussig, chief executive officer at Callidus Software Inc., a San Jose, California based company that plans to sell shares in an IPO.

IPO History

Morgan Stanley has taken public at least six companies backed by Kleiner Perkins Caufield & Byers, one of Google's venture investors. Those sales included Netscape Communications whose August 1995 IPO ushered in the Internet boom.

Goldman Sachs has arranged IPOs for at least four companies backed by Sequoia Capital general partner Michael Moritz, a venture investor in Google. Those sales include Google competitor Yahoo Inc., Webvan Group Inc., PlanetRx.com Inc. and Etoys Inc. Goldman also arranged the IPO of Google rival Ebay Inc., which has a market value of about $42 billion.

Google's Internet site is the most-used in the world for Internet searches, according to research firm ComScore Networks. Google was used for 35 percent of Internet searches by U.S. users in October, ComScore said.

Google's search results are also available on other companies' Web sites, including Time Warner Inc.'s America Online, which pay Google licensing fees.

Google generates most of its revenue from a service known as sponsored-search advertising. Customers pay Google for the right to have their Web sites come up at the top of search results on terms related to their business. Those search results are set off in colored boxes and labeled ``Sponsored Links'' to distinguish them from those businesses haven't paid to influence.

Google probably had revenue of about $1 billion in 2003 and net income of about $200 million that will increase to about $1.5 billion of sales and net income of $300 million in this year, according to Eric Martinuzzi, an analyst at Craig-Hallum Capital Group in Minneapolis.

``Any Internet site who wants to create revenue uses Google,'' Martinuzzi said.
Last Updated: January 5, 2004 15:40 EST

Re:For the work impared

[captaink]

work impared? it's not like it is a n0rp site..

Dammit Google, I love you

[eclectro]

Dear Google,

I have been seriously evaluating our relationship, and I've concluded you are not offering me what I need to be happy. I feel it is time for me to move on.

Yes, I know it's hard. We did have some good times together. Remember those times when you had "beta" in your name? Then came the time you bought and saved the Dejanews archive. I will always admire you for that. Then there was the time you added News search and Froogle. And all those times that you put those funny little cartoons in your name on holidays and on the birthdays of famous artists? Ahh, those were the days.

But those days are gone. Lately, you have been neglecting my needs as more and more results are being skewed by "link farming."

Then your eyes started to wander, and you started to pursue this illicit "shareholder love." You were wooed by this new lover that had a big wad of cash in his pocket.

Dear, no person can serve two masters: for either he will hate the one, and love the other, or else he will hold to the one, and despise the other. There are just too many search engines piled on the heap who whore out search results to the highest bidder. They think that they will never be caught, but eventually they are always found out.

You are just scaring me too much for me to take it anymore. I think it's best for both of us to find some therapy and move on.

Love,

eclectro

Re:Dammit Google, I love you

[Amadan-Na-Briona]

Honestly, who modded this insightful?

Law of nature

[$exyNerdie]

It is the law of nature that no one can keep a lead for ever. Bigger/better always comes along and looking at recent news coverage (it was posted on here too), Google might hasten the plans of going public before the next google shows up.....
But maybe I will still buy some if I had the money to spare...

Buying and selling and IPOs, Oh My

[carlcmc]

Now is the time to sell some of my NVDA thats been in the doldrums and buy GOO!

This has the potential to make a ton of money if you can get in. I bought and traded NVDA a bunch in the ipo and during the time the news came out they were being put in the xbox. It was easy making money when the stock would swing 10,20,50 points.

Oh and before the other posters get it---

"I for one welcome our new google overlords"

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.

Re:They might as well...

[Elias Israel]

much as we'd like them to remain privately held

What, do you object to the workers owning the means of production?

Re:They might as well...

[evilviper]

What, do you object to the workers owning the means of production?

I think what everyone objects to, is that, once a company is pulicly held, the faceless mass of stock-holders will do damn-well anything to make a penny. So, if clogging Google's pages with billions of ads is shown to be profitable on a chart, then the mass of stockholders will vote to do it.

I dare say, all the best companies are privately held.

Of course, Google is not trading the majority of their stock, so it's entirely likely that the private owners will maintain control, and Google will continue in the same fashion it always has... Of course, that's just the best-case senario.

They're only selling 1/3

[astrashe]

They're only selling a third of the company.

The current owners will have absolute control, and won't have to follow the whims of anyone else.

Re:They're only selling 1/3

[GuyMannDude]

They're only selling a third of the company.

The current owners will have absolute control, and won't have to follow the whims of anyone else.

That only works if the current owners always vote together as one entity. I doubt there is company that has ever put up more than 49% of their stock in an IPO. They always figure that they have 'absolute control'. But things never stay that way indefinitely.

Going public basically takes power out of the hands of employees and private investors, who probably care about the long-term health of a company, and puts it in the hands of the public (including market timers and mutual fund managers) who may not care what the hell happens to the stock price two quarters into the future.

