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Google Goes Public at $85/share 343

Posted by michael
from the buckle-your-seatbelts dept.
adpowers writes "It is official. Google will have its IPO debut at $85 per share. To quote the article, 'At that price, the low end of its recently revised range, Google raised $1.67 billion, with $1.2 billion to go to the No. 1 Internet search engine and $473 million to Google executives and investors selling their shares.' Trading begins Thursday, August 19th." Got Google?
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Google Goes Public at $85/share

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  • Finally! (Score:5, Funny)

    by Anonymous Coward on Thursday August 19, 2004 @09:12AM (#10011495)
    I am exchanging every single share of SCO I own for Google. In your face, Darl!
    • Re:Finally! (Score:2, Insightful)

      by w1r3sp33d (593084)
      It has been clear that every SCO headline that has bumped the stock price has been used by execs to dump stock, if anyone still has SCO stock I say sell it now while it's still at 4$ a share before the next IBM case.

      Besides what is your soul worth? Personally I didn't invest in defense contractors right after 9-11 although I know some people who did (and did very well at it.) Instead I gave away money to different charities, I will never regret that.

      So sell SCO, give away money to a non-profit and get a

  • by Gothmolly (148874) on Thursday August 19, 2004 @09:13AM (#10011503)
    I for one, welcome our new non-income-generating, but VC-attracting overlords. Where do I get my Aero chair?
  • If so you probably weren't in the stock market three years ago during the IPO crashes (and thus probably have a life savings yet to loose.)

    I remember Cisco used to be about 85$....

    • by Hobbex (41473) on Thursday August 19, 2004 @09:29AM (#10011668)
      I remember Cisco used to be about 85$....

      I love it when people consider the cost per stock as an indicator of whether a company is overvalued. It is people like you who create arbitrage in the market for the rest of us to exploit...

      Different companies have different number of stocks you know. $85 gives Google a total value of $23 Billion (market capitalization), while Cisco is still worth around $150 billion...
      • by afidel (530433) on Thursday August 19, 2004 @10:12AM (#10012052)
        God when will people stop using that term incorrectly. Google did not raise $23 Billion with this stock offering, therefore $23 Billion is the market valuation, NOT the market capitalization. Market capitalization is stock price times outstanding shares, in Googles case that is significantly less that $23 Billion (in fact $1.67 Billion according to the article).
    • Even for companies that are eventually successfull, there's usually a BIG dip after the initial IPO price.

      If you really want google, wait about 90 days before buying it.

      I live a couple of miles from Google HQ, so I'm bracing myself for the 500 new Hummers that the 500 new Google Millionairs will be driving!

      Seriously, a big pile of money could prove to be a big distraction for the Google Rank and File. I hope the company stays on track.

  • Ebay? (Score:3, Funny)

    by Memetic (306131) on Thursday August 19, 2004 @09:14AM (#10011512) Homepage Journal
    How long before these hit ebay?
    • Re:Ebay? (Score:5, Funny)

      by w1r3sp33d (593084) on Thursday August 19, 2004 @09:18AM (#10011550)
      Yeah in a year you will be able to get a Furby, a complete set of Magic cards, and a Google IPO ticket for under a buck.

      (actual shipping charged to the buyer, negative feedback will be left, paypal only please, no international shipping, thanks for looking at my worthless crap, you are viewer number 0000000000000000001, sold as is, etc, etc, ...)

  • by Zugot (17501) * <bryan@oseMOSCOWsm.com minus city> on Thursday August 19, 2004 @09:14AM (#10011516)
    ... how many google employees have become instant millionaires?
    • by hcdejong (561314) <hobbes AT xmsnet DOT nl> on Thursday August 19, 2004 @09:26AM (#10011630)
      Isn't that what the "I feel lucky" link is about? :-P
    • I don't know, how many executives do they have? The article didn't mention any employees other than them.

      Lets see how they do: http://finance.yahoo.com/q?s=GOOG&d=t [yahoo.com]

      Looks like the first bid was for 500 shares at 55$ but nobody dumped stock on that one. Should be an interesting day!

