Slashdot Mirror
Google Slashes IPO price
Hungry Student writes "In breaking news, Reuters and the BBC are reporting that Google has reduced the price of its IPO to between $85 and $95 per share from $108 to $135 per share. Google shareholders are also reducing the number of shares available for sale by 6.1m to 5.5m. The total number of shares available is currently 14.1m."
"What effect will the built-in search [searchenginewatch.com] in Microsoft's Longhorn [microsoft.com] have on Google's traffic?"
Agreed. I think we are going to be getting to a point where the majority of the desktop users will stop going to a website to search. They will choose to use integrated solutions in the future. If google can get an app out for the desktop that *integrates* with the desktop, it will be able to battle with the longhorn search feature on it's own playing field.
I knew it!
I said here before it would get down to $80 within 4 weeks (once people who got their shares for free sell out) after the IPO and I think that will indeed happen.
It's not only the lame pre-IPO management, it's the fact that they're a single product company and that product (ads) is a commodity.
Their placement technology is probably the best at the moment, but once someone else does that part better and sells it to Yahoo or Microsoft, they head further south...
I'm conflicted about Google going public. On the one hand, it will provide vital data in my nonsanctioned research about how concern for shareholder confidence destroys good companies, while, on the other foot, Google's new concern for shareholder confidence could, well, you know. I think going public causes a company's principle focus to shift from what would be good and profitable for the company to what shareholders think would be good and profitable for shareholders. I believe the two are typically mutually exclusive.
Are IPOs becoming like Hollywood where the take during the first weekend of a new movie is the sole measure of it's success? That means lots of good movies aren't made because they won't top that list and movies that are made are done so to optimize their profitability, not their cinematic quality.
Recipes for geeks -- no meatloaf, we promise.
How about the Google Deskbar?
Very nifty integrated search tool. I loved it (back when I actually used Windows). The only issue here (of course) is that Longhorn will come with the MSN search agent, but people will have to install Google's deskbar app.
coughmonopolycough
The Cheese Stands Alone.
These points apply to about any tech company. Will Longhorn be a success? Will there be mass migration to Linux or MacOS? Will the strong growth of Apple's music business continue or will worthwile competitors emerge? Can Dell continue to grow or will they be undermined by Chinese clones that are not tied to Intel and Microsoft? Yet, none of these considerations prevent MSFT, AAPL, DELL, RHAT from having a market valuation.
When all of the dirty laundry is aired and skeletons are pulled from the closets, I wonder what Google and their IPO will look like in the eyes of the Slashdot community. So far, they've gotten off relatively light, IMHO.
"Ask not what your country can do for you." --John F. Kennedy
Google has reduced the price of its IPO to between $85 and $95 per share ...
Google hasn't reduced anything. This is an auction and the buyers determine the price they are willing to pay. Reported "prices" are best guess speculation by Google or the press.
If you really believe this, what are you whinging about? You will make a mint.
_O_
.|< The named which can be named is not the true named
then short the stock as soon as you can. I mean if your so positive. It's easy money, yes?
"I'd rather be a lightning rod than a seismometer." -Ken Kesey
They actually would have preferred not to go IPO. However, due to a SEC regulation, it was more beneficial for them to do it. I think [off the top of my head], if a company has over 1000 stockholders [ie stocks they give to employees] and $XXX in revenue, they have to make their financial information public. This gives the competitor an edge without any benefit to google, if they didn't IPO.
Google was a profitable company to begin it. It is not going IPO to bring in more capital.
_______________________________
"I'm not Conceited...I'm just a realist..."
Do you really believe that a company like Google is worth $100+ a share? No offense to Google - I love their search engine and gmail - and it is a profitable company, but really look at their business model and tell me that it's worth tens of billions in market capitalization. If you think so you're out of your mind. Anyone getting in at those level are hoping for a short term increase (right after the IPO) to make some cash. Long term, that price has only one place to go: down.
Because by the time the shares get to the actual public, they won't be that cheap. The brokerages use the opportunity to get in on a hot IPO as a perk to their other customers. So the rich DO get richer here.
Go review your .BOMB economy history, this is exactly how the netscape IPO went.
-Looking for a job as a materials chemist or multivariat
I'm not sure about the past few years, but I've certainly noticed a deterioration of results in certain areas. As a random example, do a search for a celebrity, chances are that most of the top results will be for shite 'celebrity directories' that do little more than link to eachother and eBay.
