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Google Files for IPO
Posted by
michael
on Thu Apr 29, 2004 01:55 PM
from the tech-bubble-is-here-again dept.
from the tech-bubble-is-here-again dept.
bobwyman manages to be the first to submit this story, apparently by using his own web service: "Well, the PubSub.com SEC Edgar notification system just sent a message a few minutes ago saying that Google has finally filed their S-1 to go public. See: Google's S-1 which was accepted by the SEC at 2004-04-29T13:53:49-04:00. If you had had a PubSub.com SEC Edgar subscription, you would have been one of the first to see this filing."
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More information (Score:5, Informative)
"In the filing, Google said that it generated revenues of $961.9 million in 2003 and reported a net profit of $106.5 million. Sales rose 177 percent from a year ago although earnings increased by just 6 percent." - LISnews.com [lisnews.com].
More stories are available from CNN [cnn.com] and The Associated Press [nwsource.com].
Re:More information (Score:5, Interesting)
From the yahoo.com link:
The Mountain View-based company earned $105.6 million, or 41 cents per share, on revenue of $962 million last year. Google got off to a fast start this year, with a first-quarter profit of $64 million, or 24 cents per share -- more than doubling its earnings of $25.8 million, or 10 cents per share, at the same time last year.
It's refreshing to see an internet company actually pulling a good profit. Hopefully google will be able to use the money it raises to actually grow their business, and not do as so many other companies have done and just go out and spend their new cash on worthless crap (*cough*mp3.com*cough*). It'll also be very interesting to see how an auction-based IPO works for a company with as much interest as google. Interesting quotes from the SEC form:
We will not shy away from high-risk, high-reward projects because of short term earnings pressure.
It is important to us to have a fair process for our IPO that is inclusive of both small and large investors.
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Re:More information (Score:5, Informative)
1. The stock class they are selling to the public will not have voting rights. The founders will keep those so that they keep control.
2. They explicitly state that they don't plan to ever pay any dividends.
So what exactly do you get for buying their stock again, besides knowing you own part of the company and hoping someone else wants to know that for themselves in the future?
I mean, I love Google and all (and they make me a lot of money every day through Adsense and free search traffic), but where's the incentive to purchase their stock?
Got to say that this is an awesome racket for the founders to bring in a ton of cash for themselves and their business without giving anything up in exchange, since all the profits just go right back into the company or anywhere else they decide them want the cash to go to.
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Re:More information (Score:5, Insightful)
It's the "Greater Fool" investment strategy:
No matter how much I pay for this stock, a greater fool than I will pay even more.
The parent poster makes the most important point that I've seen in this discussion.
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Re:from the WSJ (Score:5, Interesting)
An interesting paragraph-
"According to the filing, Chief Executive Eric Schmidt made $ 250,000 in salarly and got a $301,556 bonus last year, plus other compensation of $2,894. Co-founders Mr. Brin, now president of technology and Mr. Page, now president of products, both got salaries of $150,000 and bonuses of 206,556.".
And you can compare the pay with other US companies [aflcio.org]. Other companies can learn from google here.
For those worried that Google will become a wall street pawn, here's what the founders are doing about it-
"The offering documents were filed with a lengthy letter, called the "Owner's Manual" for the company. In it, co-founder Larry Page said he and co-founder Sergey Brin have worried that the "standard structure of public ownership may jeopardize the independence and focused objectivity that have been most important in Google's past success and that we consider most fundamental for its future."
As a result, the founders "have designed a corporate structure that will protect Google's ability to innovate and retain its most distinctive characteristics."
Part of that will be a dual-class structure, in which the founders will hold a higher-vote class of stock that will allow them to control much of the company's fate.".
Bottom line? Once you go public, wall street makes you ride to its tunes. Preventing that at google will establish it not only as the intelligent company but a financially astute one too.
Side note-Berkshire hathaway is planning to soak up as many shares are available.
Any ideas what Google will do with the money it raises?
