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Google Goes Public at $85/share

Posted by michael on from the buckle-your-seatbelts dept.

adpowers writes "It is official. Google will have its IPO debut at $85 per share. To quote the article, 'At that price, the low end of its recently revised range, Google raised $1.67 billion, with $1.2 billion to go to the No. 1 Internet search engine and $473 million to Google executives and investors selling their shares.' Trading begins Thursday, August 19th." Got Google?

25 of 343 comments (clear)

  1. I'm more interested in... by Zugot · · Score: 4, Interesting

    ... how many google employees have become instant millionaires?

    --
    -- Bryan
    1. Re:I'm more interested in... by spuke4000 · · Score: 2, Interesting

      As an extension of that, how many Google hotshots are going to become millionaires and then quit? I'm sure this kind of thing happened all the time in the boom. Anyone know what the resignation rate is after a big IPO?

      --
      This post cannot be rebroadcast without the express written constent of Major League Baseball.
    2. Re:I'm more interested in... by TheRaven64 · · Score: 3, Interesting
      From what I've read of .com failures, the companies that make employee millionaires tend to do badly afterwards whether they stay or not. If they stay, then they've already made as much money as they're likely to from that company (with the exception of top management) and so are only there because they enjoy being there. While this is good from the point of view of producing great products, it's not so good from the point of view of producing great products before deadlines.

      JWZ said that there are two kind of employees, those who want to work to make a company great, and those who want to work at a great company (paraphrased slightly because I'm too lazy to look up the exact quote). The millionaire employees who leave are likely to be in the first category, while the ones who replace them are far more likely to be in the second category.

      --
      I am TheRaven on Soylent News
    3. Re:I'm more interested in... by hoggoth · · Score: 4, Interesting

      > I still have a batch of worthless (for now) options

      Count your blessings. When I left a dot-com I was granted $120,000 worth of options. A couple of months later, in the next calendar year they were worth a fraction of that. The IRS made me pay income tax on the phantom $120,000 that I never got. Of course in order to PAY those taxes I had to sell all the stock at a fraction of "what the company gave me". In return "to be fair" the IRS gave me an equivelant amount of 'capital losses' I can write off in the future. Now if I ever make $120,000 in capital gains in the future I will get back the money the IRS stole from me.

      --
      - For the complete works of Shakespeare: cat /dev/random (may take some time)
    4. Re:I'm more interested in... by Anonymous Coward · · Score: 1, Interesting

      Wow. As a tax accountant, I can say that your accountants don't sound that swift!

      There are possibily many strategies that could have been used to lower your overall taxes - so much so that it very well may have been possible to avoid all taxes.

      In fact, you might still be able to recover your tax payments now, and have grounds for a lawsuit against your so-called accountants.

      Just because a "professional" tells you something doesn't mean that it's true. If the tax payments don't make sense to you, then it's likely that your accountant is wrong. The tax code may be very complex, but it is very very rarely abusive to any one tax payer in the higher income tax brackets.

      I had one client who came to me... and I saved him over 95% of his tax payments, because his previous accountant just didn't care.

    5. Re:I'm more interested in... by Dick+Faze · · Score: 3, Interesting
      When you exercise options you buy and sell immediately

      No you don't.

      An option is the right to by a stock at a fixed price. Exercising is the act of BUYING the stock at that fixed price, it has nothing to do with selling the stock. I exercised options 7 years ago and I still own the stock

      I was in a similar situation a few years back with a company I had options that had to be exercised prior to my departure, so I bought the shares at the price indicated by the options. That year, I had to pay tax on the value of the stock even though I didn't sell it thanks to the AMT. The grandfather post is right, the IRS finds new ways to take your money. The only saving grace in the whole thing is, when I finally DO go to sell those shares, I won't have to pay tax on the portion of the profits equal to that which I already paid.

  2. Scoffing Analysts by kaleco · · Score: 5, Interesting
    I wonder how many of the analysts who scoffed at Google's potential value of $33bn rely on it every day to research other companies.

    I, for one, would be lost without it. However, I will be interested to see how it develops now it's under external influences.

    --
    Prosperity is only an instrument to be used, not a deity to be worshipped. Calvin Coolidge
    1. Re:Scoffing Analysts by dougmc · · Score: 2, Interesting
      Using it every day indicates a product or service which is of genuine value, unlike many of the dot-com mirages.
      Perhaps, but allow me to provide a counter example.

      Evite.

