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Google Sets IPO Pricing

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  • by BWJones (18351) * on Monday July 26, 2004 @09:45AM (#9800807) Homepage Journal
    Wow, this kinda reminds me of the Palm IPO pricing bit, where when I found out about the price per share, I lost complete interest in purchasing any and told my broker to not purchase. (boy am I glad about that). However, this is a different matter in that the search engine is in just the beginning of its time here while the Palm IPO was what.....8 years after the Newton was released? Also, even though I am a fan of the Palm Pilot, Palm has had no real innovation going on for quite a while (it would be nice if Apple had released their PDA to force folks to innovate a little more). While Google on the other hand is still running their company like they are actually interested in innovating and are forcing a number of fairly sizable companies to innovate to keep up which is always good for the consumer. This is a company that I will be interested in investing in even at $108-$135/share.

    • by Sc00ter (99550) on Monday July 26, 2004 @09:48AM (#9800844) Homepage
      "However, this is a different matter in that the search engine is in just the beginning of its time here while the Palm IPO was what.....8 years after the Newton was released?" I don't know about you, but I remember using search engines in '94, that was 10 years ago.
      • My point was that while innovation has stagnated with the PDA market, innovation in the search engine market has been impressive.

        • The search market engine really hasn't made impressive leaps.

          1. Type in keywords
          2. Get list of pages which are relevent.

          Step 1 hasn't changed in a long time.
          Step 2 is more like a battle against spam. How to avoid misleading (intentional or unintentional) pages.

          What makes Google interesting is that it had really nice clean hits. Better than others. Now, due to popularity, its getting worse and worse.

          Not much innovation recently.
          • In that case, there hasn't been much innovation at all anywhere if you really think about it.

            Innovation in the automotive industry? Turn the key to start, gear shift to select direction, gas pedal to go and brake pedal to stop. With the exception of automatic transmissions, this hasn't changed in a hundred years.

            Innovation in telecommunications? Pick up the phone, dial a number. This also hasn't changed in a hundred years.

            It's not just coming up with new ideas, it's also about finding better ways to do t
          • by dubl-u (51156) * <2523987012.pota@to> on Monday July 26, 2004 @11:36AM (#9801942)
            Step 1 hasn't changed in a long time. [...]
            Not much innovation recently.


            I think that's a plus, not a minus. That's like saying the telephone hasn't seen much innovation because we're still just putting our mouth to a hole and talking.

            Caching a copy of the web was certainly innovative. Google's news search was innovative. Their AdWords program broke new ground. They've also continued to add a variety of special features [google.com], including special functionality for addresses, phone numbers, calculations, hot news topics, and package tracking numbers. And although you can't see it, their behind-the-scenes operations are very innovative.

            And really, I think keeping Google's simple interface has been one of their biggest innovations. For years, everybody thought thing thing to do was to clutter up your main pages with boatloads of crap. Google's relentless focus on what their users want, rather than what their MBAs think is the best way to squeeze revenue from their users, was a huge gamble that has paid off beautifully.
          • Yup, I my first Hotmail account had 1 gig of storage and an interface different from every other mail client in existence.

            I've always had a full archive of searchable usenet posts.

            Product search? Psh we had that in 1991!

            Basically, google is a lot more than a damn good web search. It also searches products, news, usenet, and my email! That _is_ innovation.
    • by Anonymous Coward on Monday July 26, 2004 @09:54AM (#9800907)
      I find it difficult to believe that this stock price can be maintained... It puts Google as about 60% of the value of the US auto/truck industry (GM + Ford), or about the value of Boeing.

      The only people making $$ on this are those in the middle, or those starting out with Google shares.
      • Not that simple. Also depends on how many shares they sell. I seem to remember some high-faluting company that has $10,000 per share prices... but there are only a few thousand shares of stock issued.

        Would it make you feel better if they issued stock at $20 per share, but put 5 or 6 times as many into circulation?
      • You mean Market Cap (Score:4, Informative)

        by stecoop (759508) on Monday July 26, 2004 @10:06AM (#9801019) Journal
        I find it difficult to believe that this stock price can be maintained

        You mean the market capital of Google wont be able to maintain that price right? The Market Cap = the Stock Price * the Number of shares; therefore, the stock price alone dosn't mean reflect the value of the company.

