Google Cancels Spring IPO

securitas writes "Google fans and potential investors will be disappointed to learn that they must wait a while longer before they can own a piece of Google. The Times of London's James Doran reports that Google's IPO plans are on hold. CEO Eric Schmidt appears to think that market conditions are not right. When pressed for details about the delayed IPO, Schmidt said, "An IPO is not on my agenda right now." A commentary about the delayed Google IPO follows. Mirror at Australian IT."

Not terribly surprised

[wawannem]

I mean, before the .com boom, companies usually only went public because they needed money to grow. Google seems to sustain a very healthy bottom-line and I think they have yet to figure out what they want to grow into.

Bravo Google

[Cr3d3nd0]

Frankly I'm all for them never releasing an IPO. Sure it brings in extra cash in the short term but in the long term, your buisness focus shifts from your product and customers to the whims of your shareholders. One of the primary reasons people use google that I've seen isn't the qualit of searches, it's the lack of abusive adds, and genereal "customer friendly" enviroment that google provides. So the longer they put off selling stock the longer they don't have shareholders breathing down their necks for better profit margins.

Good

[wizarddc]

I find this good news. The longer that Google's technology interests are held in private hands, rather than the public interest of their stock price, I think the world is a better place. I'll be crying when I see GUGL -1 3/4 running across the bottom of my TV screen.

Why would I be disappointed?

[andih8u]

Look what happened to Yahoo when they went public. An IPO is not a good thing. Letting a bunch of Wall Street financial people have a say in what to do with your tech company is just a bad idea.

Re:Not terribly surprised

[goatasaur]

Until of course they go ahead with the IPO, become so top-heavy and ad-driven in a couple years that they topple over.

Enjoy it while it lasts.

Good thinking, Google

[192939495969798999]

I am happy to see Google not go on the market. I fear that Microsoft would simply try to buy all of the shares immediately. While google might be worth a few billion, to Microsoft it's worth a lot more, because they need a good piece of search to integrate with Hotmail and their other services... it's worth whatever they're losing!

This is good news

[Tassach]

Going public is very often the worst mistake a company can make. Knowledgable private investors are very often more forward-thinking and tuned in to long-term performance, whereas stock market investors are very fickle and often don't look any further forward than the next quarterly earnings statement.

I'm not interested in Google as an investment opportunity; I just want a search engine that doesn't suck. Staying private lets Google concentrate on what they're good at -- making good tools -- and not worry about having Wall Street yahoos questioning every decision they make and penalizing them for long-term strategy over short-term profit.

glad they cancelled

[ciaran_o_riordan]

I'm glad they've cancelled. Right now, Google have control over their company, and they seem to be pretty nice guys. After floating the company they can face greater market pressure which could easily spoil it.

Easy answer

[r_j_prahad]

I wonder what exactly the "right" conditions might be?

Not being in SCO's sights, maybe?

Here's the deal

[peterdaly]

People are asking why Google wants/needs to go public.

Here's the deal...private Google stock is held by too many people. They are at the threshold of legally be required to make their books public, and for all intentensive purposes acting like a publically held company.

As long as they will be required to act like a public company, there is a large financial incentive for them to take the next step and trade publically.

Whether they need the money or not...it is knocking on their door (both corp. and personally) asking to be taken. This knocking is (or maybe was) too hard for them to resist.

-Pete

Re:ugh

[Greyfox]

More to the point, with numbers like that why do they even need an IPO? Why bother whoring yourself out to Wall Street when you can already afford to fill your swimming pool with cash?

Re:Bravo Google

[1000101]

"Sure it brings in extra cash in the short term but in the long term, your buisness focus shifts from your product and customers to the whims of your shareholders."

You make it sound like every company that is traded publicly doesn't produce good products. I am a shareholder of a number of different companies and the only thing I care about is that they keep producing quality products so customers continue to buy them. Companies that fit your description typically don't last.

Good move

[Zebra_X]

Likely, Microsoft's interest in aquiring Google is reason for the IPO delay. Microsoft could easily buy Google out on the open market, by staying private they are a little safer from being aquired in a clandestine fashion.

Re:ugh

[Freedom Bug]

Probably because of their employees, who have probably been indirectly promised a huge stock option windfall....

