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Google Inc. of Mountain View will structure its
much-anticipated initial public offering of stock in a way that will give an unusually broad range of investors a chance to compete for some of its IPO shares, according to an investment banker familiar with the company's plans.
Google had to go on the stock market, because they have reached the size they have now and then they have to go public or show there earnings other ways.
There has been talk that Google may forego this traditional IPO route in favor of a Dutch auction. In this rare system, the investment bank offers shares at a very high price and continuously lowers it, taking bids at various prices along the way.
All bidders end up paying the price at which the last shares are sold.
CNN Article [money.cnn.com]
Not sure how many ways their are of initally selling stock, but this looks promising to everyone involved if its the route they choose.
It looks like we will see something inbetween a normal old school IPO and a new wave dutch auction.
Since we know it IS being handled by the good ol boys (MS and CSFB) there are limits on how innovative it will be in my opinion.
In a nutshell, Google treats everyone with a take it or leave it approach.
Or, as the story concludes:
..."Here, the bank is seen as a tool in the process as opposed to a partner," said someone familiar with the situation. Indeed, Google still hasn't given even basic financial data to most of the banks it has hired.
The article, by Robin Sidel, Mylene Mangalindan and Kevin J. Delaney, notes that "secrecy permeates Google's relations with the outside world." (No kidding!)
I didn't know that Google won't disclose exactly how many employees it has, I did know that it keeps a secret how many servers it uses. The article, of course, covers what this board talks about all the time:
how its decides the order in which they display Web links when a user types in a search request.
According to WSJ, "Google didn't hand over any financial data. Instead, bankers had to rely on assumptions derived from other Internet companies, as well as their own estimates about Google's business, to project a value for the company.
It was only two weeks ago that Google notified the secondarry group of banks of their roles in the IPO.
All the while, says the article, "Bankers have been paranoid about whether Google is really showing them its hand. Some worry that company executives have deliberately supplied them with misinformation to see whether they would leak it."
To the WSJ I'd say: This is typical! You should work with them as a publisher or ad buyer. (WSJ uses Overture, BTW.)
Noting Ask Jeeves run up (AJ gained 7 percent to $44 on Monday) and that InfoSpace rose 2 percent to $41.22, she says Ask Jeeves derived 69 percent of its sales from Google and "that percentage will be even higher after Ask Jeeves consolidates ISH."
Likewise, InfoSpace's and CNet ad sales. Yahoo which invested in Google when it was just starting, saw shares rise as well.
Correct me if I'm wrong, but unless a Google IPO has a way of accelerating the overall online ad business from the current estimated 20 percent annual growth rate or 35-plus percent growth for keyword advertising, then why should Google's IPO usher in higher multiples for Internet companies as well?
> Hopefully the breath of fresh air this industry
> is in long need of!
- post economic expansion phase appears to have started. (there is always a cooling off period after a hot period like most of the 90's)
- oil prices rising fast. Inflation and unemployment a safe bet to follow within 6-24months. (deja vu econ 1974)
- an election year. Nothing but defiecit bloating gets done in an election year.
- iraq is looking more and more like a quagmire.
- Housing starts flat this spring in the US (those that can afford the downpayment to buy homes have done so in the last 10 years. it is predominantly down cycle).
- food prices rising steadily around world.
- web maturing. (less $$$ to go around - hello fixed line item corporate time)
- stock market flat.
IPO in that atmosphere?
Can't wait to see that prospectus and the books - it must be a total shocker.
You must read different news than I do. This is what I read for current status:
- the stock market crash started in March 2000 and took the NASDAQ from the peak of over 5,000 almost down to 1,000 reversed itself in September of 2002, and the NASDAQ is UP over 60% since September of 2002
- the Saudis have promised to, as they have always done, push oil prices down in an election year, so we're probably only going to get better on that one in the next few months
- election year and deficit bloating - well, the deficit bloat is clearly there, but its immediate impact on the economy is almost nil - although it does mean problems a few years down the line (not going to effect a Google IPO sooner rather than later)
- housing starts will definitely slow with higher interest rates, but, considering March was the highest growth month on record, I'm not sure coming down a little from the best ever is a major problem
- food prices? is this going to effect a Google IPO?