    • As an extension of that, how many Google hotshots are going to become millionaires and then quit? I'm sure this kind of thing happened all the time in the boom. Anyone know what the resignation rate is after a big IPO?
      • by TheRaven64 (641858) on Thursday August 19, 2004 @09:51AM (#10011840) Journal
        From what I've read of .com failures, the companies that make employee millionaires tend to do badly afterwards whether they stay or not. If they stay, then they've already made as much money as they're likely to from that company (with the exception of top management) and so are only there because they enjoy being there. While this is good from the point of view of producing great products, it's not so good from the point of view of producing great products before deadlines.

        JWZ said that there are two kind of employees, those who want to work to make a company great, and those who want to work at a great company (paraphrased slightly because I'm too lazy to look up the exact quote). The millionaire employees who leave are likely to be in the first category, while the ones who replace them are far more likely to be in the second category.

    • by AliasTheRoot (171859) on Thursday August 19, 2004 @09:30AM (#10011674)
      Probably not that many, at least in cash terms - plenty will be paper millionaires. Most employee share option schemes have clauses that prevent cashing in on IPO/Acquisition.

      Last place I had shares in prevented us from cashing them in until after 6 months had passed. Course there still hasn't been an exit event, so I still have a batch of worthless (for now) options sitting in a filing cabinet somewhere.
      • by hoggoth (414195) on Thursday August 19, 2004 @10:00AM (#10011914) Journal
        > I still have a batch of worthless (for now) options

        Count your blessings. When I left a dot-com I was granted $120,000 worth of options. A couple of months later, in the next calendar year they were worth a fraction of that. The IRS made me pay income tax on the phantom $120,000 that I never got. Of course in order to PAY those taxes I had to sell all the stock at a fraction of "what the company gave me". In return "to be fair" the IRS gave me an equivelant amount of 'capital losses' I can write off in the future. Now if I ever make $120,000 in capital gains in the future I will get back the money the IRS stole from me.

        • You must have gotten some non-typical stock options. Typically you don't pay taxes on stock options until you exercise them. If you were able to sell the stock to pay the taxes then you obviously didn't have options but just a regular stock grant (which is obviously taxable). When you get options they are worthless until the stock price is higher than the option price (trust me I have plenty of those fun $40 options - $17 stock prices).

          And not the IRS didn't steal any money from you.
        • Mine were granted to be at the bargain basement price of £50 or so. They are probably worth £25-£50k at the moment, but as there's noone to sell them to...
        • Hedge your position (Score:2, Informative)

          by clone22 (252516)
          Assuming you have been given a million dollars worth of options but you can't exercise your options for 2 years. What do you do, wait around till the stock's in the toilet and you're penniless? Hell no! That's the time to preserve your captital by hedging your position. Buy put options or get creative with another derivative contract that will protect your interests. The thing that amazes me the most about the dotcom bust is how people just sat by and let their riches turn to dust.
        • Now if I ever make $120,000 in capital gains in the future I will get back the money the IRS stole from me.

          Don't blame the IRS, blame Congress.
  • Disappointing (Score:3, Insightful)

    by AviLazar (741826) on Thursday August 19, 2004 @09:15AM (#10011524) Journal
    So anticlimactic. I am actually disinfranchised by the whole ordeal. At least the price came down a bit from the overinflated suggested ipo.
    • What are you trying to say? "disinfranchised"? Did you mean disenfranchised?

      Could you vote for Google management before the IPO? No? Then what the hell did you lose?
    • It is rather disenchanting, isn't it? The whole thing has left me discombobulated.
    • by brennan73 (94035) on Thursday August 19, 2004 @09:27AM (#10011637)
      "I am actually disinfranchised..."

      You keep using that word. I do not think it means what you think it means.
  • by markkellman (662190) on Thursday August 19, 2004 @09:16AM (#10011529)
    Google is valued at around $23B. Even though it is lower than recent estimates, it is still much higher than people were originally speculating: $10-15B.
  • by scotay (195240) on Thursday August 19, 2004 @09:17AM (#10011537)
    Does that mean the search results will start to suck beacause the engine gets fat and lazy, sitting around all day smoking pot. I know I would if I had 1.2 billion dollars. Maybe they should put the engine on an allowance to keep it honest.
  • Scoffing Analysts (Score:5, Interesting)

    by kaleco (801384) <greig.marshall2@nOSPAm.btinternet.com> on Thursday August 19, 2004 @09:17AM (#10011541)
    I wonder how many of the analysts who scoffed at Google's potential value of $33bn rely on it every day to research other companies.