        According to the article; Which you're correct the market cap of BA is 39.80B and Google wont be able to keep that for long.:
        WASHINGTON (Reuters) - Google Inc., the world's No. 1 Web search provider, said on Monday it hoped to raise as much as $2 billion in its highly anticipated initial public offering and could have an initial market cap as high as $36.25 billion. About 24.6 million shares will be sold in the IPO for between $108 and $135, according to an amended prospectus filed with the U.S. Securities and Exchange Commission (news - web sites).
        • by ThosLives (686517) on Monday July 26, 2004 @10:20AM (#9801130) Journal
          Hrm. If you sell 24.6M shares at $135, and only raise $2B, where the heck did the other $1.3 B go? (24.6M x $135 = $3.3 B - and I know they're not paying 30% to the underwriters!)

          Also, how can the market cap be $36.25B when 24.6M x $135 = $3.3B? For the market cap to be $36.25B at 24.6 M shares, the share price needs to be $1473.58. If the share price is $135, that means there are really 268.5M shares and less than 10% were made public.

          Perhaps there was a misplaced decimal point in that $36.25B number?

          • by nelsonal (549144) on Monday July 26, 2004 @10:29AM (#9801222) Journal
            Your last point is correct, companies almost never sell all their shares to the public (some trusts sell all shares in an effort to buy a large asset). Google's founders, employees, and venture capitalists will be holding about 90% of Google's shares. The $2 billion likely uses the $108 price, rounds down, and subtracts the underwriter's fees (usually 6%-7% in Google's case rumored to be 3%-4%). You would have to check the filing but I think Google currently has about 260 million shares outstanding (Pre IPO).
            One of the reasons tech companies get tremendous valuations is that they have very limited floats (total number of shares less number of shares off the market in the hands of insiders and other large shareholders). As a result the price is set on only a small portion of the total shares. I'm surprised they don't split 3-1 and bring the per share price out of the stratosphere given their stated focus on idividuals (fund's prefer high share prices, retail investors prefer lower share prices).
          • by the unbeliever (201915) <chris+slashdot@@@atlgeek...com> on Monday July 26, 2004 @10:30AM (#9801233) Homepage
            You're also forgetting that they have outstanding stock that investors and employees hold, which become part of the market cap when the IPO is complete, IIRC.

            They plan to open up 24.6M shares at $108-135, but employees and investors also hold stock.
    • by swordboy (472941) on Monday July 26, 2004 @10:19AM (#9801119) Journal
      I've always been fascinated by people's fixation on the share price when it means absolutely NOTHING in the grand scheme of things.

      A stock's value is calculated by the share price times the total number of shares outstanding. Now, Hemos was quick to comment on the share price, but lacks the understanding to figure out just how much cash the company is raising and what the total value of the company will be at these levels.

      But who cares?

      It really doesn't matter because the average investor doesn't know any better. This is the same reason that stocks go up when the company announces a stock split [sec.gov]. The idiots eat these stocks up because they think that there's something magical about owning a stock through the split. "The company gives you more shares", responded an ignorant investor after I queried him on his voracious appetite for buying companies that are ripe for splitting. What he failed to realize is that the price drops proportionally - the value of the company (and each investor's holdings) is the same before and after the split. But nevertheless, owning these companies through the split is often a very profitable [stocksplits.net] method of investing simply because of all the ignorance out there. Never underestimate the power of stupid people in large quantities.

      It makes me want to shoot myself in the face.
      • It really doesn't matter because the average investor doesn't know any better. This is the same reason that stocks go up when the company announces a stock split. The idiots eat these stocks up because they think that there's something magical about owning a stock through the split.

        Let me preface this by saying I have a degree in Finance. I ended up in IT because I realized that's where my true passion was, but nevertheless I learned a lot of crap about stock valuation and stuff like this.

        Although the pa
      • by Frobozz0 (247160) on Monday July 26, 2004 @01:10PM (#9803018)
        I'm sorry, were you talking about people's fixation on stock price, horsepower, or MHz? :-)

        The world is filled with meaningless measurements that are usually pushed by those that benefit from everyone else's ignorance.

        Sad, but true.
      • by Frostalicious (657235) on Monday July 26, 2004 @01:15PM (#9803085) Journal
        The idiots eat these stocks up because they think that there's something magical about owning a stock through the split. It makes me want to shoot myself in the face.

