Personally, I think they might have made a mistake in estimating $100/share. I think it scared people away. Doesn't it seem smarter to estimate it lower and let the bidding go *up*?
I don't understand how the research figures quoted in the news article can possibly be right.
"Shapiro's survey of 450 households between Aug. 1 and 10 found that though Google is held in high regard by the public, only 4 percent of American households checked out the company's online registration site.
And of those, a disappointing 6 percent actually registered for a bidder's ID number to participate in the auction..."
I don't know what methodologies these research firms use, but if you ask 450 households a question and 4% say "yes" that's 18 households. If 6% of households that said "yes" registered for a bidder's ID that's exactly *1* household.
In other words, they picked a sample of 450 households, and 1 had a registered Google IPO ID.
But doesn't that really say "Hey, your sample size is WAY too small to be meaningful"? Surely they have to keep on interviewing until they get a meaningful number of "hits" (i.e. people with IDs) and then they can work backwards and do the projections for the whole of the US.
|Google cut range on its initial public offering to between $85 and $95 a share. The previous price range was $108 to $135. |
Shareholders are reducing the number of shares they are selling by about 6.1 million to 5.5 million shares, The company still plans to sell about 14.1 million shares.
The way I read it:
1) Range cut but not by that much (would have been a disaster if they had to cut it big time), clearly there was strong downwards pressure
2) shareholders cut number of shares they are selling considerably - they did not have enough demand for the price point quoted in 1), and company could not afford to cut price range even further
Overall - not looking good, just wait till first Q with drop in revenues (seasonal or what), and stock market will punish. Greed always ends in tears - should stock go down big time then lawsuits from 1000+ folk who were promised stock options that Google failed to register.
I think the reason for the limited interest is due to:
- fast pace and small window.
- Getting the bidder id and having to bid means that two actions would have to be taken. People get turned off.
- The PE was higher than expected.
- Lots of pundits are telling people to stay away.
|Please be advised that the prospectus for the offering of Google's Class A common stock will be amended to change the estimated offering price range and the number of shares to be sold in the offering. The offering price is now expected to be between $85 and $95 per share. As originally planned, Google expects to sell 14,142,135 shares of Class A common stock in the offering. However, in view of this new price range, the selling shareholders are reducing the shares they expect to sell to approximately 5.5 million shares, yielding a total offering of approximately 19.6 million shares. |
Sorry, can't make the link work
Perhaps it's just that the people with the smart money can see that Google is now struggling to weed out the spammy directories and affiliate sites and that this may eventually cost them their popularity?
I am of the opinion that google sould never have gone public in these times of econmic turmoil.
I firmly believe it was a mistake to even go public in the first place. They want to own the company (hence undemocratic 2 share tiers), but also get the advantages of listing - turn dead paper into liquid money.
I also think that they made mistake not only with "when" to go public, but also with "how" to do it - like it or not, but a handful of big players control market big time. After working so many years one might as well bite the bullet and take things as they are instead of betting farm on new methods of IPOing.
IMHO they should have sold to Microsoft while they could (or so some people believe): better be Visio rather than Netscape, even though a lot of employees can still make $1 mln+, and that should be enough to retire (move to cheaper country if its not enough!), so at the end of the day its the investors who will lose out.
I think it reflects on how fragile the economy is at this moment despite what that administration would have you believe (do not take that as a trigger for a political discusion).
Record oil price.
Anemic job growth.
So it adds up to a shockingly poor IPO for Google.
Totally agree, not that it is a "fragil economic time"
but becuase Google is a grade C company with horrible management and very very poor products. The public clearly understands that Google feels they are worth way too much.
Google is not special in the eyes on investors whatsoever and I am glad that the lowering of the price range indicates that. You have a loud mouthed founder who thinks he has anhy clue what he is doing get in trouble with the SEC days before IPO launch, and a pricing scheme that totaly failed.
I read the news this morning about the lowering of the price and actually was laughing. Google screwed this up more than anything. I hope they get the message it is time to improve the product they offer a LOT before screwing around with anything else.
I think they preferred this to happen, the higher the price the actual worse it is for the stock and would make expectations for google unrealistic, its almost convenient they did this now...
Any other time they would have gone IPO the price would have been insane and a bust was likely.
It would have alot harder for the price to go up
I think it is a good thing, the lower for them the better.
>>>I think it is a good thing, the lower for them the better.
Good because they now have less money than they thought they would. That the options are worth less, and they have to buy a smaller house than they were looking at, they have to buy a BMW instead of a Rolls.
It all depends really, if they know their stock is crap and it wont go up but rather down eventually, them maybe your right, they did stuff up, but they know it is highly overvalued and the profit for the investor would be horrible. Also i do believe that they do believe in their product and that it will go up. Whats the point putting a stock on the market that will stay at a stagnant price. Unless their gonna take over alot of companies, the real question is how much market capitalization do they need?