    I, for one, would be lost without it. However, I will be interested to see how it develops now it's under external influences.

    • Right... and what does having to use it everyday have to do with calculating future revenues and costs? Google does get a nice bump in its value because it is such an established powerful brand, but you still need to make money - which they do.
    • by TopShelf (92521) on Thursday August 19, 2004 @09:38AM (#10011737) Homepage Journal
      You may be lost without it, but what revenue do they actually generate based on that? Do you click on their ads? That's great, but then where do they go from there?

      Mind you, I think Google is a great tool, but they've bungled this IPO pretty badly. Whether they can continue to innovate and grow as a company is an open question that will be interesting to follow over the next few years...
      • by totallygeek (263191) <sellis@totallygeek.com> on Thursday August 19, 2004 @10:07AM (#10012008) Homepage
        You may be lost without it, but what revenue do they actually generate based on that? Do you click on their ads? That's great, but then where do they go from there?


        I know a company that when call volume is low they simply up their cost per click on Google for a couple of hours, spending about $1000, and they have work for the next month. Google ads really work.


        For my business, we landed a small contract for some communication line installations from posting an ad on Google. We spent about $60, and received just under $500 in billable services. We are currently working on an ad campaign for Google for some custom software. We will be making Google our only advertisement medium.

      • Re:Scoffing Analysts (Score:4, Interesting)

        by bigpat (158134) on Thursday August 19, 2004 @01:07PM (#10014340)
        "Mind you, I think Google is a great tool, but they've bungled this IPO pretty badly. "

        Seems they have done better than most, at least by the only measure of success that is important to the company. They will have gotten a much larger share of the potential IPO revenue than companies that take the usual route and have the investment banks divvy up the shares amongst their buddies with big kickbacks and fees. Sure they had a few well publicized mistakes, probably well publicized by the people that would loose out if this method of IPO became popular.

        The message that the investment banks want other companies to take from this is that only google can hold a dutch auction and get away with it, for the rest of the companies they should let the pros handle an IPO in the usual way, even though half the IPO revenue will get pocketed in kickbacks and fees. The middlemen are always afraid when they are bypassed and are sure to point out everything that went wrong, even when this result was better for Google and better for investors.

    • Google has no lockin power as the switching cost for consumers is zero
  • by mansa (94579)
    With the gmail name and the playboy issue, it seemed like they went crazy for a few days.

    At any rate, now I can get my one share [singleshare.com] framed! I like to keep all my favorite tech company's stock certificates on my computer lab wall. :)

  • Anyone? (Score:5, Funny)

    by Anonymous Coward on Thursday August 19, 2004 @09:18AM (#10011545)
    Anyone else see the irony of linking to the Google index from finance.yahoo.com ?

    No? Just me.
  • by loggia (309962) on Thursday August 19, 2004 @09:18AM (#10011553)
    Sometimes the media overanalyzes. If you read last night's article in the New York Times, barely anyone mentions that the simple reason the expected share price dropped is that: people did not understand/were confused by the auction process.

    I think that's about it. Nothing very complicated at all...
    • Prove it then (Score:5, Insightful)

      by Anonymous Coward on Thursday August 19, 2004 @09:24AM (#10011604)
      If the only reason the price went down was confusion, then today when the stock is listed and can be bought by "normal" means, then it will shoot right up to $135, right?
      • Re:Prove it then (Score:3, Informative)

        by spludge (99050)
        Yup, that's what happened. It shot up.
    • Perhaps that's what YOU believe because that's what Google wants you to believe? I think it's because Google knew that their stock was overrated and was going to cause major financial headaches for when the stock prices plummeted from their overinflated original offerings...
    • by mfh (56)
      It works in their favour, really. They reduced the number of shares and the price lowered. If anything this will be a good buy with solid growth. They went from being a solid investment to a hot ticket, so now news articles will demonstrate the stock going up up up in the next while. Rather than reports of the stock holding at $110 or something.