Bryan

I hope the postpone it indefinitely.

[wcrowe]

The minute they get investors involved, they'll start doing all kinds of stupid stuff to increase their bottom line. They'll end up like Yahoo

Re:Good move

[no_space_in_time]

What makes you think they would float even 50% of the company? Can't "buy Google on the open market" if you can't acquire a majority.

Not disappointed at all

[sacrilicious]

Google fans... will be disappointed

Nope. I'm a huge fan of google, but I'm quite happy at this turn of events. Going public puts pressure on a company to push for maximum short-term profit, and I like google just the way it is. If they needed the money to stay alive then that'd be one thing, but they don't.

Re:Bravo Google

[regen]

Problem is that without a public offering it is very difficult to reward the worker bees who created the company by working 20-hour days for the first x years. You can only distribute closely-held shares up to a point, as Microsoft found.

Um...Ever heard of this thing call cash? You can give it to people in exchange for them providing you with goods and services.

Most "worker bees" would prefer cash to stock options.

Re:ugh

[AKnightCowboy]

Microsoft, according to one report, is working on a "Google killer" and analysing the Web with its own internet spider, a piece of software critical to building search engines.

Anyone remember the days when Microsoft just wrote software? Why do they have to get their hands into everything? Can't they be satisfied just making umpteen billion dollars in profit a year on their operating system and office product line and leave the rest of the industry to try to eek out a profit on the crumbs leftover?

Re:Bravo Google

[shakuni]

Shareholders are the owners of the company.A publicly traded company is less likely to be managed on "whim" of an individual or a small group as the ownership in publicly traded companies is widely distributed. Note that most successful companies have been there for long and are publicly traded. So in the long run publicly traded companies do well.You are just speaking emotionally than basing your views on any objective data. Whims happen in closely held companies that are not publicly traded, not in companies with widely held stock that are publicly traded. Name all successful companies that you know of which are not publicly traded. my two cents

If I were in charge..

[Alioth]

It looks as if MS are shortly going to be along to destroy Google. Past experience shows that whenever MS bundle something with their OS (such as WMP, killing Real, or IE, killing Netscape), the competitor is doomed.

If I were running Google, I'd be thinking of getting out of it right about now and starting something else. Sadly, just like Real, Netscape and others, Google will be quickly decimated by MS once they make their own search tools the default. MS understands human nature well - people generally don't want freedom, they just want safety and the path of least resistance.

Re:ugh

[Paradise Pete]

Can't they be satisfied just making umpteen billion dollars in profit a year on their operating system and office product line

No, because Microsoft is in constant fear of becoming marginalized, and so they feel the desperate need to jump into anything and everything to try to stave off the inevitable.

Re:Not disappointed at all

[sacrilicious]

youd invest in the IPO of a company that cant survive on its own two feet?

Good question. :)

I could imagine a person choosing to do so. There are many ideas that need money to get to the phase of sustainable execution; this is, for example, the proposition commonly put before early investors. I'm not savvy enough regarding the stock market to categorically say that such funding should never occur at the point of IPO; there's too much I don't know about public portrayals of a company (for PR and fundraising purposes) vs internal ambitions and ledger balances. For my part, I don't play the stock market at all, I think of it as a game rigged in the favor of large institutional investors.

Re google specifically: if google's continued existence hung in the balance, then I'd probably support an IPO in that I'd hope that enough buyers came along to give it the chance to be something rather than nothing.

Re:Why would I be disappointed?

[andih8u]

As memory serves me, it really wasn't until after they went public that their frontpage as well as search results pages became littered with ads. They have scaled back a bit on that lately, but the bottom line is that when all your investors care about is your bottom line, bad things happen. Ads start springing up, they come up with the brilliant idea of making you pay to be listed, and they start cutting those dratted R&D dollars. Why improve something to make it last for a long time when you can buy low, sell high, and then make a quick buck. Hopefully though, Google will have enough sense not to let the investors call the shots.

Re:ugh

[Zak3056]

Anyone remember the days when Microsoft just wrote software? Why do they have to get their hands into everything? Can't they be satisfied just making umpteen billion dollars in profit a year on their operating system and office product line and leave the rest of the industry to try to eek out a profit on the crumbs leftover?

