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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.
Perhaps this will help:
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.
- 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.