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Why would Google IPO?

What purpose does it serve?

     
8:53 pm on Nov 23, 2003 (gmt 0)

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Is it to provide money to expand the business?
8:58 pm on Nov 23, 2003 (gmt 0)

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To give a return to the initial investors, thats how it works.
9:17 pm on Nov 23, 2003 (gmt 0)

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That's the only reason? If so, why would anyone buy Google's stock? Does Google have any expansion plans that anyone knows of?
9:22 pm on Nov 23, 2003 (gmt 0)

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Its called Capitalism.

CompWorld

9:24 pm on Nov 23, 2003 (gmt 0)

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I know that. The question is: why invest in a company that's not planning to expand? Or are they planning to expand?
9:27 pm on Nov 23, 2003 (gmt 0)

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Companies need $$ in order to pay for current expenses, research and development, and to stike major deals and partnerships with well, the most important player in the game, Microshaft.. I mean Microsoft.

CompWorld

9:33 pm on Nov 23, 2003 (gmt 0)

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Companies need $$ in order to pay for current expenses, research and development, and to stike major deals and partnerships with well, the most important player in the game, Microshaft.. I mean Microsoft.

Whoah. Flashback to 1999. Google needs IPO money to pay for current operating expenses? I thought they were pulling in hundreds of millions a year. If they can't cover current expenses with existing revenue, how are they worth anything more than $0?

9:34 pm on Nov 23, 2003 (gmt 0)

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I know that. The question is: why invest in a company that's not planning to expand? Or are they planning to expand?

Surely they're planning to expand. They're expanding as we speak, at a dizzying rate. Consider the hundreds of people they've hired in the last year, the dozens of services they've added, the new international markets they've entered, the companies they've acquired, the growing search advertising market... why would any of that stop next year, or the year after?

9:37 pm on Nov 23, 2003 (gmt 0)

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Ask Sergy. It's his company.

CompWorld

9:39 pm on Nov 23, 2003 (gmt 0)

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Consider the hundreds of people they've hired in the last year

To do what?

the dozens of services they've added

Other than Adsense/Adwords, what else?

the new international markets they've entered

OK

the companies they've acquired

Such as?

the growing search advertising market...

They're already in the advertising business.

What is the plan? Google IPO's makes millions and does what with it? What is Google going to do to make more money than it's making now?

9:41 pm on Nov 23, 2003 (gmt 0)

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Ask Sergy. It's his company.

If he wants people to buy the stock, shouldn't he be telling them without people having to ask?

9:41 pm on Nov 23, 2003 (gmt 0)

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Google has a roadmap in its hands, I have not seen it, but managed to get a few tiny bits of information from various sources.

I am very impressed with what they hope to achieve and believe its quite possible with the team and skills they have.

We are at a very early stage of the net and more importantly "Internet Advertising/Online Marketing"

As for why IPO? = Its their company and they can do what they like.

Shak

9:44 pm on Nov 23, 2003 (gmt 0)

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Google has a roadmap in its hands, I have not seen it, but managed to get a few tiny bits of information from various sources.

I am very impressed with what they hope to achieve and believe its quite possible with the team and skills they have.

What are they hoping to achieve and why do they need millions more from investors than they are already earning to do it?

As for why IPO? = Its their company and they can do what they like.

Of course they can do what they like. But if you want someone to invest in your company, you tell them why they should. Why should we?

9:47 pm on Nov 23, 2003 (gmt 0)

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HughMungus,

The people they will be asking to invest "Financial Institutions etc" will be told why they need the money.

Anyone in corporate finance knows whats going on.

The day they ask you to invest, i am sure they will give you the reason why...

Being webmasters does NOT give us the right to make judgement on how the worlds biggest search engine should run its business.

Lets stick to what we do best, spam the index, buy pagerank, or crack the adwords/adsense algo :)

Shak

9:52 pm on Nov 23, 2003 (gmt 0)

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The people they will be asking to invest "Financial Institutions etc" will be told why they need the money.

Huh. On a message board that's specifically about the Google IPO and business operations, I'd think someone could tell me why they need to IPO. Otherwise, why does this forum even exist?

Anyone in corporate finance knows whats going on.

Yeah, and I think I do, too. Unfortunately.

The day they ask you to invest, i am sure they will give you the reason why...

That's what I'm asking. What am I investing in? Why does Google need the money and what are they going to do with it?

Being webmasters does NOT give us the right to make judgement on how the worlds biggest search engine should run its business.

I'm not making judgement, just wondering why they see the need to IPO.

10:12 pm on Nov 23, 2003 (gmt 0)

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They don't NEED to IPO

Companies make money off of profits. Even if a company never expands - you can still make moeny off their stock. Plenty of utility companies have little or no expansion plans and people still own and make money on their stock.

That is why you would buy some. Because you think you could make money. Over the long term - a companies stock price has a very high correlation to their earnings. Over the short term this isn't true.

Google is always doing new things, but they don't make public their plans for expansion.

When a company goes public - the people that founded and invested in the company will have an easy way to sell their stock.

I agree that they don't need money for current expenses, but it would allow them to acquire other companies and make other bigger investments. They claim they are profitable. Assuming this means REAL profits (which it should) - then the IPO is not needed for current expenses.