I never did think for one minute that Google should go public and I still don't.
The VC guys needed their money back, Larry and Sergey could probably care less. When you go public, things have a tendency to err..get in the public, this works against the whole secrecy MO that these guys seem to enjoy.
IPO was inevitable. They should have known better, that, when you go against the world (especially wall st), you gotta get your defenses right, and real fast. They, should have just got everything in place, by april and just finished it fast in a couple of weeks.. And that would have gave wall st. no time to organize this negative campaign..
>The VC guys needed their money back, Larry and Sergey could probably care less.
It does not explain why Larry, Sergey and other insiders are offering their stocks for sale. They surely don't need the money.
I've been saying all along that Google shouldn't have gone public. I read an article earlier that they lowered the IPO price, but there are some reasons I came up with for this that weren't mentioned in the article:
(1) Because the Google IPO has received more hype than Star Wars Episode 1, and will be much more disappointing.
(2) Because what I've been saying all along is true and people are finally starting to figure it out - that the company doesn't profit enough to justify a $108 - $135 price, and that it would drop to about half of that almost immediately after IPO.
(3) Because the OTHER thing I've been saying all along is true - Google doesn't need and can't spend $4 Billion. They have nothing to spend it on, employees can't cash out their stock for at least 6 months anyway, and they make more than enough money to do everything they want to do without public capital.
(4) Because yet ANOTHER thing I've been saying all along is true - the more Google raises in public capital, the more they have to profit to give investors a return. Google isn't going to net $4 Billion any time soon. They would have to increase their profits 10 fold to even reach $1 Billion. While the gross figures are high, remember they only actually net about $100 Million a year. There is simply no investor advantage to buying this stock at IPO.
This IPO is going to make the founders and a few key employees rich - nothing more. They're already a profitable company and there isn't anything they want to do that they can't afford to do with their own income. Going public won't benefit the company at all because they don't need investor money. They're going to be "holding" all of this money and they have nothing to spend it on. Really the only thing that will prevent shareholders from losing a ton of cash is if Google uses their public capital to acquire other companies that are already profitable - but as we all know, acquisitions make the price per share go down, so you would have to ride it out until the revenue from the purchase of another company exceeded the acquisition costs. I just don't see it happening within a year or two.
Stay away from this IPO...
|The VC guys needed their money back, Larry and Sergey could probably care less. |
VCs did not control the company - founders could have easily overruled that, however from what I have seen it appears that their CEO would have pretty much walked out if they were not going for IPO, add to this that after doing hard and good work employees fancied making a mil or more each - can't really blame them for desire, however it is foolish to try to save a few % on fees only to lose a lot more as the result of revised share issue price - some say auction was meant to establish that price, however matter of fact is that they did release indicative pricing, if nothing all auction should have been higher, but not lower.
They had no choice. They had to go public. They offered stock options to a lot of people and they had a legal obligation to go public.
|They offered stock options to a lot of people and they had a legal obligation to go public. |
AFAIK they had to start doing all accounting at the level of a PLC, but they did not actually had to float - they just thought that after going into expense of being de facto PLC costs wise, they might as well float and reap the benefits too. Being very secretive company they were edgy about telling the whole world about it and not getting something back. I also think they concluded that they probably at their peak and its best time to sell out.
|And that would have gave wall st. no time to organize this negative campaign.. |
he he..no one organized anything, the boys didn't need any help to shoot themselves in the foot, please don't try to portray poor lil ole google as a victim here..
I don't know if this article [washingtonpost.com] has been posted before at the Washington Post but I thought it was a great read. You are right about my last post. I'm not sure where I heard that but it is wrong. They were just under a lot of preasure.
Another point to add to digitalv's fine list is the share price.
They have completely cut out the small investor. If you wanted to buy a 100 shares a person needs to 9 grand sitting around doing nothing.
This was really dumb because the people who use google come from all demographics. They should not have played to the elite investor and institutions only.
there were 5 of these similar threads running - I spliced them to cut the signal-noise ratio...
|They should not have played to the elite investor and institutions only |
This kinda goes along with what I was saying about this IPO doing nothing other than making some people in Google very wealthy and serving no other purpose. It seems that they don't care about the long term success of the company, they just want to get a bunch of cash real quick and sell.
|I never did think for one minute that Google should go public and I still don't. |
That makes me wonder.
If a company is funded by VC's who expect an ROI in an IPO, what happens if the company in question never does IPO? How do the VC's get paid back?
Google made a profit of $79,063,000 last quarter. They could split that up among the shareholders.
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