        It may be stupid, but play it. Then you can shoot yourself in the face while relaxing on your 50 ft yaht. The market is mostly psychology.
    • by ThosLives (686517) on Monday July 26, 2004 @10:34AM (#9801261) Journal
      Ok, I haven't seen anything so far on this:

      To determine if a stock is "high priced" or not, you don't look at the price of the stock. You look at other things, notably the price to earnings ratio (P/E). If you look at $135/share, that's a steal compared to other tech stocks. If there are only 24.6M shares (which there are actually more), going by the latest quarter where Google earned $79.1M, that's an earnings per share (EPS) of ~$3.21. Assuming that's an average for 4 quarters, that's a P/E of only about 10 ($12.84/$135 = 10.5)! Most tech stocks are trading around a P/E of 30, some even up in the stratosphere of 50+ (in the dot-com boom they were around 90+). More total shares means a P/E that's even lower since EPS.

      Basic stock market concepts here boys... you buy based on P/E ratio, not "sticker price" of a stock. The reason? Even though it's completely made up, you expect that if earnings goes up 10%, the price of a stock will go up by 10% * P/E. The P/E ratio is like a "magnifier" on the earnings growth, and it's why people like stocks with high P/E - but not too high because that can indicate a bubble. Basically you look at P/E relative to competitors, and no matter how you cut it Google's P/E looks like bargain-basement pricing to me at $130/share. Heck, it's a relative bargain at even $300/share by those measures... (P/E somewhere around 30).

      For comparison, the P/E of M$ is 42, Apple is 54, Amazon is 107, Yahoo! is 107... so Google is indeed a bargain.

      • For comparison, the P/E of M$ is 42, Apple is 54, Amazon is 107, Yahoo! is 107... so Google is indeed a bargain.

        Huh? The Reuters article quotes a market cap that could be as high as 39.2 billion USD. It also states that 2nd quarter earnings were 79.1 million USD. If we assume that Google performs similarly for the other two quarters, annual profit would be somewhere around 316 million USD, which would give Google stock a whopping P/E of 124.

        Hardly a "bargain".

      • by jratcliffe (208809) on Monday July 26, 2004 @12:05PM (#9802196)
        I agree with you that looking at the raw price per share is a silly way to value a stock. If Google had only ten shares, and somebody offered to sell me one for $50k, that'd be a hell of a deal. If they had 10 billion shares, then it would be a bit less attractive.

        That being said, your math is wrong. Google and its owners (the founders, the VCs, Time Warner, etc.) are selling 24.6 million shares to the public. Once the IPO is done, they'll have 268.5 million shares outstanding, so they're selling a bit less than 10% of the company into the market. With 268.5 million shares outstanding, and quarterly earnings of $79.1 million, annualized to $316.4 million, they're delivering annual earnings per share of $1.18. That's a P/E of 91.5 to 114, depending on the IPO price. While Google's a great company, that's a damn pricey valuation.

        Also, remember that the Class A shares they're selling are really second-class shares. The founders have issued themselves special Class B shares that guarantee them voting control, even if they own a very small % of the overall equity of the company.
  • by manmanic (662850) on Monday July 26, 2004 @09:46AM (#9800816)
    I think it's a fair price. It reflects the money Google will make in future from selling access to their web index and associated technology [google.com] - a market that they haven't even begun to seriously develop. The Internet is going to be around for ever, and its content is going to keep growing exponentially until this scary vision [bizreport.com] is fulfilled. Google's search results represent (to date) the best attempt to organize this information in an intuitive user-centric way.

    In fact, they already provide programmatic access to their results via the Web APIs [google.com], spawning services ranging from a recipe generator [researchbuzz.org] to a site for detecting online plagiarism [copyscape.com]. According to this story [theregister.co.uk], the developers of Google Alert [googlealert.com], one well-known APIs application, have recently been granted permission to commercialize their service. My guess is that it won't be long before there are many more 3rd party Google applications, bringing in a lot of new money to Google's coffers. Anyone for a BUY rating?

    • I'd probably give it a cautious BUY...

      I think there will be some serious hype-driven bubble inflation during and immediately following the IPO. They may take measures to prevent it, such as selling more stock, but once the shares are out on the open market, ther'es not much that can be done.

      The third-party stuff does look pretty promising though...

    • by SilentChris (452960) on Monday July 26, 2004 @10:00AM (#9800959) Homepage
      "I think it's a fair price."

      Any investment analyst will tell you that it's far better to have numerous low-priced shared than a few high-priced ones. At this price, a moderate investment (let's say $10,000) gets you only about 100 shares. That means you're completely at the mercy of the stock price (which we know to be oh-so-stable in the tech industry).