      At least at one point, I was receiving Evites every day or so for this or for that. And I'd look at the page, so I guess that means I was using it. I still don't think it provides a useful product, or provides genuine value. (Though obviously some other people do.) Probably the only reason that they're still around at all is that it's a cheap `service' to provide, though it's not much of a business model.

      Google, I see them as being useful and having a viable product and business model.

    2. Re:Scoffing Analysts by bigpat · · Score: 3, Interesting

      "Mind you, I think Google is a great tool, but they've bungled this IPO pretty badly. "

      Seems they have done better than most, at least by the only measure of success that is important to the company. They will have gotten a much larger share of the potential IPO revenue than companies that take the usual route and have the investment banks divvy up the shares amongst their buddies with big kickbacks and fees. Sure they had a few well publicized mistakes, probably well publicized by the people that would loose out if this method of IPO became popular.

      The message that the investment banks want other companies to take from this is that only google can hold a dutch auction and get away with it, for the rest of the companies they should let the pros handle an IPO in the usual way, even though half the IPO revenue will get pocketed in kickbacks and fees. The middlemen are always afraid when they are bypassed and are sure to point out everything that went wrong, even when this result was better for Google and better for investors.

  3. Glad to see it came down. by mansa · · Score: 2, Interesting
    With the gmail name and the playboy issue, it seemed like they went crazy for a few days.

    At any rate, now I can get my one share framed! I like to keep all my favorite tech company's stock certificates on my computer lab wall. :)

  4. Some good here by grunt107 · · Score: 4, Interesting

    Although to some pundits the lower price signals a weaker offering, some of this could be to GOOGs benefit.

    The lower per share value was followed by a lowering of shares available. This could generate more interest in the shares, which will drive prices up (or keep them constant longer).

    It does, however, mean the cap has gone down by over 25% (36B to 26B). Still bigger than my bank account, though.

  5. The Beginning of the End? by mkachan · · Score: 5, Interesting

    I fear that for Google, going fully profit and opening to investors might in the long run have a negative impact... Will big Google shareholders be able to influence what appears in the Search Engine? Maybe right now this will be impossible, but who knows what might happen in the future... And what will be the consequences of it for the users?

    Maybe the problem is the following: there is a way in which Google is perceived now that is fundamentally wrong. It is treated as a "service" for Internet Users, the One and Only Search Engine, while it is just Yet Another Company.

    Monopolies (especially privately-owned and profit-making ones) are never good. Will Google become as Bad(TM) as Microsoft?

  6. Money for buyouts? by manmanic · · Score: 5, Interesting

    With an already profitable business, and lots of extra money in its pocket, can we expect Google to start a buyout spree? Some targets might include Vivisimo with their clustering technology, Girafa for visualizing search, or even some of the better Web APIs applications like Google Alert or the GoogleBrowser, as this Wired story suggests.

    1. Re:Money for buyouts? by no+soup+for+you · · Score: 1, Interesting

      On the flip side.... Microsoft could spend their hordes of cash, and get 51% ownership for $11.781 billion. In all actuality, seems a decent price for them to flat buy google.

      --
      If you blog it...
  7. Bit expensive, isn't it? by jimicus · · Score: 4, Interesting

    After all, the company offers only one basic product (albeit in a couple of incarnations).

    Microsoft are starting to consider Google as competition. And competing with Microsoft has historically been a bad move - I can see Longhorn's search facilities integrating with MSN search such that the boundary between the Internet and the PC on your desk becoming blurred. Google are pretty much at the top, and it'll be almost impossible to maintain that long-term.

    So you probably wouldn't buy this share for growth. How about income? Has Google publicised what it plans on offering in dividends? Even if it did, with no past record to go on, how can you have any idea what level of income to expect?

    Even if you don't buy the share for growth, it's still an expensive share. It wouldn't take much for its value (and thus the value of the investment) to plummet.

    Ultimately, I think this share is a bet that the rich might be prepared (and financially able) to take, but most would be well advised to steer clear of. The dot-com bubble burst a long time ago.

  8. Don't buy a cent. by Anonymous Coward · · Score: 5, Interesting

    First, pick up and read a copy of The Intelligent Investor by Benjamin Graham (commentary by Jason Zweig).

    1) By all fundamental measures, this stock is dramatically overpriced. (Ask yourself how a search engine -- which could likely be replaced by next years' "next new thing" -- could be worth, on a per cap market basis, as much as McDonalds.)