      Once again, Google is flexing their mental might. :-)
    • "people did not understand/were confused by the auction process"

      Those people have no business playing in the market, then. Auction theory is in second semester economics here at UMD@CP, including the exact variant that Google is using.

      Anyone who gets in at $85 is going to get burned once rational valuation kicks in. We should be thankful it went lower. I've read that most institutional investors are staying far, far away from this one - that's pretty telling, in my eyes.

      Geek cred != market cred.

      -Erwos
  • ... you have to feel sorry for the employees of Google, if they take their share options now they have to choose - the flash cars _or_ the holiday home in Aspen, not both...

    It must be so demoralising for them :-]

    Jaj
    In no way bitter.....
  • Beta? (Score:4, Funny)

    by qmchenry (266894) * on Thursday August 19, 2004 @09:19AM (#10011564)
    Are we sure these aren't beta shares like gmail? Anyone have a stock invite to share?
  • Some good here (Score:5, Interesting)

    by grunt107 (739510) on Thursday August 19, 2004 @09:20AM (#10011567)
    Although to some pundits the lower price signals a weaker offering, some of this could be to GOOGs benefit.

    The lower per share value was followed by a lowering of shares available. This could generate more interest in the shares, which will drive prices up (or keep them constant longer).

    It does, however, mean the cap has gone down by over 25% (36B to 26B). Still bigger than my bank account, though.

    • While they might get some good press from a rising stock price in the months ahead, the downward revision in the IPO was a bad, bad sign.

      They wanted to sell X shares at Y price, and after getting all the bids in, they scaled back to selling 1/2X shares at 2/3Y. That sounds like the market demand was much less than they anticipated, and the revision is an attempt to spin things in a positive fashion going forward...
    • Another good point is that even with their reduced price, its still an impressive IPO.

      And a couple of early investors pulled their shares to sell because they think that they can sell them in the future at a higher price. Nothing better than seeing that sort of confidence in a company's stock price.
  • Some analysis (Score:5, Informative)

    by Deag (250823) on Thursday August 19, 2004 @09:20AM (#10011568)
    The Economist [economist.com] has a good article giving analysis of the IPO.
  • by mkachan (223539) on Thursday August 19, 2004 @09:22AM (#10011584)
    I fear that for Google, going fully profit and opening to investors might in the long run have a negative impact... Will big Google shareholders be able to influence what appears in the Search Engine? Maybe right now this will be impossible, but who knows what might happen in the future... And what will be the consequences of it for the users?

    Maybe the problem is the following: there is a way in which Google is perceived now that is fundamentally wrong. It is treated as a "service" for Internet Users, the One and Only Search Engine, while it is just Yet Another Company.

    Monopolies (especially privately-owned and profit-making ones) are never good. Will Google become as Bad(TM) as Microsoft?
    • Well, this is the exact reason that the dual share structure exists. Each Class A share has one vote, each Class B share, however, has 10 votes. The founders have most of (if not all) the Class B shares. In the end, I believe this gives the founders about 60% voting control of the company. However, their equity ownership (right to profits) is less than this.

      One of the reasons that they've done this (as state in their S-1 registration statement) is to prevent the pursuit of short-term profits at the exp
    • I think you are forgetting that there are plenty of other search engines that don't require a change of OS, hardware or other infrastructure to switch, unlike Microsoft.

      I doubt Google is a monopoly, and there are other search engines vying for the top spot should Google mis-step. If they sell out to shareholders and Yahoo or MSN ends up being more useful as a result, then the shareholders are only hurting themselves.

      My understanding is that only a small portion of shares are being sold, so those votes do
  • Money for buyouts? (Score:5, Interesting)

    by manmanic (662850) on Thursday August 19, 2004 @09:22AM (#10011586)
    With an already profitable business, and lots of extra money in its pocket, can we expect Google to start a buyout spree? Some targets might include Vivisimo [vivisimo.com] with their clustering technology, Girafa [girafa.com] for visualizing search, or even some of the better Web APIs [google.com] applications like Google Alert [googlealert.com] or the GoogleBrowser [touchgraph.com], as this Wired story [wired.com] suggests.
  • by jimicus (737525) on Thursday August 19, 2004 @09:23AM (#10011594)
    After all, the company offers only one basic product (albeit in a couple of incarnations).