      No, what'll be interesting is to see what mutual funds grab onto Google as part of their portfolio, and at what percentage. We know it's "risky", but is it considered growth? What percentage will make sense in a mutual fund? 5%? 25%? Those are the questions I'd like to see answered.
      • by Jahf (21968) on Monday July 26, 2004 @10:20AM (#9801129) Journal
        Take a look at the past ... Cobalt, VA, Red Hat all skyrocketed to this price level after their IPO. The only people who got the opening price were friends of brokers and the companies didn't see anything past the opening price. Yet they still changed hands readily throughout the day at those prices.

        I don't think there is any question that all the shares will sell. If they don't change hands after selling, Google isn't going to care as they will still have raked in billions with this price instead of hundreds of millions with a lower price.

        Is it actually giving anyone a -break-? No ... this price is no more friendly to the casual buyer than those other IPOs (well, not true, a couple of those went far past the $135 mark on first day so it is a boon there). But it is no less friendly to that investor either.

        The difference is the brokers and their friends don't get an immediate cash-cow, they're on the same playing field. If I can't get a break, at least I know that the rich dudes didn't either.
      • by BrodyVess (455213) on Monday July 26, 2004 @10:37AM (#9801290)
        "Any investment analyst will tell you that it's far better to have numerous low-priced shared than a few high-priced ones."

        Warren Buffett and Berkshire Hathaway (last seen trading at $88,075)might care to disagree witn you on that.
      • by MosesJones (55544) on Monday July 26, 2004 @11:14AM (#9801707) Homepage
        Any investment analyst will tell you that it's far better to have numerous low-priced shared than a few high-priced ones

        Which is why you should FIRE that analyst.

        The reason for the many and low is that this makes people feel happier "hey I got lots of shares" and has little or nothing to do about the performance of the stock.

        Google may well under go a split in the next 12 months, or even a few splits, but the worry about a high price making the share unstable is completely unfounded.

        Think on it this way. If a share is $100 or 100c and it goes up 10% then its the SAME 10%. However a 1c adjustment in a 100c share represents 1% down. For the $100 stock its almost a rounding error. The TOTAL value of stocks in the company represents the important measurement. For mutual funds the value of one share is irrelevant as if you are buying $1bn worth of stock who cares what the number of stock is its the $1bn that counts.

        Investment Analysts talk a lot of hooey most of the time. These were the muppets who raved about Boo.com, WebVan, Enron, MCI Worldcom, AOL... need I go on ?

        You are ALWAYS completely at the mercy of the share price whether you have a 200 x $1 or 2 x $100, 10% up is the same amount, and 10% down is the same amount.

        BTW IANAFA.... but then most analysts do worse than a tracker fund.
    • "... its content is going to keep growing exponentially ..." etc...

      Welcome back from your coma! Things have changed in the last 5 years... :-)

      Seriously - how many useful sites still working w/o subscriptions? How do they index "protected" content?....
      • We already know that Google has been in spats in the past for indexing protected sites and providing ways to get around them.

        I think if I were running such a site I would see about creating a system whereby if I saw Google coming in I would give it 25% of the content (which means the majority of the keywords needed for good indexing will have been sent out) along with a "please click here for more" link.

        I personally don't -like- that kind of stuff, but that is not my point ... such services are missing ou
    • by SunPin (596554) <slashspamNO@SPAMcyberista.com> on Monday July 26, 2004 @10:08AM (#9801024) Homepage
      The Internet is going to be around for ever


      Isn't that what they said about the Titanic? Hubris has a dramatic way of destroying things. Google could suffer the same fate at this asking price. Pets.com seemed like a really cool investment in its day. Same goes for Dr. "kung fu" Koop.com.

      The Internet itself will die soon for a variety of reasons (spam, peak oil, Super bugs, the Apocalypse). Just don't be disappointed when it happens.

  • New Meaning (Score:5, Funny)

    by plexxer (214589) on Monday July 26, 2004 @09:46AM (#9800818)
    'I'm Feeling Lucky' takes on a whole new meaning.
  • by garcia (6573) *
    It's the end of the world as we know it.
    It's the end of the world as we know it.
    It's the end of the world as we know it and I don't feel fine...fine...