- web maturing - is a good thing. This means that investors will seriously consider a company that makes real profits, like Google, rather than the fake companies that supported the tulipmania economy of the late 1990s. Just check out the stock trend for Yahoo or eBay for the last year and a half - Yahoo worth over 5X what it was then and eBay worth over 3X what it was then. These are companies that, like Google, actually make money with a sustainable business model.
- stock market flat? The same stock market that turned a corner a year and-a-half ago? The same NASDAQ that is up over 60% since then?
- unemployment rates are currently lower than the average for the 1990s. Admittedly, tech and some industries are hit hard, but across the board unemployment is better than typical in the U.S. It was timed perfectly with the stock market crash, as unemployment started getting worse in March of 2000. For about the last year, nonfarm payrolls have been increasing, and hours worked have been increasing dramatically since mid-2003, which bodes very well for unemployment in the future.
- pick almost any chart from the Fed's reports [app.ny.frb.org]; almost all show a trend peaking in March 2000, going down until around September 2002, and going up since. The 1990s boom was driven exclusively by an irrational stock market bubble; the subsequent crash by the 2000 stock market crash, and now we're back in relatively normal times on both.
Doesn't seem like a bad time for an IPO. If your gloom and doom forecast for 6-24 months from now is true, then better now than next year.
[edited by: mquarles at 5:48 pm (utc) on April 27, 2004]
IPO in that atmosphere?
I think Brett is right. I may add rising interest rates.
Decade of 70's was the decade of the metals, if deja vu is what IPOers are considering (oil up, rates up, growth stalled > rate of earnings' growth nuked), then the next few months will be their last chance for a semisuccessful IPO and waiting for 2005 may not be an option.
It does look like world growth has peaked and that markets are ready for another turn (down).
re: Brett's point on a quagmire in Iraq ... the possibility is there, but it's by no means certain. If the Marines really are fighting only the extremists, even imported extremists, they'll win pretty soon. There are only so many extremists.
[edited by: dwilson at 7:05 pm (utc) on April 27, 2004]
It has been pointed out that the front page of the WSJ, unlike the article, summed Google overall up tightly:
Google has created an ultrasecretive process for its IPO, consistent with the secrecy that permeates the company's relations with the outside world.
It has been fun to watch the old line publishing types come in here and ask, "What the....!?" as they find that they control nothing with the Adsense ads: With G it has been take it or leave it.
Players such as Quigo (whatever happened there?), Kanoodle, Industry Brains, Vibrant Media, Overture, and now Tacoda think Google's (and Overture's to some degree) attitude gives them a niche to carve out with the big boys on the web. I hope they are right, but I'm doubtful.
I do like Tacoda's new approach, however. It has the best potential for branding on the web that I have seen.
Here's an article on what they are calling an AudienceMatch Network:
Sounds to me like as big a privacy concern as GMail ... combining what various companies have learned about a particular user.
No doubt about it.
Here's more from Media Post:
On Monday, the behavioral targeting advertising network was officially born.
...both aQuantive Inc. and Tacoda Systems launched advertising networks yesterday to compete in the rapidly growing--yet very much under construction--behavioral targeting medium. ... aQuantive said its new unit DRIVEpm will collect audience segment information from its network of publishers, and serve ads based on the behavioral data it collects. And Tacoda continues to develop a pay-for-performance network of content sites that will run text ads leveraging its AudienceMatch technology....
Google Inc. of Mountain View will structure its much-anticipated initial public offering of stock in a way that will give an unusually broad range of investors a chance to compete for some of its IPO shares, according to an investment banker familiar with the company's plans.
For anyone wanting to buy shares the day google goes public, making this stock more available could be a bad thing.