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Still More Google IPO Speculation

Posted by ryuzaki0 on from the they-feel-lucky dept.

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."

16 of 128 comments (clear)

  1. Time's running out... by jrj102 · · Score: 4, Insightful

    I think it was a major strategic blunder not to do the IPO last time around. I like Google as much as the next guy, but even the most loyal Google supporters have to admit that their search results pages (SERPS) are now filled with spam. Half the pages found with high-profit keywords are total fluff and pages crafted by Search Engine Optimizers to grab as much Google traffic as possible without providing any real content. Google's algorithm, (and its reliance on inbound links) has been reverse engineered to a point where it is no longer valuable for the most coveted (and high-competition) keywords.

    So they need to do their IPO as soon as possible, as there's more competition coming down the pike... and Google's place in the universe is far from secure. To draw a gambling analogy, it's time for these guys to cash in their chips. I'm not saying that they are going to go away (or even that they will lose the war) but there will very likely never be another time where their company's name is on the tip of the tongue of every American, and where their company is held in such high regard (which provides a perfect environment for a successful IPO.)

    I'm rooting for them, but if their SERPS don't get cleaned up soon I'll be taking a serious look at their competition. I doubt I'm alone.

    --- JRJ

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    jrjBlog
    1. Re:Time's running out... by BlueCup · · Score: 5, Insightful

      I'd have to disagree with you. I think that their new gmail service will place them on the tongues of even more people, probably more than Yahoo. Any company runs the risk of being a one hit wonder so to speak, but, I think so far Google has made the right decisions to avoid this, and I see no reason for them to fail now.

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      WANNAWIKI Wannawiki WannaWiki WANNAWIKI!
    2. Re:Time's running out... by LostCluster · · Score: 3, Insightful

      I'm not sure if cash is a motivator for Google's present owners. Afterall, most of the ownership of Google right now still lies in its original founders, who are rich enough to afford to live well no matter what may happen now.

      Sure, an IPO would make them all insanely dot-com rich... but some people would actually turn down that money to keep their company as-is.

    3. Re:Time's running out... by JWSmythe · · Score: 0, Insightful

      But when you're rich, there's never enough money. I don't know it from personal experience, but I've known a few multi-millionaires. $5mil/yr isn't enough, they want $10mil, then $20. It almost makes me cry when they're making $40mil/yr, flying first class all over the world just because they can, and still complaining that they don't have enough money.

      Aparently, no matter how much money you make, your expenses will grow to match your income. It does make sense. If you're making $10mil/yr, are you really going to live in the same house, and drive the same car, as you did when you were making $20k/yr. The downfall of that is, when you have a bit of extra income, and change your spending accordingly, if that money goes away, you're still stuck with the expenses. Myself, I had a bit of extra income, so I bought a second car. That income went away, so instead of having a bit of extra cash every month, we were cutting corners to get the bills paid.

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      Serious? Seriousness is well above my pay grade.
    4. Re:Time's running out... by Anonymous Coward · · Score: 2, Insightful

      VC's have to account to their investors. Google has good revenue, but given the state of the dot-crunch, it's a good bet the investors won't want to wait for ever.

    5. Re:Time's running out... by Wellspring · · Score: 5, Insightful

      Warren Buffet is the classic counterexample. He lives frugally in a middle class home. He has 14 employees. He's giving his 43 billion to charity when he dies, minus a small trust fund for his kids. Admittedly rare, but still a good counterexample.

      There are many wealthy company owners who don't want to wake up every morning wondering what investors think of their performance that day, and pandering to the investment press. They prefer to collect their profits and be their own bosses.

      You never hear about these people because private companies keep a low profile and don't have a stock value to keep the press interested. They're not takeover targets, either. Also, these companies don't get the big infusions of cash from their issues, so they are typically smaller. But they're a big part of the ecology. Ikea, for example, is private.

      There's a lot to be said for not going public. Peace of mind for the managers is one thing. The ability to invest for the long term without quarterly pressures is another. IPOs are useful for generating a big chunk of cash for rapid expansion, but my main experience in IT has been that it's the exit strategy for the investors-- they build a company and then sell it to the marketplace, sell off their shares, then go off and do something else.

    6. Re:Time's running out... by AlecC · · Score: 5, Insightful

      By definition, the ones you have seen are the counter examples. There are a lot of people who have basically slacked of when they have made $10-$20 million - enough to keep themselves comfortable for the rest of their lives in any concievable circumstances, plus leave their children a helluva good start in life. By the current count, America has a million millionaires - people whose disposabe assets (including the yacht but not the house) exceed $1million. But these guys are not very visible - they slow down and only work enough to keep the coffers at a "safe" level.

      There are indeed the driven ones - the ones whose happiness is measured in how much they made today, or who have to buy ever more expensive goods to prove their worth. These are the high profile ones, the ones you see. But for each on of these there are several - I don't know how many - who slowed down when they reached "rich".

      The guys who started Google are still in their twenties. They probably have all the money they will ever need, and can affors all the wine, women and song their tastes run to. But would you like to be looking forward in your twenties and say that you have done all you are ever going to do? I (50 this year) don't want to. If you didn't enjoy whatever it was you did to get rich, you might change course. But if you are enjoying yourself (and all reports say that Google is a fun place to work, and must have bean great fun for the founders), why break a winning streak?

      The pressure to IPO is from the Venture Capitalists. They put in dollars, and they want out (lots of) dollars. But if Google, Inc doesn't need the money for re-investment, the founders can say that they don't relish the prospect of the Market looking over their shoulders and, while of course the VCs have the right to float the company, if they do the founders will walk, in search of more fun. Because of the nature of Google, because it is still in the innovation area, those founders (and the top perhapse 20 elite geeks who may not be founders but drive the company - and might well follow the founders if they left) are in a position of considerable power.

