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Google Cuts IPO Prices
Fischerlaender




msg:1233896
 8:07 am on Aug 18, 2004 (gmt 0)

According to some news here on german radio, Google has cut its price range and the new price range is now 85$ to 95$. Radio further said that there should be a statement concerning the price cut on Google's homepage, but I did not find any information.

 

Fischerlaender




msg:1233897
 8:13 am on Aug 18, 2004 (gmt 0)

Now the german news magazine Der Spiegel [spiegel.de] also has an article about the price cut.

webdev




msg:1233898
 8:57 am on Aug 18, 2004 (gmt 0)

BBC are on the ball too [news.bbc.co.uk...]

mcavill




msg:1233899
 8:57 am on Aug 18, 2004 (gmt 0)

yeap: https://www.ipo.google.com/press-release-20040818-1.html

irock




msg:1233900
 9:20 am on Aug 18, 2004 (gmt 0)

I'm no expert... Does his mean that the slow demand of their stocks lowered the true market price of this IPO? As a result of the shift in the stock demand, Google has to reduce the number of shares made available to the public so a market equilibrium can be reached.

ThomasB




msg:1233901
 9:42 am on Aug 18, 2004 (gmt 0)

That's really big news imho. I think due to their problems with SEC, DDoS attacks, ... the price dropped and I never thought that they would actually lose that much money through it.

Fischerlaender




msg:1233902
 10:49 am on Aug 18, 2004 (gmt 0)

Not only did they cut their prices, they also reduced the amount of shares from about 25mio to less than 20mios.

IMHO, this is a disaster.

Brett_Tabke




msg:1233903
 12:31 pm on Aug 18, 2004 (gmt 0)

Not totally unexpected Fischerlaender. This is a different type of deal than you may have heard about over there. They were shooting for the high end of the range when they set out.

> Does his mean that the slow demand of their
> stocks lowered the true market price of this IPO?

Not entirely - no. It means they had some rose colored glasses on when they talked about the expected prices. The big surprise is the cut in shares offered.

christopher w




msg:1233904
 1:47 pm on Aug 18, 2004 (gmt 0)

Google Inc. slashed the size of its closely watched initial public offering nearly in half to less than $2 billion on Wednesday, splashing cold water on what has been touted as the hottest Internet IPO in years.

Google Inc. slashed the size of its closely watched initial public offering nearly in half to less than $2 billion on Wednesday, splashing cold water on what has been touted as the hottest Internet IPO in years.

The revision came as Google disclosed in an amended filing that the U.S. Securities and Exchange Commission has asked for "additional information" about the publication of a Playboy magazine article featuring an interview with Google's co-founders.

The IPO of the world's most popular Web search engine is now slated to raise as much as $1.9 billion, far lower than its previous size of as much as $3.5 billion. Trading could begin as early as Thursday.

[edit]Can't get the link to work so I just pasted most of the article[/edit]

Mardi_Gras




msg:1233905
 1:57 pm on Aug 18, 2004 (gmt 0)

The demand must have been a fraction of what they anticipated. Even at $20 below their lowest estimate, they can only sell half the shares they planned to.

Of course, the Google spin is that "due to the lower share price, they decided to sell fewer shares." The implication there is that they could have sold more at $85 if they wanted to. I doubt it.

Rugles




msg:1233906
 2:01 pm on Aug 18, 2004 (gmt 0)

>>>plan to sell to 5.5 million from about 11.6 million

Wow!
They are not going to have near as much cash as they thought they would. It was a mistake to go public at this time of economic turmoil. Big mistake!

Lord Majestic




msg:1233907
 2:04 pm on Aug 18, 2004 (gmt 0)

We shall see what they really think from employees share transactions - somehow I think they won't be buying...

mfishy




msg:1233908
 3:18 pm on Aug 18, 2004 (gmt 0)

Makes a lot of sense. I was surprised to see some here justifying the original price when it was clearly too high. Makes this a much more interesting opp, IMHO.

ogletree




msg:1233909
 3:27 pm on Aug 18, 2004 (gmt 0)

I think the lower price is becasue they talked about a higher price. A lot of people did not get in because they did not want to buy stock at it's highest point ever. Everybody is waiting for it to go down and then buy it.

BennyBlanco




msg:1233910
 3:37 pm on Aug 18, 2004 (gmt 0)

I thought the projected price was laughable when I first heard it, and $85-$95 is still worth a chuckle. I mean, I love Google and think they have definitely been the leader for long enough now to be in demand... but these prices are simply insane. In the end, can you put that much value in any company which is so driven by trend? I know that 'google' has become a common part of english vernacular, but with a gust of wind, some new engine could come along and do it better (there are plenty of users who have been frustrated with Google). If the traffic slips, all of the ad dollars will most assuredly slip as well, and then where is the income coming from?