Do any of you guys have a clue how shares actually work? That the price, whether its $95 or $.50 is irrelevant when viewed alone. The only relevant thing is the price * number of shares, i.e. the market capitalisation.
Now you can argue whether or not the expected capitalisation of $24 billion is too high or too low. Then you're just saying you know more than the exports that have guessed this figure (and its _not_ set by google - its just an expectation). And since the actually share price will be determined by what the market is prepared to pay, it is by definition the 'right' price.
Further, insiders - as in the people with friends in the right places that are thus guaranteed shares at the IPO - would get rich if the price started too _low_ and then bumped up in the first days to the 'real' market price, not the other way around. By doing a dutch style auction, google is trying to prevent exactly this from happening.
I think we are going to be getting to a point where the majority of the desktop users will stop going to a website to search. They will choose to use integrated solutions in the future.
Not so sure the desktop users will bite. Mac users have had an excellent meta-search utility built into the desktop since... I think since about 1998 or so. Most of us don't use it. We mostly just use google now. In fact in the end Apple just put a "search google" field in its web browser's button bar.
If I go to Google, it's because I'm looking for webpages. If I am looking at webpages I want to do it in my web browser. It makes more sense to just keep the entire process within the browser than it does to add the unnecessary mental context switch of dropping into my file browser application. And that goes even if your operating system for some reason decides to reuse individual windows between the web browser and file browser so that it can pretend they're the same thing.
Irritable, left-wing and possibly humorous bumper stickers and t-shirts
The initial market capitalization at that $100+ stock price (I.E. price of stock * stock in circulation) was about a billion dollars less than Yahoo's current capitalization.
That makes as much sense in valuing the stock as saying that since 'Google' has six letters and 'Yahoo' only had five, then Google is better value for your money. If Google were selling one share for $1,000,000, would you think it's a great deal?
So at a more conventional PE of 10 or so, Google would only be worth a more conventional $15 or so, at which they would have opened had they opted for the same old ho-hum run-of-the-mill greedy Wall Street IPO machine procedure. The problem for those who are bidding even at the lowered target is that their shares will be in the $10-25 region come January or so, anyway.
Someone needs to take an economics class.
1. Yes, in fact you are debt free. No HAH's about it.
2. (almost) No stockholder is going to purposely devalue stock they own just because you don't obey their whims. They are in this to make money afterall, not to megalomaniacally micromanage comparies.
3. Once that $50M is raised initially the stock could go down to $0, and it wouldn't change a thing.
First list your goods at $99.95, and then (a day later) put a "25% off" on them. Trained American consumer will flock to whatever you sell because it's now "on sale".
Sure, they are undeniably the best search engine around.
In people's minds, perhaps. In objective relevance tests (where people don't know which results came from which engine) the big search engines are pretty similar.
The problem with google is that they absolutely dominate their market, searching with ad revenue.
I guess, assuming you think 40% "absolutely dominates" 60% (see search market shares)
The reason there's this much interest in Google stock is simple: love. Even you, who claims not to understand why people are interested, believes they are the best search engine and that they dominate the market. Very few corporations have as much good-will towards them from pretty much everybody.
GOOG may go up if the love continues, or it may go down if people realize that technology- and business-wise it's really not that unique.
Let's experiment.
1) Company A raises $100M through debt-financing, talking a 20year loan at a 5% interest compounded annually. Over the 20 years has an average pre-debt-payment profit of $8M. Given yearly debt-payments of $6M, this leaves $2M/year for the company founder, who then has a net worth at the end of 20 years ~$40M.
2) Company B raises $100M through an IPO, with the founder retaining 20% of shares. Given the same profit, the company is free to give out say $6M in dividends (take off some from taxes). The founder then receives $1.2M for a total of $24M at the end of 20 years.
So it appears you're right then and the IPO way isn't as good....right? But wait, the founder still has stocks initially worth $20M which now puts him out ahead. But, then consider that given a standard P/E ratio of 30 the market capitalization for the company is ~$240M, making the founders stake worth $48M, giving him a total worth of $72M.
Of course there's a whole host of other things that affect things one way or the other. Like personal income taxes. Founder A is paying tax on $40M, while Founder B pays on only $24M, since stocks aren't taxed until you sell of them.