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."

Comments

Time's running out...

[jrj102]

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

Re:Time's running out...

[BlueCup]

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.

Re:Time's running out...

[Wellspring]

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.

Re:Time's running out...

[AlecC]

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.

Recursive Google

[Yonkeltron]

Just try to google "google IPO" and see what a mass of results you get. Wierd isn't it?

Why would they want an IPO?

[LostCluster]

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?

Re:Why would they want an IPO?

[Johnathon_Dough]

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.

If they go ahead with it...

[Tiberius_Fel]

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?

Re:If they go ahead with it...

[KingOfBLASH]

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.

Re:Easter?

[Enrico Pulatzo]

Maybe the spent too much time on their April fools logo...

check them out here http://www.google.com/holidaylogos.html

Is time really running out?

[ron_ivi]

They have tons of cash, so why can't they just to a cash stock-buyback from all but 499 of their shareholders?

Re:Is time really running out?

[LostCluster]

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.

Re:Is time really running out?

[-tji]

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.

Day Trading

[erick99]

I think Day Traders (I do some) will have a ball with a Google stock. Like a lot of IPO's it will most likely skyrocket making it an almost ideal "short play" as it will either have to correct or it will simply come back down because it overshoots what most people will be willing to pay. Then, you can buy it and hold it for a few minutes or an hour while it corrects slightly back up.

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

Re:Easter?

[King Elessar]

They've never done religious holidays. They have done Season's Greetings every year in December.

Re:Divide and rule?

[LostCluster]

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.

So what prevents MS to buy 51%

[broothal]

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?

Has anyone seen any financial data yet?

[heff]

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.

RE: Has anyone seen any financial data yet?

[cebarro]

Of course they're making money. They've gotta be raking it in. How else do you think they're going to pay for the moon base?

geesh

THINK, people!

You do realize that...

[tcgwebs]

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.

Google IPO

[JWSmythe]

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.

Re:Google IPO

[Anonymous Coward]

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.

Does this remind anyone of...

[SoSueMe]

..all the hype surrounding the RedHat IPO in 1999?

It really sounds like "The Market" and "The Press"is still reacting the same way.

why does disclosure of financial info lead to IPO

[ofool]

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?

Re:why does disclosure of financial info lead to I

[Mr Very Angry]

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.