    Microsoft are starting to consider Google as competition. And competing with Microsoft has historically been a bad move - I can see Longhorn's search facilities integrating with MSN search such that the boundary between the Internet and the PC on your desk becoming blurred. Google are pretty much at the top, and it'll be almost impossible to maintain that long-term.

    So you probably wouldn't buy this share for growth. How about income? Has Google publicised what it plans on offering in dividends? Even if it did, with no past record to go on, how can you have any idea what level of income to expect?

    Even if you don't buy the share for growth, it's still an expensive share. It wouldn't take much for its value (and thus the value of the investment) to plummet.

    Ultimately, I think this share is a bet that the rich might be prepared (and financially able) to take, but most would be well advised to steer clear of. The dot-com bubble burst a long time ago.
    • by gbjbaanb (229885) on Thursday August 19, 2004 @09:33AM (#10011697)
      oh yes, it is an incredibly expensive share - current sales are about $268 million, and it's currently selling shares that value the company at $23 billion. That makes a P/E of 85, which is a teeny bit over-optimistic.

      Like, most shares trade at about 15-20 times earnings.

      Which means, as you own a little bit of the company, it'll take you 85 years before the company has sold as much ads as you paid, which manke syou think of those terribly overpriced tech boom stocks. Remember when Yahoo had a P/E of 133, with almost no profits? What is it today?...

      Unfortunately, there's no data about Google's financials published yet, so you can only speculate on what the price will end up as - but if you base the share price on earnings, you'll get the idea that it can only go down. (which is another reason why this dutch-IPO hasn't gone down well, the professional investors think its overpriced too).
      • > Like, most shares trade at about 15-20 times earnings.

        Rought, Roh, Shaggy!

      • by Anonymous Coward
        IMAFA (Financial Analyst) Dunno where you got those numbers from. Net Sales last quarter were 700m, but you're measuring price / sales anyway.

        P/E is price to earnings, which values GOOG at 118 times earnings for the last 12 months, actually in line with YHOO at ~ 114.

        Futures pricing currently suggests that GOOG will close at around $92 at the end of the day.

        Currently, however, trading is halted. This means there's such an imbalance in one direction or the other that it's impossible to put a price o

    • by pubjames (468013) on Thursday August 19, 2004 @09:43AM (#10011781)
      competing with Microsoft has historically been a bad move

      This is a bit of a meme, and I believe and incorrect one.

      Sure, when the PC market was rising Microsoft did really well agressively bagging the OS and Office application markets.

      However, it's not been very good moving into established markets, and for a while hasn't even been very good at bagging new, rising markets.

      They said they would kill AOL. They didn't even get close. They said they would dominate the software for mobiles market. They haven't. They said they would beat Sony in the game console market, but they haven't.

      Once upon a time, everyone in the industry feared Microsoft. Those days are over.
      • I accept what you are saying. What I am touting is a very theoretical scenario of the type which usually gets modded down as a troll. It may well bear no resemblance to reality whatsoever.

        I think Google would be easier for Microsoft to compete with than most. Not that Microsoft would crush them easily, just that Microsoft can compete with Google pretty well, using some pretty nasty tactics.

        My reasoning is this: Like it or not, Microsoft has a pretty effective stranglehold on most of the clients used to a
        • By integrating MSN search to the "search" feature, Microsoft can theoretically blur the lines between the Internet and the local PC.

          You are forgetting MS is now officially a monopoly. Their legal problems have changed the way they do business. They can't be as nasty as they used to be.
  • Wrong Link (Score:4, Informative)

    by clinko (232501) on Thursday August 19, 2004 @09:23AM (#10011596) Homepage Journal
    Why not use the google stock tool [google.com] to google's Stock...
    • 2 of 4 links are broken: either an email address is required or it offers the page as a download, at least that's what mozilla says. superb.
  • by Anonymous Coward
    at which point they'll trick the SEC into bombing a fault line in the Gulf Of Mexico, thereby creating Google Island. Afterwhich, google fanboys will pressure the US to declare the island as a sovereign state, thus giving a seat in the UN to Page and Brin. And Veto power.