GMD

Re:They're only selling 1/3

[pyrrho]

no, when you go public you have to follow public accounting procedures and the CEO is BOUND to do what's best for the share holders... such as sell the company to a high bidder, etc.

The owners will still have deciding votes, but there will also now be public influence from the investor community, with some legal muscle to insist on certain things.

Re:They're only selling 1/3

[ir0b0t]

Yes and don't forget regulation by the SEC with associated costs and duties.

Re:They're only selling 1/3

[__aaevmb228]

They're only selling 1/3 in the IPO. That doesn't stop the VCs and insiders from exercising and selling their options. The primary motivation for an IPO is often because the early investors want to cash out and get a return on their investment. The employees will certainly be dumping some shares in the name of diversification, too.

It won't happen immediately, but in time more than 50% of the company's stock will be available on the public markets. Go look at Yahoo. Look at the percentage held by insiders. The rest is available on the public market and you could buy it all, given enough time and money.

Re:They're only selling 1/3

[nelsonal]

If you want to retain ownership, but still raise capital you can always keep super voting stock. Ford, Comcast, Liberty Media, Viacom, and a whole host of other companies maintain very tiny holdings of the public stock, but will remain family owned basically forever.

Re:They're only selling 1/3

[bareminimum]

Until the current owners start selling shares or end up fighting with each other and a few of them use the public's 33% to get control.

In the long run, it will only require 25% of the shares to control a large company like Google. See for yourself how this is done in other big companies.

Don't forget that some of the current owners will want to cash out, and that will make the 33% public shares go even higher.

You guys are SO optimistic it makes me sick.

Ticker Symbol

[ghettoboy22]

The article doesn't list the planned exchange for the trade of Google Stock, but how'd you like to have the ticker GOO?

"I'll take 20,000 shares of GOO please!"

Common... it SOUNDS funny people!

$12 billion?

[nuggz]

Uhh what makes google worth $12 billion dollars?
Unless they have hundreds of millions in profit, you're better off buying a bond.
I don't get why it makes sense to buy google.

Re:$12 billion?

[nuggz]

Do you have a URL to their filings?
Will it hold up? Is it real or paper profits?

Re:$12 billion?

[ir0b0t]

That's the question on my mind. How much more can be done with google? And/or how much more can be done for $12 billion? I think of the so-called dot.com bubble and RJR-Nabisco, AOL-Time Warner and wonder whether this IPO is such a great idea -- whether as an investment or for the good of google. I'd be more jazzed if their mgmt decided to run google more like Linux.

Re:$12 billion?

[bagsc]

$200M growing 20% a year isn't worth $12B, considering how fast technology changes, Google will be mature within 5 years. 1.2^5 (200M) /12B = 4% ROI maybe? But how much is it worth to Microsoft, Time Warner, USAInteractive, or Yahoo!? Probably still not that much.

I don't think the market cap will be that high. $6 billion is still speculative, and it really doesnt deserve all the attention its getting unless they can actually create phenomenal growth for a long period of time.

Laughably overpriced

[GebsBeard]

The Google IPO, if the pundits are correct, is good for one thing and one thing only, at least from my perspective: jumpstarting the next technology IPO boom. I really don't give a damn about Google so much as I care about being able to unload the stocks that I'm still holding from when the tech bubble burst a few years back. The companies I picked are still largely sound (INTC, SUNW, ORCL, etc) but they've taken a beating along with everyone else during the economic downturn. If Google bootstraps another round of overpricing on the Nasdaq maybe I can bail out of the whole stock market scam and still keep my shirt.

Re:Suck.

[Cyno]

I can't see how its any different than the partnerships google has already made. Its search quality has declined in the last few years, IMO. And I bet it will continue to decline as money become more important to the organization.

Blackmail unnecessary

[lurker412]

I don't know about you, but I would certainly pony up 10 bucks a month if Google switched to a subscription model. For me, it is the most useful site on the Web. I sure hope the new corporate overlords don't screw it up.

Re:Blackmail unnecessary

[vegetablespork]

I wonder how many offices would buy a subscription and then proxy the queries through the machine with the subscription cookie. An all-you-can-eat subscription scheme would thus be DOA.

Another horrific possibility is a loose-knit farm of meta-Googles caching frequent searches (e.g. "Britney naked").

Re:Blackmail unnecessary

[/dev/trash]

You say that now, and so do a lot of others but if tomorrow Google started asking, you'd be suddeny be broke.

Re:Blackmail unnecessary

[lurker412]

There must be many ways of dealing with this. Otherwise subscription sites wouldn't exist. No reason it has to be all-you-can-eat. A simple approach would simply meter the number of queries and bill accordingly. Or tiered monthly maximum queries. I'm sure you could come up with a number of workable approaches if you were asked to.

Re:Blackmail unnecessary

[lurker412]

I'm broke now. I'd still pay.

Re:Blackmail unnecessary

[ddent]

I would suggest that they earn a good deal more than $10/month from many of their users' activities...

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.

Re:Who are they planning to buy?