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Google's Release? (Score:5, Informative)
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Re:More information (Score:5, Informative)
They have over 1900 employees [google.com]. Assuming a typical high-tech business cost of $100-200k per employee (salary + rent + computer + etc...), that's at least $190-380 million in revenue. Then you throw in their big-ass computer farms, their funky colorful office spheres [google.com], and their Grateful Dead chef [google.com]... then $980 million sounds reasonable.
Dave
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If you... (Score:5, Funny)
My prediction (Score:5, Funny)
Any day now (Score:5, Funny)
Too much hype (Score:5, Insightful)
Re:Too much hype (Score:5, Informative)
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About fucking time. (Score:4, Funny)
Re:About fucking time. (Score:4, Insightful)
I plan to buy short. Not much, perhaps 1K, just in order to put my money where my mouth is.
Quality of Google search engine results is getting worse, the email thing hasn't really taken off (although bad publicity has) and most of their money in near term is expected to come from these two. They already have a huge market share in Web searches (not much more space to grow), so the Gmail must take off if they're go maintain fast growth in 2004.
There's nothing magical in Google technology and services. True, it's been a revolutionary product/service so far, but its technology is already mature. Due to ever increasing CPU, networking, clustering and storage technologies, in two-three year time, a smart startup will be able to catch up with their search engine size within 2-3 month time. It will take couple of talented guys like the Googlers (there are smart people out there who don't work for Google yet), a better search algorithm (reasonable expectation) and some money for storage and bandwidth (who wouldn't invest couple of millions in a company that wants to beat Gogle).
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For the minions (Score:4, Interesting)
Re:For the minions (Score:4, Insightful)
The rich are going to get richer on this one, and the rest of us will just have to sit patiently. Because everyone assumes buying Google is a good idea, by the time your typical person has the opportunity to do so, it's not.
IMHO.
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COMMERCIALS (Score:4, Insightful)
Rollercoaster Time (Score:4, Insightful)
Then it's going to tank.
Then everyone will buy it at $1 a share.
It'll repeat this cycle for a while before stabilizing. In the meantime expect Ads to start flooding google.com as they try to meet their new quarter numbers as expected by share holders.
Re:Rollercoaster Time (Score:5, Interesting)
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Coming soon to an apocalypse near you... (Score:5, Funny)
* DOT COM 2 *
More vapor, more idiots, more market speak, same ending.
The Most Info (Score:5, Informative)
Nice introduction. (Score:4, Interesting)
Google is not a conventional company. We do not intend to become one.
Goodbye 1972 Maverick, Hello Porsche (Score:5, Interesting)
The initial option grants to many of our senior management and key employees are fully vested. Therefore, these employees may not have sufficient financial incentive to stay with us.
Many of our senior management personnel and other key employees have become, or will soon become, substantially vested in their initial stock option grants. While we often grant additional stock options to management personnel and other key employees after their hire dates to provide additional incentives to remain employed by us, their initial grants are usually much larger than follow-on grants. Employees may be more likely to leave us after their initial option grant fully vests, especially if the shares underlying the options have significantly appreciated in value relative to the option exercise price. We have not given any additional grants to Eric, Larry or Sergey. Larry and Sergey are fully vested, and only a small portion of Eric's stock is subject to future vesting.
I sense a disturbance in the force... (Score:5, Funny)
How is this good for them? (Score:4, Interesting)
2) Their competitors are coming on strong. Y! is making gains in the space.
3) They could suffer from a huge brain drain. If the IPO is uber successful then a lot of folks will get very rich and leave.
That being said, I wouldn't mind having some $.25 fully-vested google options right about now...
Risks (Score:5, Informative)
Risks Related to Our Business and Industry
[...]
We face significant competition from Microsoft and Yahoo.
We face competition from other Internet companies, including web search providers, Internet advertising companies and destination web sites that may also bundle their services with Internet access.
Auction (Score:5, Interesting)
1) Underwriters manage the auction
2) You pre-qualify, etc.
3)You bid (and can multiple bid - ie, one bid for 9K shares at $20, another bid for 1K shares at $40, you'll get 10K shares if the price is $15)
4)The reject "manipulative" or "speculative" bids
5)They calculate a clearance price that'd sell all the shares offered according to the bids, and accept bids accordingly
6)They determine whether to hand out all the shares bid, give everyone 80% of what they asked for, give the bid/little guys everything they asked for, or let original bid price determine who gets everything they asked for.
