Google Considering IPO Auction Online 271
HackerStickers writes "An article in the Financial Times states that Google could be considering doing their IPO online via an auction versus the standard methods of raising funds early next year. The article points out that auctioning it could bring in a larger chunk of cash for the company. Would you bid on a piece of Google?"
Google (Score:1, Interesting)
Re:IPO=Death (Score:3, Interesting)
If it doesn't make enough revenue, why would investors think this is a good deal?
If it does, why would the private owner(s) have an IPO? Sure they can make a ton of cash - but aren't they doing that now? Obviously they are tired of the business and want to get out and make a lot of cash while doing it.
who want's a piece? (Score:3, Interesting)
- "They could get a $100bn" stock market value, said one person involved.
- "It will be worth $15bn-$25bn," said one person who has been involved in the process. "This has never happened before."
Next, more hype:Though the company does not disclose financial information, its profits are growing rapidly and are reckoned to be running at an annual rate of about $150m on revenues of $500m.
Anybody got a name??
Hell no. (Score:1, Interesting)
Re:IPO=Death (Score:2, Interesting)
"Growth" will be expected year after year - the innovative ideas that have made google so successful will give way.
So you say that if people obsessed with growth show up, google would magically lose the ability to grow ?
the innovative ideas that have made google so successful will give way
Of course you realize that google stands up as an example for many, and that doing the IPO online maybe would attract people that are in tune with google's ideals and previous strategies ?
No, I won't bid on a share.
By your own words, if you're not planning to be providing "constant steady growth and innovative R&D" the next few years, please do so.
Maybe not... (Score:2, Interesting)
Re:I always feared the day they'd IPO! (Score:2, Interesting)
- By becoming public, google loses the ability to continue with constant steady growth and innovative R&D
- your company is worthless to investors unless you continually grow and grow and grow
So, which is it?Re:IPO=Death (Score:5, Interesting)
Re:IPO=Death (Score:2, Interesting)
You're insinuating Microsoft would do a hostile takeover of Google. IIRC, Microsoft would have to own 51% of the company by buying shares of the IPO (or acquiring them later on, etc). This is only possible if Google releases 51% of their shares when they go public. The company [yahoo.com] I work for recently went public and did not want to have to worry about a hostile takeover (we're relatively small - our competitors would gobble us up if they had the chance) so they only released ~ 30% of their shares. And they haven't become obsessed with the stock price; we're just as committed to providing quality products to our customers.
Re:IPO=Death (Score:4, Interesting)
"By becoming public, google loses the ability to continue with constant steady growth and innovative R&D. These things will invariably lead to short sighted planning by the management to "make the numbers" for the next quarter, 6 months, or year. "Growth" will be expected year after year - the innovative ideas that have made google so successful will give way."
I think that Google could still do this as a public company. There are a handful of companies now that do NOT issue quarterly guidance, focusing instead on the long-term (like they should, IMHO). These aren't small companies either -- I know Coca-cola does it. Google doesn't necesarily have to issue quarterly guidance if it doesnt want to. I think it has a commanding enough position (and certainly would have a top spot on the exchange if they went public) to not have to kowtow to the Street. I for one would LOVE a Google IPO -- the interest it would create would be tremendously beneficial to my portfolio. I don't think would signals the end of the Google we all know and love -- selling shares to the public is not the same as selling your soul. As long as Google has smart, talented people working for them, and as long as they gaze over their shoulder to see Yahoo and M$ breathing down their throat, I think they'll stay the same, IPO or not.
Re:Uhm, yes, I would, but not immediately (Score:5, Interesting)
It seems, though, that an auction will mean that everyone will pay the maximum amount for the shares rather than a tempting IPO amount. So instead of some people getting in at a $10 IPO value (for example) and riding it to $100, everyone will have to pay $100 each and there will be no IPO ride.
What this means to me that there is no pressing reason why I should participate in the IPO. Presumably the auction will set a price very close to what it will be trading at when shares become available through traditional channels, so why bother? Just wait a few days and see how the stock moves. IPOs in the past have been tempting for investors because there is an expectation it will rise quickly, so everyone wants in. If the IPO is at the "already risen" stock price then there's no rush to get in at the very beginning since a few days later will be essentially the same price on the open market.
This only makes sense for Google, and only the owners. As someone else has said, they already have good profit and I doubt they need more to grow the company. If the company doesn't have any plans on why it needs/wants $15 billion (other than to make a few owners rich) I'd be skeptical of giving it to them.
Re:IPO=Death (Score:2, Interesting)
A recent issue of Barron's points out Google has reached conditions that require it to make reports to the SEC, much like public companies are required to do. It's a 1934 law which takes affect once companies have 500 shareholders and $10 million in assets. There's a reference to it on Motley fool: Gunning for Google [fool.com]
So, while you're right, and realize unlike some others around here that IPOs are not pure good, for Google, if they have to open up their business like this and make these reports like a public company, why not reap the financial rewards of an IPO? This is part of what's motivating them.
Re:IPO=Death (Score:3, Interesting)
Either way you slice it, the typical investor is concerned with the P/E, as you mentioned. The problem with that is if the immediate P/E drops, they tend to dump the stock pretty quickly. So if said company reinvests capital for say a new server farm, investors don't tend to look at that as a profitable move for a company, and run form it. Private companies don't have that problem, as they get the opportunity to look much further down the road.