[captaink]

you certainly do have some interesting ideas

Re:Who are they planning to buy?

[valmont]

They could also be looking to buy an ISP. Google is an on-line destination. What brings people to Google? ISPs! EarthLink looks like a good candidate. Both companies seem to have similar philosophies in terms of striving to give their users what they need.

Re:Who are they planning to buy?

[jacoplane]

Other potentials: Amazon, Ebay? I could imagine those companies having similar company cultures to Google, which always helps with mergers&acquisitions. The big media deal seems unlikely to me, especially looking at what happened to AOL, which swallowed Time Warner only to emerge as ... Time Warner. I think if Google swallowed a very big company the "thing" that makes google google could easily get lost.

Re:Who are they planning to buy?

[bagsc]

The answer is definitely not a media company. Media is very expensive, a totally different business, and in the information age, it's a damned business model.

More intriguing would be a new business model they need big cash to develope.

But the truth is the VCs want cash. Thats how VCs get money to give money to new Googles, so they can find a couple they can sell. They're betting Google's glory days are today, not tomorrow. They have to cash out at some point.

Be Careful: Use Buy Limit Orders

[G4from128k]

If you do buy Google on day 1, don't use a market order (especially in the first minutes). If the IPO becomes a feeding frenzy, you could easily end up paying 2 or 3 times what you expected (and yes, your broker WILL hold you to that price, no matter how bad it is). Instead, use a buy limit order to ensure that you pay no more than your target price for the stock. With a limit order it is possible that you will get no shares (if the stock blows past your price). On the other hand, you are ensured that you won't get shares at some outrageous price.

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.

Re:IPO == VC Exit Plan

[odin53]

[KPCB will] cash out at IPO.

Very not likely. VCs in a VC financing will always subject themselves to a 180 day lockup after an IPO, and in any case, the underwriters in an IPO always demand that every securityholder be subject to a 180 day lockup.

Re:IPO == VC Exit Plan

[fair_n_hite_451]

As my own company goes through this same process (and I'm hoping we get out there before the 10 ton elephant that is the Google IPO hits the market and soaks up all the cash) I can tell you that only VP-level and above are subject to the six month lockout.

The line level peons are not subject to the same restriction.

In fact, the company founder resigned his position from the board -- which was a good thing anyway -- so that he would not be subject to the restriction on cashing out.

Why I don't like this - IANASB and idea

[teamhasnoi]

First, I'm guessing that a upper-lowerclass $$$ maker such as myself will not be able to buy any stock. The price will most likely be prohibitive, and access will be tough (my prediction). (50+ bucks a share??) I don't know, as IANASB (I Am Not A Stock Broker). Then, with a zillion shares out there, how can the price go up as...

Google's results have been biting the big-internet-searching-cock-in-the-sky recently, and I haven't seen much improvement. Linkfarms and blogs are wrecking the results.

I recall when Google was invaluable. Now its just valuable.

Add to this the dreaded 'shareholder effect', where hundreds of thousands of people who want Google to make them money over returning good (uncluttered, accurate, non-paid) results will destroy what value is left.

How about a distributed, open source web spider. While you are not using bandwidth/PC, this app spiders pages for you and shares (P2P-style) the results of searches.

Some encrypted? files are stored on your side, (ala Freenet - to prevent gaming of the system) and querys are sent just like a p2p search.

Yes, it would be slower, yes, IANAP (not a programmer), but it sounds like it could be a workable solution to search engines becoming corporatized and worthless.

Re:Be Careful: Use Buy Limit Orders

[pvt_medic]

eh what will happen is the stock will fly high on the first couple of days. then settle down. so buy low then sell. Simple enough.

Re:Don't forget...

[Anonymous Coward]

Actually, given the number of computers Google has running pirated SCO code, their total license fee will be much higher than that.

Flushing Credibility down the toilet

[KalvinB]

I'd almost feel sorry for the guy if he didn't post that rediculous SearchKing lawsuit as though it boosted his case.

Search for "driver library" with or without quotes and I'm number 4.

I certainly didn't pay for that. And I don't have friends in high places.

Google didn't put him out of business. He put himself out of business by apparently not being good enough to get word of mouth advertising and by apparently not buying advertising for his company.

If his company was really that spectacular, his customers wouldn't have flocked to the competition. The reason he failed was because his company was just not good enough when put under stiff competition.

And as for "lying" about how to get a high rank. No kidding. Google doesn't publicize that information for good reason: people like Spam (er search)King abuse the system and then people like him whine when the system they took advantage of is no longer there.

And last I checked people are allowed to give favors to friends. It costs lots of money to run a web-site as popular as Google. Google is not surprisingly doing a balancing act between favors for money and fairness.

Make your site and just be happy with what you get and stop trying to inflate your rating with little tricks.

Ben

Re:Flushing Credibility down the toilet

[PCM2]

And as for "lying" about how to get a high rank. No kidding. Google doesn't publicize that information for good reason: people like Spam (er search)King abuse the system and then people like him whine when the system they took advantage of is no longer there.

