Google Cancels Spring IPO 246
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."
ugh (Score:4, Interesting)
Wow, where do they get that kind of money? Surely not the ads..
Re:ugh (Score:5, Informative)
Re:ugh (Score:5, Informative)
Re:ugh (Score:3, Interesting)
If anyone wants to find the link, I think it was in the recent article about Macrosquash's efforts to develop a competitive search engine. Of course, it was probably a gross estimate anyway.
Re:ugh (Score:5, Informative)
http://www.theage.com.au/articles/2004/01/15/1073
Meanwhile, there are reports that Yahoo! and Microsoft are preparing next-generation search technologies to beat Google, the world's most popular search engine. 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.
Yahoo IS leaving Google (Score:3, Informative)
Re:ugh (Score:2, Insightful)
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:ugh (Score:3, Insightful)
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 wh
Re:ugh (Score:5, 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...
Re:ugh (Score:2, Informative)
Google makes most of their money from ads [google.com] (keyword searches, etc.); licensing of their technology to third-party search engines like Yahoo! (although Yahoo! is dropping Google [com.com]); and, selling search appliances [google.com], which do lots of non-Internet work as well.
Re:ugh (Score:3, Interesting)
I think they're a great example of a business run well, not selling out (to MS) and really focusing on being the best damn whatever that they want to do.
Re:ugh (Score:4, Insightful)
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 (Score:3, Informative)
There is the Google Search Engine Appliance [searchtools.com] thing, which must have a healthy profit margin. I doubt that's going to be all that significant a contribution though - so I guess there is more profit in throse Sponsored Links than might be expected.
Re:ugh (Score:2, Informative)
Furthermore, I get the impression that their business model uses google.com as advertising for their licensing model.
Re:ugh (Score:5, Insightful)
Re:ugh (Score:4, Funny)
Gov't regulation that's why (Score:4, Informative)
I remember reading an online article about it. Apparently, it's a real pain in the ass. Basically you have to do the same amount of paperwork as a public company, but without the benefit of the extra money.
Re:Gov't regulation that's why (Score:5, Informative)
A private company must report its finances once it has more than 500 common shareholders--or stock-option holders--and $10 million in assets, according to section XII(g) of the Securities and Exchange Act of 1934. That means a private company must file quarterly forms with the Securities and Exchange Commission (SEC) that disclose operating expenses, profits, partnerships, shareholders and many other details--a laborious process that can cost as much as $2 million annually.
Re:ugh (Score:3, Insightful)
Bryan
Re:ugh (Score:2)
Re:ugh (Score:3, Informative)
Don't forget the Google search appliances that are sold/licensed/maintained. I know of numerous Fortune 500 companies that use the appliances for their internal sites.
In addition, when I was searching for jobs I checked up on Google. There were a few positions in the DC area that required high level security clearances, indicating that the government is using the appliances internally as well. To what extent, we don't know.
Re:ugh (Score:2)
Picutre Mulder holding a PocketPC instead of a file. Considering his porn habit, I'd say he'd be an early adopter.
Re:ugh (Score:5, Informative)
- Surely not the ads.
Why not the ads? A simple back-of-the-envelope calculation shows it's at least plausible.250M searches/day [searchenginewatch.com] * 3 ads/search * 1-2% clickthrough/ad * 365 days/year * $.10/clickthrough = $274M-$548M/year.
The 250M searches/day may be low since it's from Feb 2003. It also doesn't include Google's Adsense [google.com] program, putting Google ads out on other sites, which probably doubles the amount of page views.
Google has unusually high clickthrough rates and payments per click because of their AdWords [google.com] targeted advertising. Ads are matched to keywords and then optimized, with the most effective ads showing more and least effective dropping away.
Certainly enterprise revenue (licensing the Google search engine for use on other sites) is part of their revenue, but I suspect the majority is from advertising.
Oh Darn... (Score:5, Funny)
Instead of getting my free advertising stock benefit with google, I think I'll just buy some more Krispy Kreme and get another free box of doughnuts.
Not terribly surprised (Score:5, Insightful)
Re:Not terribly surprised (Score:5, Insightful)
Enjoy it while it lasts.
Re:Not terribly surprised (Score:2)
On the other hand, with as much cash as they have, it could be wise for Google to buy the options back directly instead of becomming an entirely different beast altogether, a publicly traded company with investor approved "short term share holder value" obessed CEO...
Bravo Google (Score:5, Insightful)
Re:Bravo Google (Score:3, Funny)
Re:Bravo Google (Score:5, Interesting)
sPh
Re:Bravo Google (Score:3, Insightful)
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:Bravo Google (Score:2)
Is this something MBA's are taught that doesn't fit the real world? Or is there some government regulation that makes paying off your employees in stock opti
Re:Bravo Google (Score:3, Interesting)
Um, if the founder pays you with cash, it comes out of cash flow from operations. Which might be needed for, say, operations.
Whereas if he gives you stock options, and they vest to your advantage, you will be paid by the greater fools who buy the publicly-traded shares. No cash out of the
Re:Bravo Google (Score:4, Informative)
I split the company into 1000 shares:
- 700 I keep.
