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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 $10 million or more in assets and 500 or more shareholders must file quarterly reports with the SEC just as a publicly traded company does. Since this is generally an undesirable position for companies to be in most observers feel that Google will now file an IPO. Google officials are of course not commenting. Whether or not the Google IPO, if and when it finally happens, will make anyone money still remains to be seen. For more information on the possible Google IPO see Google IPO Central."
Just try to google "google IPO" and see what a mass of results you get. Wierd isn't it?
Keep the faith, share the code
It's true that once you hit the "reporting triggers", you effectively have to comply with all of the regulations an exchange-traded company has to... but that doesn't exactly connect to a public IPO. Sure, it's annoying to have to do all of those reports, but with the shares in the company as tightly-held as they are in the moment, do the current shareholders want to part with control of the company right now?
In order to want to do an IPO, the company has to want the cash that the IPO would generate. Basically, the current shareholders would be diluting their current percentage control of the company in order to raise money that can be used to expand the company in some way. Unless Google has a major project that requires new investments, there isn't much motivation for them to want to issue new shares for an IPO.
Now, maybe GMail is that project. But maybe it's not... anybody have some insight on that?
I was talking to someone about Google the other day and she commented on them not doing a special logo for Easter. Are they becoming more like a "normal" company in advance of a possible IPO?
Twenties Retirement
If google does go ahead with the IPO I suspect there will be a lot of interested people who pick up shares. A good number are probably slashdotters :P
What if, though, some large company (i.e. M$) buys a huge chunk of google. Can you imagine what would happen if they became the majority owners?
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They have tons of cash, so why can't they just to a cash stock-buyback from all but 499 of their shareholders?
If they did not want to do an IPO, couldn't they split up the activities? (Google ads, google servers etc.)?
And if you thought that was boring you obviously havn't read my Journal ;-)
This is a stock that will not only have some intrinsinc value, it will have huge psychological value and will be a very "sexy" stock initially. A ton of money will be made and lost the first week that this stock goes on the market (if it does, of course). The day traders will probably have a blast playing the see-saw movements. People who buy the first day and hold for the long term are likely, *in my opinion*, lose money.
All in all, it will be fun if it happens.
Happy Trails!
Erick
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Let me start by saying that I don't know what I'm talking about - I'm just speculating.
Anyway, we've read a lot about how Microsoft regrets that they didn't go into the search engine market sooner, and that now Google is so far ahead it will be hard to beat. "If you can't beat them...." Does this IPO mean that anyone can buy the stocks? As many as they like? So what prevents Microsoft (with their million of dollars) to just buy the stock majority of Google and call it a day?
You do realize that once Google goes IPO (you know it will happen, sooner or later), the focus of the developers will be less on providing useful content, and more on turning it into another Yahoo or MSN, and satisfying the shareholders. Profit is everything in a situation like this. Right now, Google is in a great position, and I'd hate to see a great search engine system crumble due to the whims of these shareholders.
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While I'd love to get a hold of a bunch of Google stock when they're first offered, and then sell to all the suckers still clammering for the stocks a week later, they may have another option, which would keep them out of IPO land.
I've seen other companies do something similiar to this, to make themselves look smaller than they really are, and to protect themselves from lawsuits, even if it's in CEO's mind.
Split up the company.
Google could make google::adsense google::adwords google::froogle google::india google::news , and even split off their IT departments into seperate companies (google::it::newyork google::it::california google::it::atlanta), and then have google.com buy and sell services between these companies. So, the google::it companies would turn a smaller profit from google.com, but google.com would show an expense.
Google's income divisions could be split, so no one division would make over $10mil/yr . They could even subdivide the company down even more. Google::Adsense::US-East Google::Adsense::US-West Google::Adsense::Europe (etc, etc, etc)
Most of the companies I've known that did this with the idea that if one company gets sued and goes bankrupt, the others are uneffected. If that would really work in the legal system is another story (and IANAL).