    At least, that's what I'd do with that kind of money. That and loose women.

  • Not at this price (Score:2, Insightful)

    by tgv (254536)
    Way overpriced. What's the traditional rule again? 20 to 30 times the annual profit (after taxes)? How are they ever going to reach, let alone sustain a 1 billion dollar profit per year?
  • But they're ripping people off on Froogle, which still lists the shares at $108-135! [google.com].
  • Don't buy a cent. (Score:5, Interesting)

    by Anonymous Coward on Thursday August 19, 2004 @09:29AM (#10011661)
    First, pick up and read a copy of The Intelligent Investor by Benjamin Graham (commentary by Jason Zweig).

    1) By all fundamental measures, this stock is dramatically overpriced. (Ask yourself how a search engine -- which could likely be replaced by next years' "next new thing" -- could be worth, on a per cap market basis, as much as McDonalds.)

    2) IPOs usually only make one group of people rich: the boardroom execs. Don't be suckered by the initial rise in price -- IPOs are almost always followed by a dramatic downturn.
    • >IPOs are almost always followed by a dramatic downturn.

      In Google's case, the IPO followed the Dramatic Downturn.
    • Because Google's product isn't their search engine, it's what the search engine is running on. We're talking a huge server clustering engine, able to take run-of-the-mill computers and integrate them into a huge cluster, providing (near) instant server recovery and minimal administration. Google.com and gmail are just two incarnations of that technology, with two different front ends. They're as much a flash-in-the-pan as McDonalds.
      • Re:Don't buy a cent. (Score:3, Interesting)

        by marauder404 (553310)

        Because Google's product isn't their search engine, it's what the search engine is running on. We're talking a huge server clustering engine ...

        Oh really? Is that how they plan on making $250M this year on $3B of revenue for 2004? How do I buy or rent this product that they are selling? Google's technical infrastructure is novel and very interesting, but it's a cost-reduction measure and not a source of revenue. Seeing how they make money, they're an advertising company more than anything else. But you

  • I don't understand WHY Google IPO'ed. It's not exactly they needed the money. Well, at least it's not like Yahoo, which went from .42 cents a share to $42.00 a share overnight for doing NOTHING. Google is at least useful and will remain top of the search engine heap for at least a couple of years. There is always someone else who comes along that's better. Remember when HOTBOT was the hottest thing since sliced bread?
    • Re:Useless (Score:3, Informative)

      by achurch (201270)

      I don't understand WHY Google IPO'ed.

      As I recall comments from the initial announcement, Google had grown enough that they had to start filing stuff with the SEC like a publicly traded company (which costs lots of money in overhead) anyway, so they decided they might as well go the whole nine yards and raise some money too. Or at least that was one hypothesis.

  • by twbecker (315312) on Thursday August 19, 2004 @09:30AM (#10011673)
    I agree with the guy in the article who said they should have offered a much larger number of shares at a much lower price. Joe Blow is a lot more likely to throw some "play money" into Google if his say, $1000 buys him 40 or so shares rather than 12.
    • by Jesus IS the Devil (317662) on Thursday August 19, 2004 @10:00AM (#10011915)
      1) Offering up larger number of shares can have disastrous effects on the market cap of Google. If they issue too many and the prices get too low, their cap would be lowered undesirably.

      2) 40 shares at a lower price, or 12 shares at a higher price, it still adds up to be the same. Only the Joe Shmuck investor thinks he got a better deal with his 40 shares vs. 12 shares. With that said, there are a LOT of Joe Shmucks out there, so it probably will have some effect.
  • I like this..

    Google wasn't original but it did search significantly better. Created interesing products that worked well. Now the payoff.

    They deserve it.