Following the IPO, fortune continues to smile on us and the stock goes up to $1000/share. My friendly employees want to cash out their 199 options. No problem: I give them 199 from my stash, mourning the $2,000,000 it costs me but leaving me with 501 shares and control of the company. Life is good.I give my superstars options on 199 shares at $1.00.
300 I sell in an IPO, taking the company public
Same scenario, except this time I gave 400 options. Now when my happy friendly employees want to cash out, I have to either go out into the market and buy those shares at $1000 to give them, or issue more shares. Either course of action has problems from my point of view. At best it will reduce the value of my holdings; at second worst it will leave me no longer in control of my company; at worst it will zero out my net worth.
That's about where Microsoft stands today: if any significant number of their "old hands (say post-1995 hires) decide to cash out their options in a single quarter or even a single year, Microsoft has a bit of a problem on its hands.
Of course, that scenario has been around since before the dotcom bust, and it hasn't happened yet, so maybe it won't. But let Microsoft report just one quarter of declining revenue and the results might be interesting.
sPh
Re:Bravo Google (Score:2)
Options for a certainly valuable company like google might be discounted less, maybe 3/4 of cash, whereas most other companies stock options would be discounted by more being valued at 1/10 or less of cash. If google has been distributing stock options, and now they are delaying IPO, it can't be good for morale. They should offer to buy back the options for cash.
Re:Bravo Google (Score:2, Insightful)
Re:Bravo Google (Score:5, Insightful)
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.
Re:Bravo Google (Score:2, Interesting)
Re:Bravo Google (Score:3, Informative)
Google didn't "cancel" anything... (Score:5, Interesting)
While there have been some hints, it has largely been hype that is responsible for people thinking that Google would have an IPO.
Furthermore, it seems that it would be a smart move for Google to capitalise on this, and have their CEO say that an IPO wasn't even on his agenda. That would make people want it all the more, so it's a smart move that they've done that! Using the hype to their advantage without committing to anything... very shrewd.
Re:Google didn't "cancel" anything... (Score:2)
Is there some basis to this or was this just another Slashdot urban legend?
Re:Google didn't "cancel" anything... (Score:2)
Largely from the RedHat IPO, one of the biggest scams at the height of the Internet bubble. They actually spammed all contributors to Linux, trying to sell their worthless shares.
Good (Score:5, Insightful)
Why would I be disappointed? (Score:5, Insightful)
Re:Why would I be disappointed? (Score:2)
I don't see that going public hurt Yahoo at all, as far as customers are concerned.
Re:Why would I be disappointed? (Score:3, Insightful)
hmmmm (Score:4, Funny)
Re:hmmmm (Score:2, Funny)
"Market conditions are not right?" (Score:4, Interesting)
Easy answer (Score:4, Insightful)
Not being in SCO's sights, maybe?
Re:Easy answer (Score:3, Interesting)
Just a thought.
sPh
Re:"Market conditions are not right?" (Score:3, Informative)
This is good for the company, because not only do the private owners still totally control the company, but they:
a) can buy back the shares on the open market for less than they sold them if they want them back
b) can sell more shares later if they need more capital (since they didn't sell as many shares on the IPO to make the initial capital)
Good thinking, Google (Score:4, Insightful)
Re:Good thinking, Google (Score:2, Informative)
Re:Good thinking, Google (Score:2, Interesting)
Could the cooling-off period limit their ability to respond to Microsoft's publicity machine during a potentially critical time?
Re:Good thinking, Google (Score:5, Informative)
It's not quite as simple as that. First off, the IPO would only be for a portion of the shares now held in private. So Google insiders would still hold significant control. Second, there are disclosure rules pertaining to buying up shares. The SEC requires shareholders to file statements once they cross thresholds in ownership. Third, Google could implore a number of various defences against any "take-over", including a share rights agreement (aka poisin pill), staggered terms for directors, etc. For one company to buy out another, it either has to be a friendly deal between the parties, or hostile - offers shareholders $$$ to tender their shares to the acquiring entity.
The reason for IPO-ing is either 1) to raise capital for growth, expansion, etc. - Google seems to be doing fairly well so far, and money is still cheap enough that they could tap the debt markets or private placements before going public, or 2) (which is likely more the reason), to provide liquidity for the current shareholders - the currently management team is sitting on millions of dollars, but they don't have any easy means to convert their ownership position into cash.
By having a public float, Google would have to disclose their financial information (as well as other stuff). With all that is happening, increased competition, maybe they take a wait and see approach, especially if they aren't in dire needs for cash.
Re:Good thinking, Google (Score:2)
This is good news (Score:5, Insightful)
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.
Investments (Score:2)
Yes that may be true, and I know that some stats document this.
But nothing prevents a public company from acting with a long term strategy, or a private company acting with only a short term strategy.
It really comes down to what the owners want.
Many shareholders just want a quick buck, so the companies run that way.
I hope that with the changes in US dividend taxation people might start looking for good cash generating business to invest in, and maybe this will change.
glad they cancelled (Score:4, Insightful)
Is it the right thing? (Score:5, Interesting)
From everything I've seen of google, financials don't appear to be their weakness (though maybe it is and it's just not visible). So what do they need the cash for? Sure, the directors will make tons of money from doing it, but is it in the best interest of the company? Do they have acquisitions they want/need to make?