I don't think Google has ever done anything to conceal how PageRank works. If you're in the dark, let me point you to the September 2001 issue of Web Techniques magazine (later known as New Architect), where I interviewed Google's CTO, Craig Silverstein, on the subject:

WT: So how does PageRank work?
CS: It takes advantage of the fact that the Web has links. We can use the Web's link structure to get a quality score for every page on the Web. If a lot of high-PageRank pages point to your site, then your site also gets a high PageRank. PageRank wasn't developed for Web search, actually. But when Larry Page, the developer, started studying it, he discovered that the PageRank of a page corresponded closely to his intuitive idea of the quality or importance of a Web page. Intuitively, if Yahoo, the New York Times, and the maintainer of the most popular Barbie Doll site all link to your Web page--I won't try to guess what your Web page might be about--that reflects well on your page. From that observation was born the idea of using this quality score as part of a search engine ranking system--an idea we feel has been very successful.

So basically, your page's rank depends not only on the quantity, but also on the quality of the links you receive. You can spam your own Web address over a thousand low-ranked pages and not have too much effect. If your site is linked to on the New York Times Web site, however, that's bound to make Google's spiders take notice. In a sense, Google's system is therefore somewhat self-policing. This guy's site (which sounds like some sort of online pharmacy site -- read: cheap viagra and penis pills) probably didn't rank very highly for totally legitimate reasons.

To further demonstrate Google's impartiality, try doing a Google search for either "google sucks" or "google blows." Two seemingly contradictory phrases, and yet the guy's site shows up top ranked every time! (grins)

Yeah, Thanks...

[thelizman]

...one more reminder that there are always kooks out there with absolutely no point to their accusatory rants what-so-ever.

Incidentally, what is that page that you enter in someones names and it shows you their connections with other people?

Cryptonomicon example

[JimmytheGeek]

There was a predatory dentist/venture capitalist/litigator who was able to do terrible things once he owned any percentage.

Dunno if Stephenson messed up or not, but that seems like the kind of Valley detail he'd get right.

Learned this one the hard way...

[Anonymous Coward]

If you do buy Google on day 1, don't use a market order (especially in the first minutes). If the IPO becomes a feeding frenzy, you could easily end up paying 2 or 3 times what you expected (and yes, your broker WILL hold you to that price, no matter how bad it is).

So true... I learned this one the hard way. Anyone remember the Palm IPO? I sure do... oh... the raping I took on that one. My first stock trade ever. Took me months to make it back.

What comes to mind....

[vwjeff]

"... they could probably raise just as much money with a blackmail scheme."

SCO? Anyone? The only difference is that SCO will never raise any money!!!

Prediction

[ttys00]

My prediction: Google stock is going to skyrocket in price to ridiculous levels during the first few days of its trading, then it will settle down and become more realistic. This is because stupid people will pay too much for it in the excitement - witness the Red Hat stock price during its first few months.

For those of you who manage to buy any Google stock when it becomes available, I advise that you sell it the moment the price steadies. Most of the stock will go to institutional investors, rather than the general public, who will do just that.

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.

Re:Financials and dutch auction

[TopShelf]

I thought with a Dutch auction, everybody gets charged the same price, which is the highest price that ensures that all shares get sold.
For instance, if you have 50 shares to sell, and the bids are:

10 @ $40
25 @ $35
15 @ $33
10 @ $30
15 @ $27

then the first 3 orders get filled, all at the $33 mark. In that scenario, there's still room for some opening-day "pop", and the company's owners still get a much better return than under a typical IPO.

Re:Financials and dutch auction

[0WaitState]

You're right--in the dutch auction everybody who bid above the settlement price gets that price. The sfgate website has Hambrecht among the investment bankers, and Hambrecht is known for trying dutch auctions, so maybe it'll happen in a limited way.

Call me a cynic

[TerryAtWork]

but I say it's a cashout by the Google boys.

They know they have new engine types on one side of them and the ominous spectre of Omnicron, Devourer Of Planets - excuse me, I mean Bill Gates, on the other.

I say they're cashing in before they either sell out to M$ or hit the silk when the company craps out.

OR it might survive anyway. Either way, they win.

Capitalism

[michaelmalak]

Google has become so invaluable to many people (like me) that they could probably raise just as much money with a blackmail scheme.

Uh, timothy, in a capitalistic society, that's called "charging for services," not blackmail.

I've said many times over the years that I would be willing to pay at least $1K-$5K per year for deja.com, which Google has since taken over. I would be useless at my job without it.

1/3rd ownership vs Duties...

[Anonymous Coward]

A large number of "IPO == sell out/monetization" posts, versus "ah but Sergei and Co control a majority of the company"...

An interesting question is, even if the founder still control a majority of the company, once they are public, aren't they obliged to maximize returns? For example, they could hardly say to the shareholders, well "Fsck You, we're donating all this to Open Source movement and gifting the remaining cash to Linux". Nope. So, how does going public open them up to Fiduciary Responsibility to the shareholders, and how much are they open?