I just never believed that the value would hold and I guess it is better to see it happen pre-sale, than months afterward when millions would lose millions.

Just mho

bnhall




msg:1233911
 3:48 pm on Aug 18, 2004 (gmt 0)

It's interesting they're still forecasting a PE of close to 100 - when in other discussion on this forum most people are only willing to pay 6 months' earnings for web sites (affiliates or content sites running ads). At that price GOOG would be going for $0.50 a share.

taxpod




msg:1233912
 4:11 pm on Aug 18, 2004 (gmt 0)

Some think this is no big deal. But if you were one these guys who is going to be very rich after it goes live, you went to bed last week thinking you would have net worth of X dollars and woke up this week realizing you have half that. That's significant if you're going from $20,000 to $10,000 or two billion to one billion. Come to think of it, it seems worse the bigger the numbers go.

Also if the company had been making plans for spending X billion, having half that sort of changes plans, don't you think?

Finally, it ain't so much where the price is at moment one after the IPO. To those who have their shares locked up, it's where the price goes from there.

itisgene




msg:1233913
 4:16 pm on Aug 18, 2004 (gmt 0)

I think Google is worth about $20-30 per share.(only for the next few years.)
After 3 - 5years, I am not sure If google exists.
So.. I wouldn't buy any Google stock at such price, of course.

grelmar




msg:1233914
 4:26 pm on Aug 18, 2004 (gmt 0)

I like google, but I haven't been impressed with their IPO, and how they've handled it, from day one.

Their problem wasn't releasing too many shares at too high a price, it was that they were releasing too few shares at too high a price

It's just a matter of image and presentation.

People don't tend to associate a "share" with what % of the company that the share actually represents. They just see the price. Emotionally, it's hard to justify 135$ a share (or now 85$ - 95$ ), when you can go and buy into microsoft for about 27$ a share [finance.yahoo.com].

It doesn't matter that there are zillions more outstanding shares for microsoft. The initial gut reaction is:

"Google, small indy company with a neato search engine and a cool attitude, 85$ a share. Microsoft, big bully ugly america company that's huge, unstoppable, and owns the desktop, 27$ a share. I think I'll buy into the bully."

If google had of double split their shares (increasing their number 4 times), that 135$ initial price range would have been around 33$ - 34$ a share, and far more palatable. The total value would have been exactly the same, but from a perception standpoint, it would have seemed like a bargain.

But no, they've locked in their initial number shares now, so any cut in price just makes them look weaker and less stable, and helps to worsen their overall public percetion in the eyes of the market.

I think Google, and whatever crackpots have been advising them, have done nothing but fumble, stumble, and generally make fools of themselves during the entire process.

Which simply does not make me want to invest in them. No matter how much I like their product (which is a lot).

Visi




msg:1233915
 4:31 pm on Aug 18, 2004 (gmt 0)

Maybe those following this can explain to me the following?

In the auction the price was supposed to be set at the lowest price that all share could be sold. By reducing the number of shares available have they effectivly increased the price being taken? Although lower number of shares=higher price?

Lord Majestic




msg:1233916
 4:35 pm on Aug 18, 2004 (gmt 0)

By reducing the number of shares available have they effectivly increased the price being taken?

Exactly! They just could not afford to float at much lower price as it would make it look like total disaster. Founders probably took the brunt of share-cutting since they stood to make lots more money anyway. Suprised it was not pro-rata cut however. Either way it does not promise good start in trading and certainly does not indicate that issue was oversubscribed big time (something .con's liked to brag about).

nyehouse




msg:1233917
 4:52 pm on Aug 18, 2004 (gmt 0)


i personally think Google is being penalized somewhat by their less than common approach to the market. Brokers are so used to the old way when they were guaranteed profit by first day markups that they are staying away from this one, but Kudos to Google for launching this way even if its costs them billions.

So by trying to help the small investor, Google price suffers. Long term, the price will settle where it belongs. I personally think that Google has a lot going for it from the brand point of view. Look at Nike, they make golf balls, and they sell well based on the swoosh. A strong brand.

Google could very easily release a Google Browser or a Google travel site and people would use it. Do you think for an instant that anyone would go to Expedia or Travelocity if the same functionality was available at Google. Brandwise I think there is not much comparison.

What google does with their brand is their business, but I do not see them going for the fast buck. I do not see them disappearing either.