    2) IPOs usually only make one group of people rich: the boardroom execs. Don't be suckered by the initial rise in price -- IPOs are almost always followed by a dramatic downturn.

    1. Re:Don't buy a cent. by marauder404 · · Score: 2, Interesting
      Because Google's product isn't their search engine, it's what the search engine is running on. We're talking a huge server clustering engine ...
      Oh really? Is that how they plan on making $250M this year on $3B of revenue for 2004? How do I buy or rent this product that they are selling? Google's technical infrastructure is novel and very interesting, but it's a cost-reduction measure and not a source of revenue. Seeing how they make money, they're an advertising company more than anything else. But you don't have to take my word for it:
      "Because Google arose after the Internet bubble, they were able to acquire a very strong technical team," Mr. Brewer said. "The irony is that they are really more of an advertising company than a search engine company today."
      -- So Google Is Almost Public. Now Comes the Hard Part.
  9. Scenario by Anonymous Coward · · Score: 0, Interesting

    Here is what happens when an enlightened, nimble company like Google goes public:

    1) The MBA are brought in.
    2) MBA's fire all the original staff and programmers.
    3) All developemnt and support is outsourced.
    4) Business sinks
    5) Business get bought by MS.

  10. Re:Financial sites with trading info by Anonymous Coward · · Score: 2, Interesting

    All the banks/brokerages I use are ready for it, the ISIN number has been assigned (US38259P5089).

  11. Price guaranteed to go lower by gnugrep · · Score: 3, Interesting

    The way that Google offered its shares, through a Dutch auction, guarantees that the price will go down. The way a traditional IPO is done is that the underwriters buy all the shares. Then they feel out the demand and sell the initial shares at a somewhat lower price to select investors. As soon as it starts trading, these lucky people flip the shares for an easy profit as the pent-up wider demand for the shares is met in the stock market. Using the auction process, they opened the bidding to the public at large and therefore anyone interested in really owning the stock would have already placed their bid. The demand is met by the IPO, not by the trading after the IPO in the aftermarket.

  12. Will it still be safe to advertise on Google? by achilstone · · Score: 2, Interesting

    What with all those investors clicking away on any google ads that appear, gotta keep revenues up!

    Think about it, you now own part of a search company who's money comes from clicked adverts. Regardless of interest wouldn't you click on the ads to ensure constant revenue???

  13. Cheaper than you think by Alomex · · Score: 2, Interesting

    The discount over the original predicted price of $105-135 is larger than what the $85 price suggest. The original plan was to offer twice as many shares in a dutch auction. In this type of auction the price is bid down instead of up until the entire lot of shares is sold.

    If the original amount of shares had been offered to the public, bidding would have continued well down past $85 to a range of $50-65 per share or so. In other words, for all practical purposes Google went public at half the price they had predicted. Interestingly, at that price Google's valuation is more in line with its competitors (overture, yahoo).

    Keep in mind that most companies that go public aim for a $10-20 per share initial price. This suggests that when the Google IPO process got started, Google was expecting to get a lot less per share than they got, so in the end they should be more than happy.

  14. Lotsa capital by bluesnowmonkey · · Score: 2, Interesting

    WTF is Google going to do with so much capital, anyway? What market will this money open up to them? It seemed like they were doing everything they wanted to do.

  15. Google's PR mistakes by scrm · · Score: 2, Interesting

    Telecomms and PR Expert Ben Silverman has a very interesting analysis on PR Fuel of Google's PR gaffs (and the resultant harsh media treatment) of the company around IPO time. Choice quotes:

    Whether it was a questionable interview with Playboy by company founders that almost derailed the IPO or the failure to properly account for stock options, Google's missteps have been high-profile and surprisingly amateurish. Google's brand with consumers has not suffered as a result, but in the media, the company's respect level is at an all-time low.

    --

    The PR people at Google, I have no doubt, are well aware of the challenges they face in going from a privately-held company to a publicly-held company. Up until a few months ago, I had faith that the company could handle these challenges without much fanfare or problems. But in light of recent events, I'm more skeptical about how the company conducts itself with the media and public at-large. Perhaps Google was just too perfect for its own good.

    --
    ---- scrm
  16. Re:Prove it then by stu72 · · Score: 2, Interesting

    Why would you doubt that ask? If I had google shares and no intention of selling them, there's no harm in naming an outlandish price, just in case some nutjob steps up to the plate & buys them.