I'd be really interested in what some professional equity people think of this process, it seems really interesting to me.
Re:Auction (Score:5, Interesting)
Check out this link for more info:
http://www.googleinvestor.com/auction.asp
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Re:Auction (Score:4, Insightful)
The gist of the process is that it prices the IPO so that the proceeds to the company are not diverted to institutional investors. In traditional IPOs the investment banker typically underprices the shares and allocates most of them to large institutional investors as a reward for holding large portfolios in-house. The first-day pop you saw in other IPOs is a sign of that underpricing (in addition to some irrational exuberance). If company X offers 100 shares at $10 per share, then the price shoots up in the aftermarket to $100, that means the company likely could have gone public at $100, raising 10x the revenue. The auction would price it closer to $100.
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Dutch Auction (Score:5, Interesting)
This, of course, has some Underwriters worried, given that a fee in the range of 5% could yeild over 100 million dollars for an IPO such as google.
Many believe, however, that this will not indicate a trend due to the fact that this may be easy for google, because they are allready a household name. In most other cases, an auction will not be so easy.
I thought this very interesting (Score:5, Interesting)
Re:I thought this very interesting (Score:5, Insightful)
The outsourcing item made me wonder how much the writer really understands the difficulty of implementing a search engine. You can outsource typical day to day applications, the easy stuff. Google is doing cutting edge work! This is not a case of putting 1000 monkeys in a room and youll be a leader at search, and if youre still not w/ 1000 monkeys, then just add 1000 more. Or popping out JSP pages.
Google does have a strategy to lock in customers-Gmail. #9, about profit extension is not completely baseless, but they are not extending so much as optimizing their core strength to new applications. If a car engine company makes specialized engines for airplanes or boats, thats not really "extending" to me. If they tried to make cars, then that is a different story.
#6 about pay per click advertising is off base, considering the nature of google's ads. They are non intrusive, and embedded in the dynamically generated html. it would be very difficult for these adds to be removed, and they are so unobtrusive most users are not bothered in the slightest by them.
Overall, I found the article quite lame. Competition is definitely a concern, but if youre buying google, youre really buying the idea that Google can do things better than its competitors- people still buy Ford and GM stock regardless of the competitive nature of the auto business.
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Upcoming Open Source Alternative to Google... (Score:5, Informative)
Search engine built on Open Source technologies and will never have to worry about coming too corporate.
Goal is to use an open api, open algorithm and disclose everything there is about search and search technologies. Will even be launching a blog shortly.
Well, this isn't about the Google IPO, but it is about an open source project with ambitions to play the game google does without all the corporate mumbo jumbo and no need to IPO.
Index is about 50 million pages during beta but we are about to roll out our 250 million page corpus.
Let us know what you think
Re:Upcoming Open Source Alternative to Google... (Score:5, Interesting)
I'm not trolling, I'm just a pessimist...
I'm sorry, but it's not going to beat Google.
You see, the open source community is capable of some amazing feats, but half of the most skilled search engineers in the world work for Google. They have an obscene collection of fantastically talented people working on theory that few others understand.
As others realise the money in search try and compete with Google the premium on employing search experts will go up so high that there won't be many with the principles to work on open source.
It's sad but true.Parent
Wonderful. (Score:4, Funny)
Goo (Score:5, Funny)
Sweet precious GOO.
cute choice of numbers (Score:5, Funny)
Re:cute choice of numbers (Score:5, Funny)
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Google IPO links (Score:4, Informative)
That site has been around for a while, a unofficial google ipo watch.
Useful.
Are you worried google will loose focus? (Score:5, Informative)
This will stop your worries
In an unusual provision for a technology company, Google will create two classes of shares with different voting rights, a move that aims to guarantee founders Larry Page and Sergey Brin will maintain decision-making authority. Such structures have proven beneficial in media companies, such as The New York Times, the filing states.
So this mean Larry and Sergey will still drive Google and everyone knows how they work. I don't think they will just react how wall street wants them to react.
