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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."
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
jrjBlog
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
http://www.busyweather.com/
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?
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.
--
|-_-| . o O ( bEef!)
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.
Domain name registration for $8.79 per year
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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.
Google has a choice of going either with bookbuilding, the Dutch Auction, or a combination of both. It is clear that the former will result in arbitrary pricing and preferential allocation, often resulting in underpricing and significant initial returns.
On the other hand, one of the implications of the Internet is bringing transparency to the marketplace. In consequence, going with the Dutch Auction will result in non-preferential allocation and equal access to all investors. It should also find the market clearing price of the shares, and in theory, be less volatile since there should be less market activity with the stocks. In addition, less underpricing should occur, resulting in more money for the company.
The main problem that Google will have to face goes back to the issues associated with preferential allocation. Firms often get quite a bit of leverage with preferential allocation. Loyalty to favored investors who have invested in the past, and potentially in the future is still of importance on Wall Street, and a paradigm shift for them may not be easy to come by. Hence, some of the main costs with the Dutch Auction is that there may be no institutional support, as companies are quite reluctant to go against Wall Street.
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.
> 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.
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.
This IPO speculation is the only reason the media is giving Google so much attention over Gmail and every other little move they make.
/. 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 give it 6 months before
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.
... 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.
Ecce Europa - Web Design for Business
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."
Basically if you want to invest in the initial price offering you must find a broker that can get you in on it. Most IPO shares are purchased by large institutional investors, but individual investors can get in on it with a little luck. I know E*Trade lets some investors get in on IPOs, but I'm not sure about the other online brokerages. For some of the basics of getting in on an IPO see these articles on IPOs on The.Street.com. You may need to contact several brokers before you find one that can help you, if at all. Of course everyone can buy once trading starts.
The price-setting is a bit of a black art (think: complicated regex work) based on both company valuation and market appeal. It's not unheard of for the initial valuation to be changed the day before the IPO based on huge market anticipation and the feeling that people will pay more.
"It was a summer's tale: Just a boy, his Linux, and a head full of dreams..."
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).