I suspect some Google lawyer has already started drawing up the paperwork for this, unless they really want to go for the IPO, and are just playing like they don't.
Serious? Seriousness is well above my pay grade.
..all the hype surrounding the RedHat IPO in 1999?
It really sounds like "The Market" and "The Press"is still reacting the same way.
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. But that wall is about to become transparent soon, IPO or not as Google slips past the line into having to comply with reporting rules even without an IPO. This Google IPO talk will dry up fast if things aren't as cool as people are imagining.
Hi, I guess I'm a novice in the finance arena but I don't understand why Google's having to disclose its financial information would "force" it to issue an IPO. Could somebody explain?
The end result of going private would be a company owned by the founders, paying off some large bonds out of profits. With interest rates so low, that's a good option right now.
Mr Novice OFool,
You are right, and maybe not so much a fool as you like to make out. The story is a complete fake. Possibly written by someone who WANTS Google to IPO so is trying to coax the company into doing so.
A Google IPO would make more money for the army of service professions like bankers, lawyers and journalists; professions which some ungenerous persons might call leeches.
The argument for an IPO is independent of disclosure.
You would IPO if you had a plan to build a large project but could not finance that through your own efforts (assets or banks). The cost of the IPO, apart from the transaction costs are the loss of control of the company to finance houses, which in the case of an innovator like Google, could in fact kill the company - you can call it throwing out the baby with the bathwater.
I had read an interview of one of the founders of Google, who said something to the effect that the whole SEC filing was going to cost them an absolute fortune, and they simply didn't want to do it.
:) I didn't need a job, I just wanted to be part of their gig, it sounded like a great place to be, and I could offer a lot. But hey, if they don't want me, I have plenty of other things to do. :)
To now, from my outside view, I see nothing wrong with the way they're doing things. Most people are very happy, except for sites who wish to artificially push themselves to the top of Googles rankings.
I do have one problem with Google. They didn't hire me. But, that's something I can live with.
Serious? Seriousness is well above my pay grade.
Also, while Warren Buffett's office only has a handful of employees, his company owns all or a large part of many large corporations and retail stores (General Re, Jordan's Furniture, See's Candy, Coke). Just counting the 100% ownership subsidiaries, he has thousands of employees.
Finally, a small percent, but a very large dollar value, of his jointly owned stock with his wife Susan will go to her control, and not the charity of his choice, when he dies.
I forget why, possibly based on some of his existing charitible contributions, but while Buffett hasn't said, I suspect the charity that will receive most of the money is Planned Parenthood.
--Pat / zippy@cs.brandeis.edu
I may be on my own here...but all of those look like horrible, horrible FUD. There's lots of idle speculation and outright bollocks, but no real arguments.
Example 1: "Microsoft and Yahoo might actually try and compete with Google."
WHAT THE JIMMINY-BILLY-BOB-BING? You mean all this time Yahoo was just having a jolly old time of playing at search engines and not really trying to compete with Google? Well, maybe I should just bow down at the feet of Mr. Ali Baba PhD, he obviously knows something I don't...
Example 2:"Google's reported 50% margin with its AdSence (displaying Google ads on third party sites) is unsustainably high for a middleman. Competitors will offer similar services in the future, taking less of a cut."
I don't get it..people are paying for Google's service, if there was a cheaper alternative, I'm sure they'd jump ship, but there isn't. By the time there is, Google will have raised the bar and lowered the price.
Example 3:"Half the Internet entrepreneurs that I have known have brainstormed starting a search engine business, most quickly abandoning the thought.But as the costs of technology and software fall (#2 and #3) more Internet entrepreneurs may start search engines leading to a competitive and innovative search industry."
HA! HAHA!! HAHAHAHAHAHAHAHAHA!!
I especially like number 2 and 3, where he tries to talk about the cost of entry and outsourcing.
Capital, my dear Steve Baba, just capital. Maybe you should look into trading in your Ph.D. for a Clue(tm).