    While I love the idea of Google raising money for its business I am still keeping my fingers crossed that they can remain faithful to their customers rather than the random whims of their investors.
    • by Dr. Bent (533421) <ben@int.cLAPLACEom minus math_god> on Monday July 26, 2004 @09:59AM (#9800957) Homepage
      I am still keeping my fingers crossed that they can remain faithful to their customers

      Oh, you mean the people who advertise on google? Yeah, I think they'll do a good job of keeping those people happy. But people who use google's search engine just to find stuff are not customers...they're the product. Google main business is not selling search results, it's selling eyeballs. Just like any other media company (television, radio, etc...) who's job is to sell advertising, google's customers are the people who pay for advertising. When you start paying google to do a search, then you'll be a google customer...until you're the product.
    • While I love the idea of Google raising money for its business I am still keeping my fingers crossed that they can remain faithful to their customers rather than the random whims of their investors.

      Google's investors will control the direction of the company. That's what shareholders do ;-)

  • High price but... (Score:3, Interesting)

    by bdigit (132070) on Monday July 26, 2004 @09:46AM (#9800825)
    Who will actually be able to even buy it at that price when it hits? Most people probably wont be able to get the stock until its even higher. How does one go about getting a stock at its IPO price?
    • Re:High price but... (Score:5, Informative)

      by thegrommit (13025) on Monday July 26, 2004 @09:56AM (#9800930)
      Who will actually be able to even buy it at that price when it hits? Most people probably wont be able to get the stock until its even higher. How does one go about getting a stock at its IPO price?

      Open an account with a participating broker [businessweek.com].

      That share price is nothing compared to Berkshire Hathaway [yahoo.com]. It's not the share price that matters, but the earnings per share ($5,190 in the case of Berkshire). A higher stock price is justified if earnings are high and have growth potential.
      • Wow, they're down quite a bit..

        Im used to seeing them at around 87-90k.

        Also, do you all know who founded Bershire Hathaway? Good ol' Warren Buffet.
        Ever heard of Geico? Owner? Warren Buffet.

        ALl I can say is Mr. Buffet Knows how to run his companies (and ditch them when theyre bleeding dollars).
    • by artemis67 (93453)
      Mutual funds have that kind of buying power, and I believe they comprise the largest segment of the stock market.
  • by Anonymous Coward on Monday July 26, 2004 @09:47AM (#9800829)
    Seeing as Google is everyones darling child now, and they have had much coverage over their cool technologies and decent methods of doing business, it looks to me like a bad buy. In other words, the price can only go down.

    IANAstockbroker, and i have no money to buy stock anyway.
  • Change (Score:3, Interesting)

    by Klar (522420) <curchin@g m a il.com> on Monday July 26, 2004 @09:49AM (#9800848) Homepage Journal
    Will going public affect google at all in terms of service, and their search algorithm? Investors won't get higher returns in searches will they?
  • GOOG as stock ticker (Score:2, Informative)

    by Rovaani (20023)
    GOOG as stock ticker looks wierd, I would have preferred GLE
  • Ironic? (Score:5, Funny)

    by Anonymous Coward on Monday July 26, 2004 @09:50AM (#9800861)
    Does anyone find it ironic that this story is a Yahoo story?

    • No, it's a Reuters story Yahoo just picked it up. The Financial Times is also running the story. I'm sure many others are as well.
  • by WallaceSz (643543) on Monday July 26, 2004 @09:51AM (#9800875)
    Despite their "quiet period", Google have been busy making all sorts of announcements over the recent months, no doubt to bolster their valuation before the IPO. Moving into email with Gmail [gmail.com], entering the world of digital photos with Picasa [picasa.com], adding a new adsense for search [google.com] program, and improving their corporate search appliance [google.com].

    They may also start leveraging the success of popular services that use their Web APIs [google.com], such as Google Alert [googlealert.com] and Copyscape [copyscape.com], particularly with the commercialization [theregister.co.uk] of Google Alert. Positioning themselves as a general technology platform for the web is surely a step in the right direction to further raising their valuation.

    Will be interesting to see how quiet they stay from now till the actual IPO...

  • by Lawrence_Bird (67278) on Monday July 26, 2004 @09:51AM (#9800884) Homepage
    story about underwriters crying about the whole auction process and fear that price will be so high that market collapses after. Given their idiotic pricing and occaisionally illegal distributions in dot bomb ipo's, why should anybody take them seriously? Of particular note is that they are being paid significantly less than a standard IPO.
  • by gorbachev (512743) on Monday July 26, 2004 @09:53AM (#9800900) Homepage
    The price of a share is irrelevant. What is relevant is how much of the company you get for buying the share, and how much the total value of the company in question is.