TGN

iblaine




msg:1233918
 4:58 pm on Aug 18, 2004 (gmt 0)

This is my favorite headline today...
Google slashes IPO sale almost in half
[marketwatch.com ]
They cut their price by 20-30% and the media implies it was cut by 50%. Awesome honest reporting.

Lord Majestic




msg:1233919
 5:01 pm on Aug 18, 2004 (gmt 0)

Awesome honest reporting.

They talk about capitalisation - not only price was slashed, but also the number of shares on offer. Here is quote:

The cuts mean Google will raise about $1.8 billion in the sale, down from an originally expected $3.5 billion.

Pretty honest reporting, if there was one :)

Chris_R




msg:1233920
 5:08 pm on Aug 18, 2004 (gmt 0)

Price per share doesn't mean anything. Ut only matters from apsycholigical perspective.

IF they get $90 a share - they are still getting people willing to bid at a huge multiple to earnings.

That is if people don't go back and readjust their bids (which I think many will).

If their estimates are correct - then it would still make Google a 23 - 25.8 billion dollar company based on market cap. This is more than almost anyone was willing to predict a year ago.

This would put google in the same ranks as Ford and Unilever. They would be in the top 200 companies in the world based on market cap.

Yahoo has a market cap of 38.16 Billion
Ask Jeeves has a market cap of 1.44 Billion

I think to say google is worth at least 16 times Ask Jeeves and at least 60% of what Yahoo is - isn't to far out of line.

If they get $90 a share - or even $70 a share - no one at google is going to be crying.

The average Per Share Price to people at google was 35 cents. Getting 200 times what you "invested" is not a failure by any means.

metatarsal




msg:1233921
 5:11 pm on Aug 18, 2004 (gmt 0)

Hmmm, great mantra -

DON'T BE EVIL

"but heck - the price is all wrong"

"But we're still not being evil!"

"Sure - but how do you set the price, and *still* not be evil?"

"Ha - evil is such an extreme term. You can do pretty well what you want under this mantra - and still be cool!"

"But you're not cool - and we can all see it now."

"Agreed - we're no longer cool.., but for f*cks sake don't tell the investors"

BayAreaGuy




msg:1233922
 5:12 pm on Aug 18, 2004 (gmt 0)

What a disaster of this much anticipated IPO?. It could have been such a high flyer except for the greedy tactics and how recklessly this IPO is managed.

Chris_R




msg:1233923
 5:17 pm on Aug 18, 2004 (gmt 0)

The cuts mean Google will raise about $1.8 billion in the sale, down from an originally expected $3.5 billion.

This is wrong. Google INC is still selling the same amount of shares. Some of the stockholders are selling less shares - The shares being offered by google themselves is staying the same.

BEFORE
Google Inc. is offering 14,142,135 shares of Class A common stock and the selling stockholders are offering 11,555,394 shares of Class A common stock. We will not receive any proceeds from the sale of shares by the selling stockholders.

AFTER
Google Inc. is offering 14,142,135 shares of Class A common stock and the selling stockholders are offering 5,462,917 shares of Class A common stock. We will not receive any proceeds from the sale of shares by the selling stockholders.

BEFORE LOW $1,527,350,580 HIGH $1,909,188,225 AVERAGE $1,718,269,403
AFTER LOW $1,202,081,475 HIGH $1,343,502,825 AVERAGE $1,272,792,150

gopi




msg:1233924
 5:22 pm on Aug 18, 2004 (gmt 0)

>> If google had of double split their shares (increasing their number 4 times), that 135$ initial price range would have been around 33$ - 34$ a share, and far more palatable. The total value would have been exactly the same, but from a perception standpoint, it would have seemed like a bargain.

Exactly grelmar...This is the first i posted here when they announced the price range months before...

Companies do stock split just to give a perception that the stock is still cheap ...Google thought they can be different and can be another Berkshire Hathaway . But they forgot even BRK started small!...They should fire those nutcases advising them .

You dont want to do so many mistakes at the same time :- pissing off the big wallstreet boys and doing stupid mistakes like the price point , illegal share sale, playboy interview etc etc

skibum




msg:1233925
 5:23 pm on Aug 18, 2004 (gmt 0)

Was this really about the "small investor"?

So much for the auction where the investor determines the value of the company. Seems like if you declare that you are going to auction off x number of shares to make it fair to everyone, then they ought to do just that, not change the rules in the middle of the game.

On the other hand, since those numbers are just guidance, it could still roll out at $50.00 a share or less and probably would have if the number of shares had not been cut.

If the auction is still open, it couls end jitters through the folks who do have bids in and cause them to lower even more.

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