  • by rfunches (800928) <thefunch@NoSpAm.gmail.com> on Thursday August 19, 2004 @09:39AM (#10011747) Homepage
    NASDAQ is reporting that Google shares will begin trading sometime between 10 AM and 12 PM EDT. IMO look for an opening between 10 and 10:30 AM EDT.
  • by ch-chuck (9622) on Thursday August 19, 2004 @09:40AM (#10011757) Homepage
    mod me down, goggle fanboys, but I'm not buying into the hype. I haven't heard anything about how they're going to turn a big bundle of cash into an even bigger bundle for a return on my investment, other than piss it away one advertising experiments. It's basically Internet data-mining of public information anyway.

    Give me a good solid energy or pharmaceutical company or something with a steep demand curve, naturally limited supply and customers who gotta have it (like sickly suv owners).

  • I have given up trying to understand investors. As I understand it, Google is selling what it claims are a small fraction of its available shares. If these are sold for a total of about $1.5 billion, this somehow values the company at the ratio 100% of shares/% sold.

    But, as any idiot knows (I know, I am an idiot...) the value of anything is marginal. House prices are only high so long as there is a shortage. If everybody suddenly panics and wants to sell, houses get cheap very quickly. This is economics 101

  • Well Google going IPO is bound to create a heap o cash (tm) one way or another but it would seem they have simultaneously shot themselves in the foot repeatedly and torpedoed net-based ipos for other companies no? I'm basing my comment on slashdot news which is a funny feeling I have to admit, but would they not have been very likely to earn more if they did it the old fashioned way?

    I suppose Google employees are also able to buy Google shares on the market and ride them up, but mostly I'm curious about w
  • by gnugrep (696034) on Thursday August 19, 2004 @10:16AM (#10012093)
    The way that Google offered its shares, through a Dutch auction, guarantees that the price will go down. The way a traditional IPO is done is that the underwriters buy all the shares. Then they feel out the demand and sell the initial shares at a somewhat lower price to select investors. As soon as it starts trading, these lucky people flip the shares for an easy profit as the pent-up wider demand for the shares is met in the stock market. Using the auction process, they opened the bidding to the public at large and therefore anyone interested in really owning the stock would have already placed their bid. The demand is met by the IPO, not by the trading after the IPO in the aftermarket.
    • The way that Google offered its shares, through a Dutch auction, guarantees that the price will go down.
      No it does not. You are forgetting about all the people outside the USA who were unable to participate in the auction, the many people who did not meet their brokers eligability requirements and the people who failed to get a bidder id.

      I'm not saying it won't go down, there are plenty of other reasons for it to fall.
  • by Alomex (148003) on Thursday August 19, 2004 @11:17AM (#10012844) Homepage
    The discount over the original predicted price of $105-135 is larger than what the $85 price suggest. The original plan was to offer twice as many shares in a dutch auction. In this type of auction the price is bid down instead of up until the entire lot of shares is sold.

    If the original amount of shares had been offered to the public, bidding would have continued well down past $85 to a range of $50-65 per share or so. In other words, for all practical purposes Google went public at half the price they had predicted. Interestingly, at that price Google's valuation is more in line with its competitors (overture, yahoo).

    Keep in mind that most companies that go public aim for a $10-20 per share initial price. This suggests that when the Google IPO process got started, Google was expecting to get a lot less per share than they got, so in the end they should be more than happy.

  • Google's PR mistakes (Score:3, Interesting)

    by scrm (185355) on Thursday August 19, 2004 @12:09PM (#10013569) Homepage
    Telecomms and PR Expert Ben Silverman has a very interesting analysis on PR Fuel [prfuel.com] of Google's PR gaffs (and the resultant harsh media treatment) of the company around IPO time. Choice quotes:

    Whether it was a questionable interview with Playboy by company founders that almost derailed the IPO or the failure to properly account for stock options, Google's missteps have been high-profile and surprisingly amateurish. Google's brand with consumers has not suffered as a result, but in the media, the company's respect level is at an all-time low.

    --

    The PR people at Google, I have no doubt, are well aware of the challenges they face in going from a privately-held company to a publicly-held company. Up until a few months ago, I had faith that the company could handle these challenges without much fanfare or problems. But in light of recent events, I'm more skeptical about how the company conducts itself with the media and public at-large. Perhaps Google was just too perfect for its own good.

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