Re:1/3rd ownership vs Duties...

[110010001000]

Additionally a lot of pressure will be put on them by their VC's to maximize shareholder returns as soon as possible. I predict once that happens, Google will lose their focus and attempt to get into some business (music, "content" distribution) that they know nothing about.

Google is slipping

[bigberk]

I hope these problems I've seen recently are just temporary, but Google (or at least, google.ca) is having problems. A friend of mine noticed this too and in fact we were discussing this earlier. These can be show-stoppers, so they'd better iron it out before IPO:

• The search engine stalls and introduces delays longer than any I've experienced in the past
• There is more and more garbage in the index. In particular, sites that appear to have figured out the google algorithm and are using sites with similar content and mutual links to rank higher
• Sometimes, pages I know are there appear to be dropping into blackholes. As in, they disappear and there are no search results -- but a few hours later, there are thousands of results

Re:Google is slipping

[martin-boundary]

You're right about the problems. The returned results quality has taken a nosedive this last year, and it doesn't look like they're able to fix it.

First there were problems with the crawler, and rumours that they had run out of numbers (ie 4byte identifiers, around the 4 billion mark).

Then they recently had a second contest which was quite different than the first. In the first contest, they let people essentially play with their data, be creative. In the last contest, they were looking for coders who are fast under pressure.

It doesn't bode well. Personally, I think they've run into fundamental scaling difficulties and would rather IPO while they're still hot.

Re:Why I don't like this - IANASB and idea

[ir0b0t]

I2ANAP (not a programmer) but that's a really interesting idea. I'd help test that sort of search engine just because its so cool sounding.

From the article

[nuggz]

Considering a market cap of $12 billion
Net income $200 million = 1.7%
Net income $300 million = 2.5%

Not exceptional, there are companies with long histories with dividends above this.
You might get a better return from bonds.

Time for alternatives

[1ini]

Well it was good while it lasted! My boss suggested that i start using something other than Google so i found Teoma. Seems like a nice engine.

Blackmail Scheme?

[jmorse]

...not far off, with the way IPOs are currently allocated and priced. But then the institutional investors get the money, not the company.

Re:Be Careful: Use Buy Limit Orders

[Frisky070802]

You never know... I put in a limit order for Akamai's IPO at 100, and was excited when I saw it was at 114 until I realized my order never executed. So I cancelled it and stewed, and watched it keep going up the 1st day, only to jump in an hour later at $145. I saw it go up to maybe $345 and put in a stop loss order to sell at $245 on the way back down. (I'd have sold earlier but my wife insisted we not bail too early).

Obviously things have changed since 1999 (or whenever this happened). But while I agree with you completely that a limit order is good for ensuring your exposure is limited, people may want to place that limit pretty high, depending on how desperate they are to buy in. And anyone who is risk-averse should of course stay far away, or at least wait to see how the wind blows.

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.

Re:The problem is

[Venotar]

Yes, it's my observation that radical innovation goes away with the first public offering. The board of directors is ultimately responsible to the stockholders. Voting stockholders tend to prefer conservative business practices.

I'll be interested to see if Google still maintains it's reputation as a peerless place to work 2 years after their IPO.

Which is exactly why

[deadline]

SCO is going after them. How many shares of Google do you think it would take to buy SCO and get rid of a looming SCO law suit during their IPO?

Think about it.

Triggering

[oaf357]

This is great. I myself will be buying Google shares the instant they go IPO. I might turn around and sell those share a day or a week later but I will make money off of them.

However, Google's IPO is expected to unleash a slew of other tech IPOs. Not like back when the bubble was forming (POP!) but a Google IPO will make other companies follow suit thus creating another smaller bubble.

Investors probably won't be as dumb this time as they were last time but 2004 has been predicted as a good year for tech IPOs.

Re:Triggering

[gkuz]

Investors probably won't be as dumb this time as they were last time

Sure they will. That's one thing you can be absolutely positively sure of. It's happened so many times, always the same, back to the tulip mania in 1636.

Don't you remember all the things people were saying in 1999-2000? How P/E ratios don't matter? How earnings themselves don't matter? How this new Internet economy is different, and different rules apply? Last time was different, right. This time will be different. BS -- they're the same every time.

surprising

[cmacmanus]

I find it amazing that Morgan is so quick to jump on a fad. Google is great, and I love it so..but we all know it has it's shortfalls, especially with the popularity search it provides. Sometimes when I do electronics-related searches all I get is pages of links to places with "great deals". I miss the Google of years ago.

Re:Why I don't like this - IANASB and idea

[liteyear]

Well, IAAP, and heard about this guy a while back:

"Grub is a distributed web crawler."

"Last week, LookSmart released a screensaver that harnesses the spare computing power of volunteers whose machines are indexing the Web.
Like SETI@Home, LookSmart's Grub screensaver runs in the background or when the computer is idle. But instead of searching for signs of intelligent aliens, Grub crawls the Net to build an index for Web searches."

Interesting idea indeed.