Re:IPO=Death (Score:3, Interesting)
The valued employees already very likely own stock and/or stock options in the privately held Company. When private Company goes public (IPO), the private stock simply gets converted to public stock.
Many employees now busting their humps 12+hours a day will dump their stock ASAP, call in rich, and lose quite a bit of incentive to put in more than 8 hours. I've personally seen this happen in several start-ups during the good-ole days of the bubble.
Conversely, staying private means that the company needs to string the private-stock-option-holding employees along with the hope of eventually going public. Eventually, employees get tired of waiting and bail (if they can find a job somewhere else).
The moral: cash is the incentive program preferred by 99% of employees.
Re:Yeah, I would... (Score:3, Interesting)
Top that: eBay doing its IPO on eBay! (I know, I know, they're already public, don't let reality get in the way of a cool fantasy...)
Deja Vu? (Score:5, Interesting)
I've felt for a long time that this is an affront to capitalism (yeah, I'm a capitalist... go ahead and mod me down). The only people who make big money did essentially nothing to earn it, besides the company founders who took big risk and make less than they could since the banks keep the price down to make sure they sell the whole float.
At the same time, we've been here before, as this Forbes article [forbes.com] from early 2001 describes. Earlier efforts to make IPOs more efficient and democratic failed. It's not clear to me whether this was due to the coincidental collapse of the tech IPO market, or whether it was the result of a coordinate sabotage effort by the big investment banks. (Or maybe, just maybe those banks really do add some value by getting their big customers to serve as market makers).
Google has about as much market clout as I can imagine, so if they decide to go for it, this will serve as a good acid test. If the IPO goes off successfully as an online auction, this probably means that the earlier efforts were just bad timing. If it fails, I might smell a conspiracy.
IPO 101 Lesson (Score:2, Interesting)
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Dr. Eric E. Schmidt, Google Inc. Chairman of the Board
- Sergey Brin, Google Inc.
- Larry Page, Google Inc.
- John Doerr, Kleiner Perkins Caufield & Byers
- Michael Moritz, Sequoia Capital
- Ram Shriram, private investor
The sole reason that Kleiner Perkins, Sequoia, and Mr. Shriram are represented on the board is that they invested millions in Google. I sincerely doubt that they do not want a return on that investment (especially with the millions they likely lost when the bubble burst). Google had already sold out long ago.Not that wanting an ROI is a bad thing (that is what make the US economy great). But assuming that a privately held company is any more or less profit driven than a publically held one is a very bad assumption indeed.
Google's Motivations (Score:3, Interesting)
My guess is that they:
1.go public
2. gets lots of cash
3. Buy back company and privitize after price comes back down.
I also think that google is using the muscle to hopefully make some good changes to Wall Street.
Even when things were good in '97 and '98, Wall Street's actions always looked criminal to me.
Wall Street consistantly ended up giving companies going public only a fraction of the price that the company closed at after the first day of trading.
Why is this a problem?
Well a company going public is essentially selling a % of their company to raise capital.
Let's say we have a company that we are willing to sell 20% to raise $20 million.
To do that, I have to sell 2 million shares at $10 a share.
If the stock closes at $20 at the end of the first day, as the IPO'd company we still only raised $20 million dollars.
If the I-bankers did their job correctly, we could have only sold 10% of the company and still raised the same amount of cash ( $20 million ). Instead, we were forced to sell 2x as much ownership of the company as we should have.
The investment banks pocketed all the additional money. The most common structure of an IPO is that the underwriters purchase all the stock from the IPO company and then sell it from their books as trading occurs.
As I understand it, the biggest task a IPO underwriter performs is evaluating what a share of a stock will trade for in the market. If you look at their historical accuracy of doing this, you'll see how poor a job they do at this.
Why does Wall Street still exist?
Legislation
Look at the effeciency of NYSE vs Nasdaq. No comparison.
Warning to moderators! About Everyman. (Score:5, Interesting)
(I know I may burn some karma on this, but it is worth it if I can contribute to putting an end to Everyman's lies about Google.)
Warning: Before modding the parent post, you should know that "Everyman" is the Slashdot alias of Mr. Daniel Brandt, who owns google-watch.org [google-watch.org].
I have pointed out many times that google-watch.org is a site full of lies and deception [slashdot.org]. The reason the site was set up in the first place was that Mr. Brandt didn't think that he got a high enough PageRank, and that his obscure pages about various subjects should rank above other, more informative and popular sources of information on the same subjects. When his obscure site with a page about Donald Rumsfeld did not get a high rank on Google for obvious reasons, he set out on a personal vendetta against the search engine.
In other words, he is not making that site for the good of us all, but to spread FUD about Google. It is a good thing to keep an eye on powerful companies, but this is over the top - it is ridiculous.
Before falling for Brandt's lies and deceptions, please visit Google-watch-watch.org [google-watch-watch.org], which exposes his misleading site for what it is.
This latest post on Slashdot is just the latest post in the series of strawman arguments Mr. Brandt is using to try to destroy Google. Also, he still hasn't answered my last reply to him, where I pointed out his hypocrisy, when he complains about how Salon writes a misleading article about him [slashdot.org] (yeah, right...).
Re:I'd buy, but not in an auction (Score:3, Interesting)
Re:Way too expensive... (Score:3, Interesting)