Post-NASDAQ-crash IPO looms, Congrats! (Score:4, Informative)
Go Google! (Score:5, Insightful)
Re:IPO - not a great idea... (Score:5, Interesting)
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Re:IPO - not a great idea... (Score:5, Insightful)
Yeah, because every company that has gone public has stopped innovative R&D and constant steady growth. Look at some of the major public companies out there (3M and General Electric) to see what R&D can really accomplish. Add in the fact that Google will gain at least $2 billion that they can use towards more services, current research, and increasing infrastructure. Your comment is baseless
What I'm going to say I think is not much new, but here's a good place to say it. You're right, but I think what the original poster really had in mind was not necessarily innovation in terms of doing research. It was more along the lines of innovation in terms of risky undertakings paying off. Once a company goes public, you can't throw the basket of eggs at the wall and see what sticks anymore. You have to choose more dependable undertakings to convince your investors not to sell. While risky undertakings can lead to wildly successful innovations, there are plenty of less risky undertakings which I'm sure Google can handle. Google's future will look more dependable, which is good, because yes, they're a quality company.
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Re:IPO - not a great idea... (Score:4, Insightful)
On the other hand, the IT industry is filled with companies sending jobs overseas, holding back costly initiatives, and downsizing their R&D departments, because they cost money and impact the bottom line. Further, companies absolutely make decisions on a yearly timescale when they have to report to the public. A 5-year project which will take $100 million off the bottom line each year before yielding dividends? Good luck selling that proposal.
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Investments (Score:4, Insightful)
More then a few outstanding ideas have died or at least not lived up to their potentials due to bad implementation, planning or management.
Myself I'm not convinced 1 that google is a long term financially sound company.
The IPO price will probaly be too high to justify what value they do have.
And most importantly. There are probaly more established companies with a history of performance that will offer a better return with less risk.
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Re:Buying Stocks (Score:5, Insightful)
Also, keep in mind that you have to pay a commission on purchase and on sale. So lets say you buy $500 worth of Google, and it goes up to $600. You pay $10.95/trade (Ameritrade, say). That's $78.10 profit. If you sold it within 18 months of buying it, you have to pay income taxes on that money, lets say that is 25%. That's $58.57 profit. (Actually, I don't remember if you can discount the commissions for tax purposes). That's around a 11% return. If you buy $1000, and it goes up to $1200, gives you $133 profit after the 25% taxes and commissions, a 13% gain. The more you invest, the less significant the commissions become.
If you insist, though, you don't have to spend all of the money in your brokerage account on stock. You can leave some in as cash. You probably won't earn interest on it, but since its only a few hundred dollars anyways, that shouldn't matter too much.
Btw, you may be interested in a service such as Sharebuilder. They can automatically debit a certain amount every month, and then buy fractional shares. It's like $12/month for the service, though.
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Long Live Google! (Score:5, Informative)
In an unusual provision for a technology company, Google will create two classes of shares with different voting rights, a move that aims to guarantee founders Larry Page and Sergey Brin will maintain decision-making authority...
"In our opinion, outside pressures too often tempt companies to sacrifice long-term opportunities to meet quarterly market expectations. Sometimes this pressure has caused companies to manipulate financial results in order to 'make their quarter.' In Warren Buffett's words, 'We won't smooth quarterly or annual results: If earnings figures are lumpy when they reach headquarters, they will be lumpy when they reach you."
The founders have also fought to maintain their control over the company even as it hired Chief Executive Officer Eric Schmidt in 2000. According to the document, Page and Brin said that they will run the company as a "triumvirate."
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Re:Evil (Score:5, Funny)
LETTER FROM THE FOUNDERS "AN OWNER'S MANUAL" FOR GOOGLE'S SHAREHOLDERS
DON'T BE EVIL
Don't be evil. We believe strongly that in the long term, we will be better served--as shareholders and in all other ways--by a company that does good things for the world even if we forgo some short term gains. This is an important aspect of our culture and is broadly shared within the company.
I mean, if they're promising not to be evil, isn't that good enough? If we had only thought to extract non-evil promises out of companies like Enron....
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Re:Interesting note... (Score:4, Insightful)
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