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of the purchase price can be received until the registration statement has become effective, and any such offer may be withdrawn or revoked, without obligation or commitment of any kind, at any time until the notice of acceptance is sent after the effective date.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.'"

Comments

*sigh*

[bigattichouse]

A convoluted advertisement for the upcoming IPO... of which I will probably not be able to afford - even *with* the Dutch Auction.

Re:*sigh*

[Eccles]

even *with* the Dutch Auction.

I think the Dutch auction works against the investor, and in favor of Google.

Think about Netscape, VA Linux, Red Hat, and other such IPOs. They initially sold at a low price, and the stock skyrocketed the first day. People who got in at the IPO price and sold shortly thereafter made out like bandits -- heck, overall they probably made more than the companies. With Google's approach, there's no reason to expect much of an opening day vault, as the opening ask price comes from the auction price, and who would suddenly pay much more for the stock (once it's in general trading) than they would have shortly before (during the auction)?

Google has a scheme that allows them to pocket all that opening day enthusiasm themselves. Very smart, but there's little reason for small investors to care about the IPO itself as a result.

Not that I know that much about investing and IPOs, mind you.

Re:*sigh*

[xmas2003]

I would also suggest that the Dutch Auction works "against" the financial firms bringing firms public.

For "classic" IPO's, the individual investor has a very hard time getting in on the ground floor - i.e. the folks getting most of the offerred shares at the actual IPO prices are the financial firms handling the offering ... and their best buddies/clients - think Frank Quattrone.

So THEY are able to "flip" the shares first day and make a buncha money ... whereas the individual investor typically can't get in until after the POP, when most of the movement is done ... and as noted, the company only gets proceeds at the opening price, not the POP price ... so it is in the financial firm's interest to price as low as possible.

This is why the offering firms aren't too keen about a Dutch Auction ... and it takes someone like Google (who has broad interest) to pull it off. It does seem like they will get one heck of a premium for their stock - note that as often incorrectly noted, it is not the share price that really matters, but the company valuation - i.e. how many shares of stock (total, not offerred) times the share price that is significant - in this case, the number is on the order of 30+ billion dollars - lotta money for a search engine, even a darn good one!

Re:*sigh*

[JJahn]

Correct, this IPO is for people in for the long-haul. If you're looking to get in fast and get out even faster and make some money, Google is not for you. Its not for me either, but thats just because I try to stay away from IPOs (especially tech IPOs) no matter how cool they sound.

Re:*sigh*

[dhovis]

Actually, the Dutch auction works in favor of the small investor AND Google.

In traditional IPOs, the company sells itself to several investment banks at a value below the expected fair market value. These banks sell those shares to their best customers. Sometimes they even give out shares with the stipulation that the investor that received those shares must buy more shares at market price when the stock goes public (an illegal practice that drives up share prices). Once the stock goes public, the share price usually rockets (because it is undervalued) and the investment banks are free to sell their stock and pocket the difference. The company issuing the stock gets none of this money, even though it is part of the "perceived value" of the company at the point of the IPO. This system really benefits the investment banks and their big investors, to the detriment of the company issuing the IPO and small investors.

Small investors usually can only buy the stock when trading goes public. Most small investors are lucky to get in the first day, and by then, the price has skyrocketed. With the Dutch auction, every investor is on equal footing. If you are willing to buy 10 shares at $100, you will win out over somebody willing to buy 100,000 shares at $90. Everybody who gets the stock will buy it at the lowest price at which all share will sell, so if you bid $135 and the final price is $103, you will get the shares you bid for at $103, the same as everyone else.

FWIW, the estimated market cap for Google, based on those share prices, is more than McDonalds, but roughly the level of Yahoo. Is Google worth as much as Yahoo? That is for you to decide. If you think that those prices overvalue Google, don't buy. If you think Google is going to grow to be a $30 billion company in the next decade, then it is a very good investment. You decide...there are always risks in buying stocks.

Re:*sigh*

[Fortunato_NC]

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.

Interesting...

[Short Circuit]

He goes to great lengths to say it's a solicitation, when it's pretty close to being an advertisement.

Re:Interesting...

[smooth wombat]

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?

Prime Stock

[Aggrazel]

If you add those two numbers together, the number you get is 24,636,659 ... which happens to be prime.

I don't like the idea

[Anonymous Coward]

With all the hype surrounding this IPO it is sure to drive in some individual investors who would otherwise not commit themselves to such a high level of risk.

This is one of the rare times when an indivudal without millions in worth will have the opprunity to purchase shares from a company's public offering.

In my opinion any individual who purchases these shares is not doing themselves any favor. What is the goal behind buying any? Priced between 108-135 the odds of GOOG appreciating in value anytime soon after the IPO are slim.