    All other things being equal, 10% ownership priced at $100 is a somewhat of a better deal than .00001% ownership priced at $100.
    • by Frisky070802 (591229) * on Monday July 26, 2004 @10:00AM (#9800965) Journal
      Not completely irrelevant. For instance, companies will split their stock to make it more attractive (because stock buyers consider the price, no matter whether they should), and more to the point, they may do reverse splits when the price gets too low. One reason for that is that a lot of mutual funds and institutional shareholders won't buy stocks below $5.

      So the higher it starts, the further it is from the $5 magic floor.

      • The only reason stock splits are attractive is because people who don't understand the market think stock splits are attractive, and people who do understand the market exploit them.
      • Point in case: MTF (Bank of Tokyo Mitsubishi). In Tokyo those shares can be bought for roughly 1M Yen (about US$8000). See here [yahoo.co.jp] That's the price for one share. Makes you think twice about getting those.
    • Actually, the P/E ratio sums this up nicely (Price Per Share/Earnings Per Share); a high P/E ratio would indicate a poor investment, a low P/E ratio would be a great return on your money.

      Regardless, the stock price is going to be determined by the market, and primarily by institutional investors at that, who will correct the stock price long before you have a chance to invest. For example, Google might offer 10% of the company for $100, but because the institutional investors have advance knowledge and opp
  • can anyone not see Google doing extremely well in the near future? They maybe expensive but for the next say 5 years they will rise in value and be a pretty safe bet... but after that I dunno, Google is doing evetyhing now but will it still in the future or will it pull a microsoft and go "We're at the top, hello minions do as we say"
    • by Erwos (553607)
      I can think of any number of reasons Google would get hurt:
      1. Someone finds a way to circumvent PageRank easily and reliably, basically nuking Google's worth as a search engine. Unlikely, but it could happen.
      2. Yahoo or Microsoft come up with a better search technology. Not all the brilliant people in the world work for Google.
      3. Gmail roll-out gets flubbed. Google's core expertise is not in making _consumers_ pay for things. This probably wouldn't hurt Google terribly, but stock price would go down (lack o
  • by Chatmag (646500) <editor@chatmag.com> on Monday July 26, 2004 @09:55AM (#9800915) Homepage Journal
    Their opening bid is high, and they will bring the price per share down until there is a buyer. At that point, everyone else will buy shares at that price. I think their price per share will be in the 50-60 Dollar range.
  • IANAFinancialAdvisor, but I expect the price to slip below the opening price probably three weeks after the IPO and then settle to a more realistic price. I for one won't be participating in the IPO and have recommended that my friends wait and watch instead.
  • Go Short Early? (Score:4, Interesting)

    by grunt107 (739510) on Monday July 26, 2004 @09:59AM (#9800953)
    With a high IPO like that, going 'short' after a couple of weeks might be a good strategy. The market is not stable and many outside influences (energy costs, Iraq setbacks) could easily drop 10% out in a day.

    A bigger drop will possibly happen around election time. Whether irrational or not, Democrat wins tend to drop the market initially.

    *NOTE* - the above statement is not my political preference, just an observation of how the 2k2 elections were referenced in the same manner
  • by coyote_oww (749758) on Monday July 26, 2004 @09:59AM (#9800954)
    Ultimately, your buying a piece of the company. Higher price per share is perfectly fine if you're getting a bigger piece of the company.

    Consider 2 businesses of equal value doing IPO. One creates 1000 shares, and sells them for $10 per share. The other creates 100 shares and sells them for $100 per share. Which is the better deal? Duh! it's the same deal (essentially).

    In this case, it appears Google is (or thinks it is) selling "large chunks" of the company. They could offer instead 10 times as many shares, for only $13.50 a piece. Maybe this would be smart. It apparently would suck in a large number of Slashdot readers!

    And this crowd is supposed to be math-sci literate! How depressing... I think I'll go off and cry about the poor state of the nation's youth now.

  • IPO = (Score:5, Funny)

    by bugsmalli (638337) on Monday July 26, 2004 @10:00AM (#9800961)
    It's Probably Overpriced and it is.
  • Why so high? (Score:3, Interesting)

    by RupW (515653) * on Monday July 26, 2004 @10:00AM (#9800962)
    Why not sell ten times as many shares at a tenth of the price? Is it deliberate to keep out smallish investors?
    • "Is it deliberate to keep out smallish investors?"