12 billion???

[AndreyF]

12 billion?
1000 employees...

12 million/head... nice

Googles assets and liabilities?

[shanen]

Sure, I agree Google is very useful, but I still can't figure out where the heck they are getting this kind of valuation from. [Except for the usenet archives, and only sort of there] Google doesn't own any of the information that they help people access. They are just a kind of middleman there. At least in theory, anyone else can access the same information.

Sure can't be their hardware. Supposed to be just a big pile of PCs and mass storage devices.

Actually, Google might even wind up in a serious liability situation as regards copyright questions for the cached and HTML versions that effectively bypass the real owners of the information.

Okay, by acclamation Google is the most useful of the search engines and the one most of us do use first, but $12 billion of first? I still can't figure it.

On the other hand, if I was allowed to print up some little papers with fancy scrolls and say they were worth $12 billion, I suppose I might consider doing it. Truth be told.

Beginning of the end

[irritating environme]

WEll it was a good run. Google will suck within 2 years of going IPO.

How about a P2P search engine?

[gr8_phk]

Imagine a distributed P2P search engine with no central control that can spider faster than Google. Imagine some form of authentication so only known good software can participate as part of it. Not sure how the system knows what is a valid upgrade yet but hey. You run the search engine in the background, it scans the net at whatever rate you set and maintains a small part of the DB. Naturally it would have to be Free software (not just OSS) to prevent someone getting control. I just had to throw this out there in the hope someone can figure out the hard parts and build it.

Re:How about a P2P search engine?

[grmb1]

I love the idea, but...

You'll need to have _complete_ (or at least almost complete) search index online at any given moment to make the system useful. As it will be distributed, there always will be lost segments of it (unless you have millions of users in network and hundreds of thousands of them online, which is quite tough thing to achieve). The speed will definitely suck and noone will wait 5 minutes to get results. Try searching files on p2p network.

If someone build such system, they will have to actually _pay_ users in the beginning to attract them. Without massive user base it's useless and new people won't participate.

Re:How about a P2P search engine?

[evilviper]

I just had to throw this out there in the hope someone can figure out the hard parts and build it.

Yeah, that always works. Let's try this one:

Imagine a method of generating limitless power, with no pollution that can be built for less than a car engine.

So, once they're done with your idea, I expect mine won't be far behind. Panacea, here we come!

Google going downhill already

[acomj]

I tried searching for reveiws of some products this holiday season. I have a method of keywords I used to get me past the ads. This used to work great. The google slammers (or whatever they're called now) are getting much much better as a lot of what looked to be reviews were just sites selling. Uggg. Often I would have to go to page 2 and 3 to pick up real review. I ended up using sites recomended by a friend and searched there postings.

I've started looking for/using other engines already. Sometimes when you get too big everyone tries to trick the service into selling.

Like open source preaches options are really important to keep things going.

Re:Google going downhill already

[evilviper]

I've had the same experiences, and they are always fixed within weeks.

You should send in a report to Google about it, and they will certainly handle it.

Re:Google going downhill already

[lurker412]

So help me out here...what keywords eliminate the ads? My benchmark is "Mozart Requiem Mass." I would like to learn all about it--hopefully without clueless 11th grader term papers clogging the results--but not see Amazon or other sites that are simply selling it. It seems to be a fairly hard problem to me. If you eliminate all the .com domains, you do eliminate most vendors but you also eliminate journals that may have valuable content.

Re:Google going downhill already

[acomj]

I use words that are likely to be in a reveiw/paper to try an eliminate cruff. Usually words that are common to music out of range of a middle schooler. Maybe musical terms. Maybe a word like "composed" or the key its in. It always takes a work.

No wonder the tech economy is in the shitter...

[telstar]

Three quarters of the investment-advice posts in this thread are based on a completely mistaken understanding of how IPOs and the stock market function.

Why they are going IPO-

[way2trivial]

google was reaching the point where they pretty much had to

http://news.com.com/2100-1030-5119504.html
A private company must report its finances once it has more than 500 common shareholders--or stock-option holders--and $10 million in assets, according to section XII(g) of the Securities and Exchange Act of 1934. That means a private company must file quarterly forms with the Securities and Exchange Commission (SEC) that disclose operating expenses, profits, partnerships, shareholders and many other details--a laborious process that can cost as much as $2 million annually.

Re:Why they are going IPO-

[Sivaram_Velauthapill]

Reporting costs and going IPO are two different things. Yes, reporting costs are huge (especially for medium sized companies--Google isn't medium though). But if you just go for an IPO just because of the $2million (or whatever) reporting/admin costs, that's not a wise decision. Going IPO means that you are GIVING UP OWNERSHIP of your company. NO ONE wants to give up ownership of the company under normal circumstances. Think of it this way. Google supposedly has net income of around $300 million. With its proposed share issue (1/3 of the company), the owners will all of a sudden just get $100million now in income (instead of the $300m they were getting before). The owners get ZERO "extra" money. It's not as if the billions raised by google will go to the existing owners.