Maybe Microsoft thinks that their days of OS domination are numbered? Isn't that what most FOSS leaders like Linus, ESR, etc continue to say? That software is a commodity?

Despite what I think of their way of doing business, MS has some really smart people running it. I think it's more than a little likely they've considered the above, and want to make sure that the company survives life after the Windows monopoly.

out of context?

[Anonymous Coward]

The news stories based off this one comment are getting out of hand. He says 'An IPO is not on my agenda right now.' Are we talking about his agenda for the week, the month, the year? Until an official statement is made by Google I would take this news with a grain of salt.

Re:ugh

[gmack]

" It might be the ads - they're awfully expensive for a decent campaign"

They are expensive only if your looking exclusively at the initial cost and don't take results into account. Clickthroughs from google are far more likely to actually make a purchase than from almost every other source I've looked into. The result is that a google adword page view is a lot more valuable than an ad elsewhere.

The fact that they alert you if they think it's not effective enough only adds to the value.

Re:ugh

[dubiousmike]

ok, I'll bite at the parent comment that I can't believe is modded up insightful.

Companies can either grow or stagnate. If Microsoft didn't venture into new areas, other companies would. Microsoft is interested in capitalizing in every area they can and they owe it to their stock holders to do so (I am not one and am not generally a Microsoft fan).

But to play devils advocate....
Remember when Apple concentrated on making computers and allowed others to make hardware that was compatable with their OS? Now they sell MP3 players, sell music online, drive businesses who made major software for their platform away by building competing products (Adobe and FCP), force all of us to use their hardware, ect...

To paraphrase your comment, "Can't they (Apple) be satisfied just making umpteen...dollars in profit a year on their operating system...and leave the rest of the industry to try to eek out a profit on the crumbs leftover?

Of course not, that would be silly and shortsighted, just like your comment...

My theory: MSN will buy Google

[dirc]

As several posters have pointed out, the statement that "market conditions are not right for an IPO" is just a smokescreen. As they say, the market conditions are the more favorable now than any time in the last 3 years, and with the Federal Reserve ready to start moving interest rates up after the November election, conditions are not like to get any better.

Google is faced with a few problems, and a challenge:

1. It is being dropped by Yahoo! as a its algorithmic search provider. This will have a minor effect on Google's revenue and profit.

2. MSN is developing its own search engines (for paid advertisements and algorithmic search). While Slashdotters will deride Microsoft's efforts in these areas, it will be additional competition that Google cannot ignore.

3. Out of the three biggest portals (Yahoo!, MSN and AOL), Google is supply advertisements to the least healthy one: AOL.

4. Google realizes that algorithmic search is on the way to becoming a commodity. The difference in quality of the results is becoming minor. There is not a lot of money to be made there because people do not pay much to see or be seen in algorithmic results.

5. The money is in the advertising results that are shown with the algorithmic results. (No, Virginia, there is no Santa Claus, and Google does make most of its money through ads.) There are two ways to get people to see those ads: get them to come directly to your own site, or get those advertisements to the sites that people visit. Most normal people (i.e., not people who read Slashdot) go to portals.

So the challenge for Google is to become a portal. Becoming a portal means offering a lot of services beside "search in a box". It means news, chat rooms, music, games, auctions, free email, the list goes on and on. Google recognizes this. That is why it has added other products, such as news and free email. But building a portal from scratch takes a lot of time and money. If Google were planning to make itself into a portal, it would launch its IPO and use the money to build a portal.

Which brings me to my theory. Some portal is negotiating with Google to buy Google. There are only two portals big enough: AOL and MSN. AOL is a declining portal, but it already has a deal with Google, and terms of that deal apparently include a partial ownership stake in Google if Google goes public. Microsoft has piles of cash, has missed chances to buy an algorithmic search engine in the past, and regrets that failure. It sure would be easier for Microsoft to buy Google than build another Google.

In summary, my theory is that Microsoft is trying to buy Google, and Google is seriously considering accepting the offer. Microsoft wins by getting a terrific search engine and ad machine, and Google wins by getting a lot of money for its employees, a permanent partnership with best available portal, and the opportunity to stay focused on search.

If it happens, the "popping" sound that you will hear all over America will be the heads of Slashdotters exploding when their favorite search engine is owned by their favorite villain.