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Google Cancels Spring IPO
securitas writes "Google fans and potential investors will be disappointed to learn that they must wait a while longer before they can own a piece of Google. The Times of London's James Doran reports that Google's IPO plans are on hold. CEO Eric Schmidt appears to think that market conditions are not right. When pressed for details about the delayed IPO, Schmidt said, "An IPO is not on my agenda right now." A commentary about the delayed Google IPO follows. Mirror at Australian IT."
Deals with Yahoo, AOL, and other big sites... sales of their standalone intranet search servers... and I'd imagine they're doing well on the ads, too.
Any website you see with a search function that says "Powered by Google" under it, means that site is most likely paying Google a fee to use that, and make sure their site is indexed. Two I know for sure are AOL and MSN for their ISP software, they license their search functions from Google.
It's not quite as simple as that. First off, the IPO would only be for a portion of the shares now held in private. So Google insiders would still hold significant control. Second, there are disclosure rules pertaining to buying up shares. The SEC requires shareholders to file statements once they cross thresholds in ownership. Third, Google could implore a number of various defences against any "take-over", including a share rights agreement (aka poisin pill), staggered terms for directors, etc. For one company to buy out another, it either has to be a friendly deal between the parties, or hostile - offers shareholders $$$ to tender their shares to the acquiring entity.
The reason for IPO-ing is either 1) to raise capital for growth, expansion, etc. - Google seems to be doing fairly well so far, and money is still cheap enough that they could tap the debt markets or private placements before going public, or 2) (which is likely more the reason), to provide liquidity for the current shareholders - the currently management team is sitting on millions of dollars, but they don't have any easy means to convert their ownership position into cash.
By having a public float, Google would have to disclose their financial information (as well as other stuff). With all that is happening, increased competition, maybe they take a wait and see approach, especially if they aren't in dire needs for cash.
Yahoo may however be leaving google..
8 77971434.html
http://www.theage.com.au/articles/2004/01/15/1073
Meanwhile, there are reports that Yahoo! and Microsoft are preparing next-generation search technologies to beat Google, the world's most popular search engine. Microsoft, according to one report, is working on a "Google killer" and analysing the Web with its own internet spider, a piece of software critical to building search engines.
I remember reading an online article about it. Apparently, it's a real pain in the ass. Basically you have to do the same amount of paperwork as a public company, but without the benefit of the extra money.
I'm not drunk, I just have a speech impediment. And a stomach virus. And an inner ear infection.
If they are indeed intending to go public, they might be waiting for the tech market to peak so they can make the same amount of capital while selling less shares.
This is good for the company, because not only do the private owners still totally control the company, but they:
a) can buy back the shares on the open market for less than they sold them if they want them back
b) can sell more shares later if they need more capital (since they didn't sell as many shares on the IPO to make the initial capital)
It can make the decision makers who care about the product gunshy, and drive them to 'middle of the road, risk free' behavior. Innovation and advancement doesn't come from this type of behavior.
It's a sad day when the decision makers have to consider the value of their stock tomorrow more highly than the viability of their company in ten years. Why should the CEO care? He won't be there in ten years - he'll have moved on with his rapidly-excercised stock options and golden umbrella payouts; He's liquid enough already (unless he makes really stupid decisions) that he'll be rich even if he never gets another job.
Thinking outside my Head
Don't forget the Google search appliances that are sold/licensed/maintained. I know of numerous Fortune 500 companies that use the appliances for their internal sites.
In addition, when I was searching for jobs I checked up on Google. There were a few positions in the DC area that required high level security clearances, indicating that the government is using the appliances internally as well. To what extent, we don't know.
Nothing but the finest in meaningless drivel
Uh, vaporware? MS has been spidering for over six months now and the search interface is at http://beta.search.msn.com . The system definitely exists.
- Surely not the ads.
Why not the ads? A simple back-of-the-envelope calculation shows it's at least plausible.250M searches/day * 3 ads/search * 1-2% clickthrough/ad * 365 days/year * $.10/clickthrough = $274M-$548M/year.
The 250M searches/day may be low since it's from Feb 2003. It also doesn't include Google's Adsense program, putting Google ads out on other sites, which probably doubles the amount of page views.
Google has unusually high clickthrough rates and payments per click because of their AdWords targeted advertising. Ads are matched to keywords and then optimized, with the most effective ads showing more and least effective dropping away.
Certainly enterprise revenue (licensing the Google search engine for use on other sites) is part of their revenue, but I suspect the majority is from advertising.
I split the company into 1000 shares:
- 700 I keep.
Following the IPO, fortune continues to smile on us and the stock goes up to $1000/share. My friendly employees want to cash out their 199 options. No problem: I give them 199 from my stash, mourning the $2,000,000 it costs me but leaving me with 501 shares and control of the company. Life is good.I give my superstars options on 199 shares at $1.00.
300 I sell in an IPO, taking the company public
Same scenario, except this time I gave 400 options. Now when my happy friendly employees want to cash out, I have to either go out into the market and buy those shares at $1000 to give them, or issue more shares. Either course of action has problems from my point of view. At best it will reduce the value of my holdings; at second worst it will leave me no longer in control of my company; at worst it will zero out my net worth.
That's about where Microsoft stands today: if any significant number of their "old hands (say post-1995 hires) decide to cash out their options in a single quarter or even a single year, Microsoft has a bit of a problem on its hands.
Of course, that scenario has been around since before the dotcom bust, and it hasn't happened yet, so maybe it won't. But let Microsoft report just one quarter of declining revenue and the results might be interesting.
sPh