The main reason for getting on the stock market is for FINANCING reasons. If you want to grow, issuing stock is the easiest and sometimes cheapest way* to getting capital (borrowing money from bank becomes difficult). There are also other reasons but they are usually minor (for example, some companies get listed on the stock market to increase their profile. If you are involved in international trade, being listed on the stock market automatically boosts your credibility)

(* From what I remember from my finance courses, issuing stocks is actually the most expensive cost of the financing techniques. Getting loans, issuing bonds, etc are cheaper. However this depends on many factors and one has to look at it on a case-by-case basis. Issuing bonds, for example, is better than issuing stock but some companies don't have a good credit rating, or are already leveraged with massive debt, and so on. Gettings loans is much tougher for tech companies because they don't have much collatoral. )

I'm pretty sure the main reason Google is going for an IPO is to get more money. They probably can't get enough capital for their future growth. Google is attempting to grow and it cannot do so without getting financing from the stock market.

Sivaram Velauthapillai

PLZ MOD PARENT UP.

[valmont]

i think it fairly objectively debunks a lot of the FUD that surrounds google.

Google must IPO

[solprovider]

Google has remained private as long as possible. If their VCs were looking to cash out, they could have done it before the crash. And everyone has been asking them to IPO for the last 2 years to kickstart the stock market. It was smart of them to wait until the DJ was above 10,000, but probably unnecessary.

They probably are not worrying about buying somebody either.

The reason they are going public is because SEC rules force companies with a certain number of owners to go public. The companies have to file all the costly paperwork as if they were a public company, and they lose most of the advantages of staying private, such as not releasing all that information about their activities. There is little reason to stay private, and the extra cash from the IPO is handy for paying for all that paperwork.

The famous case of this happening was Microsoft. Too many employees were exchanging shares privately, and the SEC forced them to go public. They did really well, and you cannot blame their decline on being a public company since the prior management is still running things. OTOH, because MSFT is public, the shareholders can insist on new management, but they will probably wait until the stock goes under $10, and that will be too late to save the company, if it isn't already.

Google is being forced into going public. There is no need to look for extra motives from their investors and management.

yea yea yea

[mix_master_mike]

Okay whilst you all talk about google's whatever capitalistic whims and whatnot..

Alot of us too are capitalists; I'm only very suprised that no one's really come up with the best way a small time investor (such as most of us) could also capitalize on the IPO/offering. Is there really anyway the little guys can get their hands on google early enough to profit??

IPO is no good

[superpulpsicle]

Initial Public Offerings typically benefit the original share holders and early group of employees in a company. This will give google a massive one year publicity and financial boost, I am sure of it.

Afterwards it's just regular stocks. From a personal experience I have owned 401ks, stocks, IPO stocks, many mutual funds. This kind of corporate game is "so yesterday". It's going to take a clever financial market to really reel people back.

Expect google to get a ton of attention upfront. I agree with most /.ers though, google will spiral downhill afterwards for a million reasons.

Framing your stock

[TubeSteak]

Sorry to let you in on this, but most companies don't issue paper shares anymore. You usually have to buy them and they're a bit pricey all things considered. its something of a loss, because some old companies made shares that were small works of art.

Will Google's employees retire?

[solprovider]

Google management will have 6 months after the IPO to find ways of keeping anybody important to their operation that is about to become rich. There are SEC rules that employees are not allowed to sell their shares for 6 months after the IPO. Here is a very good explanation. It is possible that people who "know too much" may not be allowed to sell their shares for years.

The other side is that while most full-timers at Google have either shares or options, they probably did not amount to much compared to their salary. If those shares become worth ten times their value, and the employee decides to cash out, they will probably gain a few years salary. That might be wrong in this case. With a market cap of $36 billion, even a few shares may be enough to retire. Most companies plan at least 10% of their stock to cover employee options. $3.6 billion / 650 employees gives an average of $5.5 million. On the good side (for us), maybe most of those options are not vested yet.

The big winners are the ones who started the company or invested cash for shares. The investors should not matter to operations, and the founders have already made enough to retire if that was their preference.

---
Here is a link to the story that Google might be forced to IPO that I should have included in my last post. 500 share or option holders and $10 million in assets forces an IPO.

Here is a link to the actual rules. See "Corporate Reporting".

WAY not offtopic! VERY relevent!

[Saeed al-Sahaf]

Don't know why this is offtopic.... It has been much talked about that an IPO will be the end of Google. Remember that the only thing that matters legally to a publicly traded companies board of directors is returning dividends and raising the stock value. This being so, we can expect Google to become MUCH more commercial.

Take note some of the complaints about Google in a recent Slashdot article on another up-and-coming search engine: It is now becoming very difficult to get relevant non-commercial results from Google. Expect this to continue, and lookout for pop-ups and banner ads... Seriously!

