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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 $10 million or more in assets and 500 or more shareholders must file quarterly reports with the SEC just as a publicly traded company does. Since this is generally an undesirable position for companies to be in most observers feel that Google will now file an IPO. Google officials are of course not commenting. Whether or not the Google IPO, if and when it finally happens, will make anyone money still remains to be seen. For more information on the possible Google IPO see Google IPO Central."
It's true that once you hit the "reporting triggers", you effectively have to comply with all of the regulations an exchange-traded company has to... but that doesn't exactly connect to a public IPO. Sure, it's annoying to have to do all of those reports, but with the shares in the company as tightly-held as they are in the moment, do the current shareholders want to part with control of the company right now?
In order to want to do an IPO, the company has to want the cash that the IPO would generate. Basically, the current shareholders would be diluting their current percentage control of the company in order to raise money that can be used to expand the company in some way. Unless Google has a major project that requires new investments, there isn't much motivation for them to want to issue new shares for an IPO.
Now, maybe GMail is that project. But maybe it's not... anybody have some insight on that?
I'd have to disagree with you. I think that their new gmail service will place them on the tongues of even more people, probably more than Yahoo. Any company runs the risk of being a one hit wonder so to speak, but, I think so far Google has made the right decisions to avoid this, and I see no reason for them to fail now.
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If google does go ahead with the IPO I suspect there will be a lot of interested people who pick up shares. A good number are probably slashdotters :P
What if, though, some large company (i.e. M$) buys a huge chunk of google. Can you imagine what would happen if they became the majority owners?
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Maybe the spent too much time on their April fools logo...
check them out here http://www.google.com/holidaylogos.html
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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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.
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.
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.
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.
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