      Uh. You only meant to buy less than $100 wort of stock? Good luck getting any ROI on that investment with all the transaction fees.

      The minimum investment on any stock, IMHO, should be no less than $2000. Anything less, and the transaction fees are digging too much into the profits to make it a worthwhile investment. The lower the transaction fees, the lower that figure can be, obviously.

      For $2000 you can get almost 20 shares. Now, if the stock price was $
    • Possibly. A company tailors its stock to appeal to different segments of the investment market. Just like for the longest time, Microsoft had a high rate of return without paying out any dividends, it was a good buy for wealthy investors who wanted capital gains but didn't want to pay taxes on the dividends.
    • Re:Why so high? (Score:4, Informative)

      by Violet Null (452694) on Monday July 26, 2004 @10:22AM (#9801148)
      It was a bidding system. Google said, "Hey, guys, we want to sell 26.4 million shares. How much would you pay for 'em?"

      People wrote in bids and the amount they'd buy at that bid. Google took the highest until they'd sold all 26.4 million shares.

      So the answer is, because someone was willing to pay that much.
  • I hope the price will last for those who want to invest in it. Although it should be a fair price what I am afraid will happen is a lot of smaller investors and fans buying at a higher price.

    Later these investors might start selling and larger companies will get hold on shares. When that happens Google will have to answer to its shareholders. Shareholders who have no interest in the search engine. They have only interest in the shares and the money.

    The shareholders then want more value to the share, wich
  • by Aggrazel (13616)
    So how many shares are they going to have to sell at that price to raise their target of e Billion Dollars?

    (scroll down to Humerous) [wikipedia.org]
  • Question (Score:3, Insightful)

    by AdamHaun (43173) on Monday July 26, 2004 @10:08AM (#9801032) Journal
    What difference does the price of the stock actually make? Isn't $1000 of Google the same regardless of how it's divided up?
    • 1) If the stock pays dividends (Google won't, AFAIK), the more stock you have, the more dividends you get, so 100 shares of stock at $10 would be better than 10 shares of stock at $100.

      2) Stock is only worth what you can sell it for. The standard yardstick of what a stock is worth is the price-to-earnings-ratio (P/E); how much money the company earns vs what its stock is worth. The higher this number, the more "overvalued" the company. The S&P has a P/E of ~30 currently (Yahoo has...~82 I believe).
  • Google Share price (Score:2, Interesting)

    by hackus (159037)
    Anyone here who purchases google stock at 108 a share is stupid as a rock.

    The share price is going to drop like a rock within the first year, almost assuredly.

    The Nasdaq is still WAY over valued as well as the big board.

    In general stocks are going to burn badly in the next 2-4 years.

    If you are considering investing, don't do it in American companies, do it overseas in the far east. Far more growth potential over there to offset any losses you will accumulate in stocks.

    I like google, I use it daily. B
  • Go in High and have all the investors who have been oogling google buy in.

    Once the price "adjusts" for the rest of us, (6-8 months?) Geeks will join @ 50-80 and the inital investors get screwed, and the layman will win.

    YEAH google you go you!

    Yo Grark
    • Right. Because it's the investors who get swept away in paying too much for something that they like or have "heard good things about", and the layman who makes the calm, rational, well-informed decisions.
  • froogle... (Score:5, Funny)

    by natron 2.0 (615149) <[ndpeters79] [at] [gmail.com]> on Monday July 26, 2004 @10:19AM (#9801117) Homepage Journal
    can i use froogle to find a lower stock price?
  • by mledford (246826) <[ude.agu.mulaagu] [ta] [drofdelm]> on Monday July 26, 2004 @10:29AM (#9801221)
    If people are smart they will realize that Google isn't the one who sets the price. Due to the Dutch auction format it's the investors who set the price.

    In Dutch auction you take the highest price and count down the number of shares till you run out. The last person to be issued shares at the lowest price is the one who sets the price for the *entire* auction. Everyone gets their shares at that price. So if you believe that Google is overvaluating their stock then what you need to do is pursaude the majority of those purchasing the stock that it should really be *insert fair market value* for the stock.

    Personally I think the stock is worth about half of what Google said, but I am not a professional nor do I claim to be.
  • by gtoomey (528943) on Monday July 26, 2004 @10:29AM (#9801223)
    With second quarter earning of $78M, and a projected market cap of $36B, the PE is 36000/(78*4)=115.

