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Google IPO Open for Registration
Jon Shoberg writes "Google IPO is open for bid registration. From the front page: 'A registration statement relating to Google's Class A common stock has been filed with the Securities and Exchange Commission but has not yet become effective. Google's Class A common stock may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. This communication shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of Google's Class A common stock in any state in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state. No offer to buy shares of Google's Class A common stock can be accepted and no part of the purchase price can be received until the registration statement has become effective, and any such offer may be withdrawn or revoked, without obligation or commitment of any kind, at any time until the notice of acceptance is sent after the effective date. Of the shares to be sold in Google's initial public offering of Class A common stock, 14,142,135 shares will be issued and sold by Google and 10,494,524 of the shares will be sold by the selling stockholders.'"
Here's some information on how an IPO works. As for what google means, that's just silly.
The above may sound like an advertisement but what Google has posted is standard boilerplate language. When dealing with securities and 'advertising' them you are simply putting the word out that company X has such-and-such securities which you as the public may want to purchase.
Yeah, I know, talk about semantics. Having worked in the financial industry for a time I can tell you there are other oddities that neither you nor I would think of. For instance, did you know that giving a stock quote is considered selling and that if you are not licensed you cannot, legally, give a quote to someone?
We will bankrupt ourselves in the vain search for absolute security. -- Dwight D. Eisenhower
"US Person" just means that there can't be any doubt that US law applies. A branch of a foreign company in the US clearly has a US presence, pays US taxes etc., so qualifies. It just means that the IPO doesn't have to worry about anyone else's investment regulations - a Frenchman, say, couldn't go running to the french regulator when he lost all his money saying "Those evil google people didn't tell me it was risky".
If you look at the prospectus (hahhahaha) the number of outstanding Class A shares after the IPO will be 36,995,863. That is the number which you must multiply by the share price to get a market cap. If they get $120, for example, that works out to well north of $44 Billion. Is it worth it? I can't say for sure. What I can say for sure is that there will be many people bidding on this stock that have no grasp on the actual market that Google is operating in, and whether their growth is sustainable for any length of time.
My bet is that the IPO goes for somewhere around the asking price, but on the first day of trading shoots up to around $150.
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An IPO is *supposed* to be a financing event. It's only with the dotcom boom that a perception has arisen that the IPO is when you "cash-out" of a company. Traditionally, a company would consider an IPO to raise cash for expansion - it's a means to and end, not an end in itself.
The way Google is conducting their IPO indicates that they view it as a traditional financing event - the higher the IPO price, the more money that's available to the company to expand and grow. In Netscape's IPO, for example, the stock may have closed at $80 at the end of the first trading day, but Netscape itself only realized the $14/share that the offering was priced at. You can bet your bottom dollar that despite all the hype, someone was getting his butt chewed for leaving $66/share on the table. Google's auction doesn't eliminate the possibility of something like this happening, but it does reduce it significantly.
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I'm Australian, so I could be way off base
Let me help you out (btw, how's winter this year?):
I don't think Google are floating to raise capital, which was the original reason to float a company.
Nope. Lots of companies are subject to the filing requirement and stay private; although you still have to file, you're not subject to an ungodly number of corporate regulations such as Sarbanes-Oxley, not to mention intense accounting scrutiny. Corporate governance insurance is also much, much cheaper, keeping overhead down for the (existing) investors. There are even companies that are "going private" to avoid the hassle - see Cox's annoucement today, for example.
As I understand it (and I could be wrong), the co-founders of Google were under intense scrutiny by Mike Moritz at Sequoia and John Doerr at Kleiner Perkins - their VCs - to take the company public. You see, these VC firms vie for the title of "greatest ROI" - and in order for these guys to shop around the "we're #1! we got a 30,000% return on our GOOG investment!" claim to the pension funds, they need the company to list.
Once Google goes public, employees will cash out and leave (see: Netscape) - which is why the co-founders really didn't want to go ahead with this, but basically have no choice. It also adds undue scrutiny on them - sure, they're worth $8B in paper worth, but in reality it's a lot better to make $100m a year in cold hard cash while maintaining a low profile; that way you don't have to worry about getting kidnapped while vacationing in St. Tropez.
The only people who will benefit from this move are the VCs.
Microsoft didn't float to raise capital either. The problem they had, which is why they were forced to float, was an informal "stock market" sprung up within the company. This is either illegal or frowned upon by the US business regulators.
Nope. Gates probably took the company public due to 1) youthful vanity (no other way to gain the title of "world's richest man" - which, by the way, is a lie (see, for example, King Fahd of Saudi Arabia, who spends $8m a day in expenses - $3B a year)); 2) extreme harassment from greedy investment bankers / existing shareholders. Gates obviously learned that it was a mistake, as he is on record saying that one of his greatest regrets was taking MSFT public.
Lots of employee-owned companies have "internal stock markets." If I remember correctly, SAIC is a good example.
In conclusion - my advice to all budding entrepreneurs is this - money is only useful when you can do something with it. When everyone knows you've got money, suddenly you are restricted in your options, as you are being scrutinized. Come up with something that people want to buy, sell it to them, make a lot of money, and shut up. The less your competitors and the general public know about you, the less complicated your life is - and the safer you are.
Oh yeah, and never take VC.
Then go for something more sane, like Linspire, Inc. They just priced at $9-11 per share for the August 11th IPO (the day after Google's).
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