The Decline of Google

[Lawrence_Bird]

seems to me have started about a year ago.. now its next
to impossible to get any query back without the first page or
two being all items for sale (almost without regard to
what you are actually searching for). It would be nice
if there were a way to have it default to searches that do
not include stores selling merchandise. They can run all
the ads they want down the right side of the page, just
leave the search results alone.. pls!

See this paper for more...

[meese]

This is an idea that's been toyed with by a few people, but it seems tough. They've outlined an approach using some standard peer-to-peer systems - see this paper for a list of the challenges and some numbers. Unfortunately, without some sort of sacrifices in search quality (or number of documents), it's probably not feasible yet, at least by their figures.

When to SELL?

[Doc Ruby]

It's easy enough to know when to buy - as soon as you can afford a rising issue. But the real insight is always when to sell. That's when you get to make money (or cut losses), and is the only test of how smart you were. So, at what price or event would you SELL your Google IPO shares?

Right on!

[dave1g]

Kudlow and Cramer on CNBC have been hoping that google would be the first to do a true free market auction style IPO.

Its sad they didnt go for it. It could have all been done online, there owuld be no need to have some company oversee the IPO, computers would have done a better job and cheaper too.

Who will we find to take the risk of a non traditional IPO other than google???

print.google.com

[xtal]

12 billion would buy a lot of books. Imagine being able to search and buy electronically any book (screw music) you need, right there, presto-chango. I could spend a LOT of money on a service like that. It's probably just google cashing out, but hey, I can dream.

I like that casino you favour with your custom.

[jotaeleemeese]

Please let us know the name here, don't be so egoistic.

Investment analysis

[nuggz]

So you think google will continue to get 50% increase year after year. That would be truely amazing.

Also even at such a growth rate in 2 years it would take 2 years just to match the payout from an 5 year A rated corporate bond (at about 3.6%) And for a risky stock, it should offer a much higher return then that.

Lets compare to yahoo http://finance.yahoo.com/q/is?s=YHOO&annual

Has about 1 billion in annual revenue and this hasn't grown significantly over the past 2 years.

I don't think such growth is sustainable over the long term.

Another thing is that the Price is just what people are willing to pay for it. It doesn't tell you how the underlying business will perform.

I don't think the price is justified today, or even with the aggressive assuption of 50% compound growth, the price won't be justified for many years, and won't even outperform the compound return of a corporate bond for a few years.

http://google.msn.com

[Cid Highwind]

How long do you think it will take after this IPO for Microsoft to snap up enough shares to own google? I give them 4 days. A publicly traded company can't possibly last more than a week against takeover attempts by a company with *$4 billion* in the bank. The only real question is how much longer will we get to use google without needing a passport account and IE6-specific ActiveX controls?

No confusion here...

[TopShelf]

By valuation, I was referring to market capitalization, which is the value placed on the company by the market (share price times outstanding shares). What you're referring to (assets minus liabilities) is more of an accounting measure like Book Value than anything else.

My point was that if you spent $12 billion for an asset that returns $200 million per year, you've waaaay overpaid compared to the return you could get elsewhere.

Re:No confusion here...

[11223]

Valuation is in fact defined as assets minus liabilities; however, the question is in how you place value on those assets and liabilities. There are several schools of thought in investing; some focus solely on the profit the company makes in the hope that the company will share such profit via a dividend; others, like value investing, simply decide to invest or divest based on whether the company is undervalued or overvalued at its current market cap. Warren Buffet's investing methodology is an example of value investing.

Strange.

[/dev/trash]

Your definition of broke must be different than mine.

Google IPO auction

[glinden]

Google was rumored to be planning an unusual public auction for their IPO. It's not a new idea and may result in fairer pricing for IPO shares.

IPO gives up ownership

[solprovider]

Yes, they lose some of the ownership, but the effects should not be evident for a few years.

Yes, they could pay for all those reports while staying private, but there are reasons that every company that has to file those reports go public. The SEC frowns on doing that. I think there are fees/fines/penalties that apply in that situation that do not apply to a public company.

Yes, issuing stock is about the worst way to get money. Almost all of the alternatives are better (except cousin Tony.) You then contradicted yourself saying they were doing it for the money.

With its proposed share issue (1/3 of the company), the owners will all of a sudden just get $100million now in income (instead of the $300m they were getting before).

No, and your math is bad. If they sell 1/3 of the company, they still have 2/3rds so they get $200M of the $300M, not $100M.

The owners get ZERO "extra" money. It's not as if the billions raised by google will go to the existing owners.

Where do you think that extra money goes? If they just issued more stock, then the money goes into the bank and they can give themselves bonuses. If it was their stock they are selling, then the money goes to them. From what I have read, it seems the first scenario is the usual. Does anybody know why the current owners would reduce their share if they do not directly gain from it? I know some companies go public to be better able to expand, but that does not seem to apply here, although I am certain a few people are trying to decide what to do with $12B. How did the dotcoms "cash out" by going public if the money does not go to them?

Ticker: GOO

[bagsc]

GOO is a NYSE ticker symbol. NASDAQ requires four letters, and as far as I've seen, every indication is that its going on NASDAQ.