      I see an internal power struggle - though very polite. The geeks are saying "No IPO - we don't need it". The VCs are saying "OK, we accept that for the moment. But please can we put everything in place so we can IPO quickly when the time is right." - with which the geeks go along.

      Original post says that filing SECs figures without a market presence is uncomfortable. Possibly - but it is a discomfort Google could put up with for a long time if it were necessary. Don't hold your breath.

      And, paradocucally, if Google IPOs, the VC will have won over the geeks and the company will be worth less because of it.

      --
      Consciousness is an illusion caused by an excess of self consciousness.
  2. Re:Why would they want an IPO? by Johnathon_Dough · · Score: 4, Insightful

    Well, the other traditional reason to have an IPO is to make all the current share holders bloody rich and to let the Venture Capatal guys earn their "just rewards" for investing in this "long shot". So, even if you are trading your percentage of stock in for a smaller percentage, you can now go out and buy a new house and a car and a fancy watch. In many ways this is more important to the people working their ass of for the last 6 years(and don't forget the VC guys watching them work their ass off) than more money coming in to the company for some other project. The project they are concerned about right now is very likely their bank balance.

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    If you are one in a million, then there are six thousand people who are just like you.
  3. Re:Easter? by Apiakun · · Score: 3, Insightful

    I doubt it. Google is what it is because of their technology, their attitude, and most of all their people. They have their own personality, and that is what makes them great.

    Sure, companies sometimes have to get a bit more corporate as they mature, but that shouldn't mean they have to take away some of those "pieces of flair".

    If Google becomes just another corporate behemoth, do you think we'll still back them up and give them the benefit of the doubt?

  4. Has anyone seen any financial data yet? by heff · · Score: 5, Insightful

    It's interesting to watch everyone salivate over google stock when there has been virtually no financial data published by the company (it is private after all).

    Sure google is the most popular search engine and employs smart people but there's no telling what's happening on the business side of things.

    They could be losing money for all we know.

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    1. Re:Has anyone seen any financial data yet? by Stuntmonkey · · Score: 2, Insightful

      They got an estimated $900m in revenue last year (2003), up from an estimated $200m in 2002, which would certainly put them over $1b in 2004. I don't know the breakdown between ad sales and their other products (e.g., the "yellow box" enterprise search engines), but I would wager this is nearly all ad revenue. The total sponsored-link business is estimated at around $2.1b per year, to give a sense of Google's share.

      In a company of ~1000 employees in an industry with fairly low capital intensity, this almost certainly translates into a profit. And in fact they have publicly claimed to be profitable for a few years now.

      Which brings up an interesting question: What would Google the company need from an IPO? An IPO's main purpose is to raise cash to fund future growth, but they may be generating all the free cash they need. It's a bit like how Microsoft has zero long-term debt (very rare in corporate America) -- they have all the cash they need, thank you.

      If they did go public, it would be so that the investors and founders/employees could monetize their holdings. They would likely float a very small fraction of the shares in the IPO, again because they don't really need the cash right now.

  5. Re:Is time really running out? by -tji · · Score: 4, Insightful

    Because noone with an equity stake in Google is going to sell their shares before it goes IPO. They are all expecting it to go through the roof when it goes public, so the last thing they would want to do is sell it now.

    Also, it's not as simple as just buying it back. The majority of those shareholders are probably employees who get stock options that vest monthly or quarterly.. so they are always getting more shares. This is part of their employment contract, so Google can't just revoke the shares.

  6. It _Will_ Make Money For Someone by John+Hasler · · Score: 3, Insightful

    > Whether or not the Google IPO, if and when it
    > finally happens, will make anyone money still
    > remains to be seen.

    It is absolutely guaranteed to make money for all of the accountants, lawyers, bankers, and brokers involved.

    --
    Warning: this article may contain humor, sarcasm, parody, and perhaps even irony. Read at your own risk.
  7. The IPO and the media by Awptimus+Prime · · Score: 2, Insightful

    This IPO speculation is the only reason the media is giving Google so much attention over Gmail and every other little move they make.

    I give it 6 months before /. people quit looking up to Google as some really leet organization. As soon as the IPO is launched, the people who made sure it got the media coverage will get richer and Google will, in effect, lose it's soul.

    I'm not sure what the facsination is with companies and their going public. Sure, we would all like to have a little chunk of something cool, but you have to remember there are going to be much more powerful people who will cut corners and make Google the most efficient, productive company they can. The result: an uncaring attitude towards the technologies and efforts that previously went into building the company.

    It happens every time. Just give it a while. For instance, the ISP I used to work for employed a number of really good, well known people in the Open Source movement. They were weeded out in an effort to move towards efficiency; or in other words: they were replaced by people fresh out of school that would write so-so code for $50k/year.

  8. the writeup implies ... by cookiepus · · Score: 3, Insightful

    ... that google has more than 500 shareholders currently. Who are they?

    The Google page advertising positions says that employees get stock options. I guess that means that every Google employee is a (potential) shareholder.

    If this is the case, then Google corporate knew what they were getting into. They did not have to give stock options, and if it's stock options* that pushed Google over the 500 shareholders threshold (if not that, then why are there over half a thousand owners?) there's no doubt they were prepared to find themselves in this situation. Whether this is because they're ready for an IPO or not, hard to say. But either way they were not blindsided by this.

    * I work for a private company which avoids stock options (and therefore having to file SEC statements) while giving employees a sense of ownership by giving bonuses directly proportional to company performance.

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    Ecce Europa - Web Design for Business
  9. Re:Easter? by BurntHombre · · Score: 2, Insightful

    Correction -- historically, it's the Christians who are usually the target of the rock-throwing.