Even in their SEC filings they admit in the risks section that they face increasingly greater compettition. They are not immune anymore and I would not want to myself to buy any of these shares nor would I like any family members.

Re:can I have some clarification

[rwiedower]

Here's some information on how an IPO works. As for what google means, that's just silly.

Rolling in dough

[hrbrmstr]

OK, so 2,4636,659 shares * $135.00USD = $3,325,948,965USD

Is it just me, or are we back in the dot com shenanigans?

Google. 3 *billion* USD. Not worth it (to me at least).

Then again, I'm just a lowly engineer.

Why not more shares and lower price so those of us who *made* Google what it is could have had at least one share?

Sigh.

Re:Rolling in dough

[hrbrmstr]

Yep. I saw the market cap #'s. What fundamentally amounts to being an advertising placement firm (free search, free e-mail, free news is not a business model) is trying the same boondoggle.

My bet is that the share price drops down to double digits by next year.

boB

Re:Rolling in dough

[ortholattice]

If you are interested in this, remember that the public is getting only a tiny fraction of the 268 million shares outstanding. Several of the officers and directors will each individually own more than the entire public offering combined. See the prospectus. If indeed it fetches around $135 per share, it will create quite a few instant multibillionaires. Now, is this a fair price, or is everyone getting caught up in the hype? I certainly have respect for Google. But if you're thinking of using your money to make these guys obscenely rich, you should at least read the prospectus very, very carefully before making your decision.

Why No Internationals???

[Tr0mBoNe-]

I, being a Canadian, would be interested in buying 1 stock. Just for saying I owe approx. 1/14000000th of half of google. But because I am not a U.S. Person, I am stuck owning a small portion of Nortel stock and a little of Air Canada. (canadians would know why I'm kinda bitter about those)

Yarr.

I'm so confused!

[goldspider]

What are we to think of Google now that they are becoming a publicly traded for-profit corporate conglomerate? Instead of serving the anti-establishment community, they have become the establishment, serving only rich white guys with stock prices out of reach of the common man! They have become everything that Slashdot hates!

way overpriced

[JarrodMJ]

What does a search engine need with $3.3 billion other than $$$ for the board members? I love google as much as anyone but I won't be buying their stock....unless it is in a mutual fund or stock index fund.....

Wimpy

[Anonymous Coward]

I'll gladly pay you Tuesday for some Google stock today!

here we go again...

[CptTripps]

Ok, cross everything you have two of. This could be REAL good, or REAL bad for the tech sector. I, like many others, lost my ASS on Palm when they IPO'd. I only wish I'd have waited a DAY, instead of buying immediately. My $2,000 got me a whopping 11 shares, that turned into 1.1 shares 6mos later when they had a 1-for-10 split. Now it's worthless...

Lesson learned...

With $3BN..

[rf0]

Google could buy a 10% stake in Yahoo. Now that would be fun to watch

Rus

Re:With $3BN..

[scottennis]

I don't think this should have been modded "funny".

My guess is that Google will use the money to start an acquisition binge. Might not be Yahoo, but start looking around at who you think Google might like to buy. (then buy their stock if they are public) You certainly don't need $3 billion dollars to improve search functionality.

When the share price falls

[Albanach]

When the share price falls can we get the folk suing RedHat to start a class action suit against Google too? After all, these tech sahres are only supposed to go upwards are they not?

Here is the real reason for the IPO

[tijsvd]

User Friendly found this out

(Teenage girl filter ON)

[Chagatai]

"Hi! Like, we're Google, and we have totally told the SEC that we want to be on the stock market! Ohmygosh! Totally! We're not doing it yet, just like Marsha Mrady, but we will soon! Now, we're not like telling you to buy our stock, but if you really want to, you can totally do it soon! For sure! We're gonna sell, like, 14 million shares, and our totally groovy people who already have, like, 10 million shares, are going to put it all up! This is so cool!

Comment removed

[account_deleted]

Comment removed based on user account deletion

business model

[esarjeant]

Keep in mind that Google has additional avenues of business available to them. Not only have they built some phenominal search technology, but they have also demonstrated the versatility of Linux and the GooOS at maintaining a vast sea of computing hardware.

In the future it may be a Google-inspired operating system that we run for our enterprise computing tasks. The Google Search Appliance is a targeted business to test the culmination of this technology as a consumer product.

Time will tell, but I suspect this is a more robust company than the dot-bombs of the mid 90's. As always, skip the IPO and pickup stock after the initial boom cycle has given way to bust. Don't forget to read the prospectus and do the math to figure out what the company is *really* worth.