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Still More Google IPO Speculation
KaffeineKitty writes "SiliconValley.com is reporting that Google will be required to begin filing financial reports with the SEC beginning April 30th. According to the Securities and Exchange Act of 1934 companies that have $10 million or more in assets and 500 or more shareholders must file quarterly reports with the SEC just as a publicly traded company does. Since this is generally an undesirable position for companies to be in most observers feel that Google will now file an IPO. Google officials are of course not commenting. Whether or not the Google IPO, if and when it finally happens, will make anyone money still remains to be seen. For more information on the possible Google IPO see Google IPO Central."
They've never done religious holidays. They have done Season's Greetings every year in December.
If they did not want to do an IPO, couldn't they split up the activities? (Google ads, google servers etc.)?
That could turn ugly, as the departments would have to start charging each other for services... and there could be in-fighting that doesn't exist in the present setup.
It'd be easier to just report and not issue an IPO.
They have tons of cash, so why can't they just to a cash stock-buyback from all but 499 of their shareholders?
A company usually nearly-depletes its cash reserve before going IPO... So the fact that they still have cash indicates they're not so likely to IPO any time soon.
If you are going to IPO your company, traditionally you only IPO less than 51%, so the current owner(s) keep their control. Microsoft can buy up 25%, so long as 51% is not on the market, and in the hands of individuals, it won't matter what they want -- they will just be investors who have to put up with google wants to do or remove their money. Then again, if nobody owns 51% of the company, Microsoft could be a player, and gain some control. But the point is that microsoft could only get that option if the google owners give up control with the IPO.
Two problems with this at the moment.
1. If Google goes strictly bookbuilding, day traders will certainly not get an allocation so that they can flip the stocks after the initial raise in price due to underpricing. Google will also prefer to avoid people who add much volatility to their stock.
2. If they go with the Dutch Auction, again, day-traders may not get an allocation if they underbid. Moreover, the market clearing price will be determined, and chances are, there will not be much, if any underpricing. The market clearing price also takes into account the fact that a lot of people are going to be overbidding.
Hi Point firearms does this. They make the shittiest, crappiest, ugliest, cheapest guns in the U.S. While they market their products responsibly and do everything they possibly can to ensure their products don't go to criminals, their status as seller of the cheapest guns available makes criminal use inevitable. Seeing itself as a prime target for predatory lawsuits, Hi Point has broken their company up in just the manner you describe. Each individual model of firearm is manufactured by a different by a different sub-company.
Look into the cost of quarterly SEC filings. It's usually several million $ paid to an auditing and accounting firm, quite an expense for NO benefit period. This also means that your data is now PUBLIC, eliminating any advantage to staying privatly held.
So, you go public with a small (10-30%) amount of newly issued stock. This gets your company a LOT of money, and gives your employees some reward as well.
Now you're filling quarterly, and your details are disclosed to the public, but at least you got some benefit out of it.
It's all about "if we have to anyways, we might as well benefit while doing it."
Yes. An IPO will dilute the value of existing shares. So if a company does too many IPOs, it will undermine investor confidence (ie. investors won't believe that the value of their shares will be maintained), and drive their share price into the ground.
That's the "first tier" strategy - because of that, companies don't do an IPO unless they really need the cash (and it would be unwise to get it through debt financing). This means that companies who do an IPO are seen to be short of cash. If investors believe that shortness of cash will adversely affect their business, this will drive share price down even more than the dilution.
Of course as with any such "rules", they're more guidelines than actual rules - google managers have demonstrated many times that they aren't stupid, so they may have some reason for doing an IPO while they have lots of cash that is a little more advanced than the bare 'basics' I've outlined here. One such reason may be that they have too much debt, and want to fix their D/E ratio with an IPO ... this isn't uncommon, but I don't know how much debt (if any) Google currently has.
"Why are you watching the washing machine?"
"I love entertainment, as long as it's clean"