Plenty of insiders may hold onto their shares - or sell very few of them. The idea that they would go public so everyone can cash out is misguided. They would go public so anyone that wants to has the ability to sell some or all of their investment is more accurate.

Up until this point - there is no easy way to come up with a value for their shares. After they go public - it will be easy for someone who own stock - Larry for instance - to sell some of their shares on the open market. It provides liquidity.

10:13 pm on Nov 23, 2003 (gmt 0)

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I'm not making judgement, just wondering why they see the need to IPO.

If you don't believe that Google has room for expansion, then here are a few more reasons [fool.com] they might feel compelled to go public. (Note the paragraph about the law from 1934.)

I agree that a Google IPO would be a bad thing for the world, but I think it's inevitable. :-(

10:17 pm on Nov 23, 2003 (gmt 0)

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>>That's what I'm asking. What am I investing in?

Have you been asked to invest?

Google Inc have not officialy filed for an IPO, until then all is specualation, and everything should be taken with a bit of salt.

And trust me Shak knows what he's talking about.

10:18 pm on Nov 23, 2003 (gmt 0)

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If he wants people to buy the stock, shouldn't he be telling them without people having to ask?

Well, there's the small matter that they haven't actually announced plans to go public yet -- everything here is based on rumor. When/if they do announce plans to go public and register with the SEC, they will issue a prospectus that explains in excruciating detail why one might invest (with warnings about why one might NOT invest) in the company.

10:25 pm on Nov 23, 2003 (gmt 0)

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Let's turn it around.. instead of asking why they should IPO, let's ask what they WILL do with the cash asuming thet DO IPO? Much more interesting.

I've seend numbers suchs as 15-18b flying about... that's more then you need to pay the hours of a few 1000 employees, or for spare parts on a few k of *nix boxes...

What, in the industry of SE and online advertising can you do with 18b that you can't do with Gs current profits?

SN

10:34 pm on Nov 23, 2003 (gmt 0)

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Have you been asked to invest?

IPO = offer to invest.

My question: Why do they need investment.

10:36 pm on Nov 23, 2003 (gmt 0)

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I've seend numbers suchs as 15-18b flying about

That's the predicted value (market cap) of the whole company, not the amount of money Google would rake in from the shares it sells, which is only a small fraction of the total. $1 billion maybe. Still a lot, I realize.

Personally, I hope they use it all to hire me. :)

Here's one nice thought: Maybe they'll spend it on the infrastructure necessary to digitize all the rest of the world's information, the stuff that's not on the internet. Which is a lot.

10:37 pm on Nov 23, 2003 (gmt 0)

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G will be doing the AV shuffle in a few years.

Search with investors in-mind just isn't a good thing.

We've all seen how quickly the SE landscape can change. Why is G so different? Because they have a plan? -HA!

10:38 pm on Nov 23, 2003 (gmt 0)

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The reason Google will IPO is that soon they will have so many shareholders that they will have to provide just about the same information as a public company.

Hence they will lose the main advantage of remaining private, so they might as will reap the rewards of a publically traded company.

10:39 pm on Nov 23, 2003 (gmt 0)

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I agree that a Google IPO would be a bad thing for the world, but I think it's inevitable.

No, I'm not saying it would be a bad thing. I'm asking, what is Google going to do with all that money?

For example, from that article, let's say they're going to compete against Yahoo and MSN search and retain and expand their userbase. What would they spend money on to do that?

10:43 pm on Nov 23, 2003 (gmt 0)

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This might help

How the stock market works [money.howstuffworks.com]

10:45 pm on Nov 23, 2003 (gmt 0)

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Well, there's the small matter that they haven't actually announced plans to go public yet -- everything here is based on rumor. When/if they do announce plans to go public and register with the SEC, they will issue a prospectus that explains in excruciating detail why one might invest (with warnings about why one might NOT invest) in the company.

Then why does this forum exist? So everyone can ask, "When's the IPO?" I thought the point of this forum was to discuss Google's business operations, including expansion plans and investment.

10:51 pm on Nov 23, 2003 (gmt 0)

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This might help

Says nothing about why they would want to sell shares in the company.

11:06 pm on Nov 23, 2003 (gmt 0)

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HughMungus, your question has been answered many times in this thread by many different posters. All the below are quotes from this thread:

Reasons for a Google IPO

>To give a return to the initial investors

>to pay for current expenses, research and development, and to stike major deals and partnerships

>When a company goes public - the people that founded and invested in the company will have an easy way to sell their stock.

>it would allow them to acquire other companies and make other bigger investments.

>They would go public so anyone that wants to has the ability to sell some or all of their investment is more accurate.

Those are all very valid reasons why the founders of Google would want to IPO. Hope this helps - and thanks to the posters I quoted above. :)

12:04 am on Nov 24, 2003 (gmt 0)

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I'm asking from an investment standpoint.

Why would someone buy Google's stock? What are they going to do to create a return on investment?

Research and development: What kinds? What kinds of R&D will create ROI?

Acquisitions: What kinds? What kinds of companies will help create ROI?

Compete with MSN & Yahoo: How so? What do they spend money on to do this?

This 39 message thread spans 2 pages: 39
 

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