    With a PE of 115 Google is an expensive stock & I guarantee Warren Buffet won't be buying at the price. By comparison banking stocks have PEs generally under 20.

    Analysts (and I use the term loosely) try to spin these high PEs by claiming there will be high growth, and using Price Earnings Growth (PEG) models.

    I won't be buying at that price.

    • The low end of their IPO price ($108) would have their PE at :

      $36.25B * 108/135 * 1/(4*79.1M) = 91.6

      Still pretty high. Comparing to banking stocks is silly though, since Google is not a bank. Comparing to other internet stocks is more informative. Yahoo trades at a PE of 110. Ebay trades at a PE of 78. Amazon trades at a PE of 60.

      Google's price-to-sales ratio (@ $108/share) would be 10.35. This is lower than Yahoo's 14.35, eBay's 18.20, though much lower than Amazon's 2.71.

      Google will be an expen

    • While you're busy crunching numbers, are there any obscure meanings to the # of shares the founders are going to sell?

      Sergey Brin 962,226 shares
      Larry Page 964,830 shares
      the numbers don't mean anything to me in hex, but there has to be something going on... those numbers are just too odd (even) to be anything but deliberate. who sells 830 or 226 extra shares?

      [Tinfoil Hat]

  • by vettemph (540399) on Monday July 26, 2004 @10:33AM (#9801252)
    It's just a search engine. There are plenty of those. This stock will be trading at a fair price in no time at all. .... $4.50.
  • dutch (Score:3, Interesting)

    by Sheepdot (211478) on Monday July 26, 2004 @11:22AM (#9801796) Journal
    For those of you who don't know. Dutch auctions are only useful to the seller if the buyers anticipate a lot of people investing at the stated price. Pretty much describes Google here.

    Since the price goes *down* from there, Google is relying on a lot of (for lack of a better term) stupid geek-types to buy at the $108-$135 price. If you put in a bid at $75ish, you might still get shares.

    What's nice about the Dutch auction is you get to pay what you think the shares are actually worth. If you pay at the $108-$135 range, you're going to be seriously overpaying and will be disappointed when the stock starts selling publicly at $85 by the guys that got a thousand shares at $75.

    These are just example prices, but it totally rewards the people who bid lower and still get at least some of the stock whereas those that bid high get all they bid for.

    It's kind of lame that Google is doing it this way, IMHO, because they will end up totally scamming some of their biggest supporters into paying such a high price. That is, some of those in the /. crowd that can afford to invest in them.

    Hope those of you that actually bid $135 think it's really worth it, cause you're most likely to be disappointed in the long run.

    But to each his own. I could end up being wrong about it. There are articles about this stuff:
    http://slate.msn.com/id/1002736/
    http://b iz.yahoo.com/ibd/040709/tech_2.html

    Basically, Google is ensuring that "insiders" don't get rich off of them, but that doesn't help *you*, the average investor, at all if you are looking short term and not long term.

    I think by choosing Dutch they are looking for long term investors.
  • by JungleBoy (7578) on Monday July 26, 2004 @11:42AM (#9801999)
    Now would be a great time for me to direct you all towards this illustrated commentary: Google = Money [gamespy.com]

    -JungleBoy
  • by telemonster (605238) on Monday July 26, 2004 @12:05PM (#9802189) Homepage
    This weekend I was looking for some software that would be used for live performance midi work under Windows. My goal was to control lights/lasers, but none the less I noticed when searching google most of the results were crap pages setup to rank high on google.

    I turned to Yahoo's search, and found much better results with less fake keyword filled pages. This is the 3rd time recently I've discovered this.

    Is google a victim of it's own success? I love the uncrowded google page, this is what attracted me to google in the first place. Now I'm starting to wonder what I'm missing by relying solely on google. Yahoo responded quickly, although the site is crowded.

    Thoughts?
  • by blanks (108019) on Monday July 26, 2004 @01:18PM (#9803113) Homepage Journal
    I'm just thinking how often, if it's even legal, for a company to go out of its way to jeopardize a companies IPO. Take for example if MSN and or Yahoo! a few days before their IPO date if they filed (one or many) lawsuites for copyright infringement, IP reasons, SCO attacks because of licenses etc, or any number of things specificlly to bring down there sales of stock. Would this affect the interest that investors would have in the company? If so how much?

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