Frankly, Google has done quite well as a private company and I have some concerns about what may happen if they go public. As an example, there are some people that claim Google has unfairly ranked them and have sued. Google is, in many ways, a monopoly in the search business. Were they to go public, these kinds of suits might get further in court as Google would likely be under more scrutiny regarding this. I think Google does a good job of modifying page ranks of people trying to trick the system. I'd hate to see them lose that ability.
There are other areas as well where Google being privately held is an advantage. I could certianly be wrong about some of this. I'm not a corporate attorney nor an accountant, but this is my interpretation.
Conditions really aren't right (Score:5, Interesting)
- Microsoft has been making constant noises about their new, upcoming search engine and how great it's going to be, basically doing the full-tilt vaporware thing, almost certainly with the purpose of adding uncertainty to Google's IPO. Microsoft would do something like release, with a huge media blitz, their new search product the day before Google's IPO. Waiting either pushes MS to actually release their product or allows Google, on the not wholly unrealistic possibility that MS drops the subject and then suddenly starts making noises again when Google reschedules their IPO, to accuse MS-Search of being vaporware.
- SCO is being the computer industry loose cannon, until the money from their donation from Microsoft (and, hypothetically, Sun) runs out; they are under no obligation to do anything at all to make more money; and they seem to be desperately, greedily obsessed with doing exactly two things: Hurting linux in any way, public relations or otherwise, and getting press attention. They've been making noises about suing Google; this is probably because making such noises keeps them in the press and because they know Google's about to IPO so they want to push Google to pay SCO some money so they'll go away and stop making uncertainty. However, it's not inconcievable they may well actually sue Google; their case with IBM may be about to unravel, and if so they need to start up a new lawsuit of some sort to keep up the illusion they have some sort of revenue model; and doing so on a nearly-IPOing Google would greatly help MS, which, how shall I put this, SCO at least seems to feel grateful toward, what with the fact their only documented profit ever happened solely because if MS's donation. SCO's a minor consideration, but still delaying IPO at least gives them time to die or deflates their lawsuit threats.
- The economy is changing, and since the president may well change or nearly change in about six months it may be set to change a lot more in a very unpredictable and drastic way. This is a big deal. IPOs are of much less good if the economy changes drastically shortly afterward. (Can you say "Andover"?)
I'm sure you can think of more reasons if you think about it..
.
Re:Conditions really aren't right (Score:2)
The US Presidential election is 9 months away, and if Bush loses, his successor won't take office for over 11 months.
LK
Re:Conditions really aren't right (Score:4, Informative)
Of course a skeptical person.... (Score:4, Interesting)
There has been speculation about the Internet search engine's ability to scale, or the lack thereof. Filing for an IPO forces any company to come clean about the potential shortcomings or problems that it faces. Not always nice.
Probably nothing of the kind, but worth keeping at the back of your mind.
Re:Of course a skeptical person.... (Score:3, Funny)
SCO related? (Score:4, Interesting)
In the midst of an IPO, impending court action would cause the price of stock to plummet. I'm guessing Google are holding out until this whole SCO debacle has been laid to rest.
Thank goodness. (Score:2, Interesting)
I predict the technical side of Google will be outsourced to India within two years of it's IPO.
Go ahead and waste your mod points silencing this post. It's not a troll, but happens to be what I think.
Re:Thank goodness. (Score:2)
I predict the technical side of Google will be outsourced to India within two years of it's IPO.
I'd say your prediction has a pretty good chance of coming true, based on this [google.com].
Re:Thank goodness. (Score:2)
Here's the deal (Score:5, Insightful)
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:Intensive purposes? "Intents and purposes." (Score:2, Informative)
Altavista as an example (Score:5, Interesting)
I see the same possibility occurring. If google goes down the same trampled path that Altavista went, then a lot of people will be moving on to find another search engine with a clean interface that simply does the job.
Google: Thats what we want. When we go to a search engine we want to search. We don't want links to buy garden tools when we are searching for benchmarks, or links to tech consultants when we are searching for a definition for an error message. Just a search. It's not broken the way it is.
Re:Altavista as an example (Score:2)
It's not broken the way it is.
Actually, it sort of is. Many times when you search for something general you get:
1) Metapages that point to "useful" search engines.
2) Shops trying to sell you something.
I think it's high time Google implement the feature that's already in some more experimental search engines: category classification of results. It's especially important when searching for some term which is used in two or more completely different meanings.
Re:Altavista as an example (Score:2)
Re:Altavista as an example (Score:2)
Not that I want that to happen - I love Google as a free service. As
Will this be like the Netscape IPO? (Score:3, Interesting)
Re:Will this be like the Netscape IPO? (Score:2)
Sounds good to me.
Re:Will this be like the Netscape IPO? (Score:2)
Why? (Score:2, Interesting)
Good move (Score:3, Insightful)
Re:Good move (Score:2, Insightful)
Re:Good move (Score:3, Interesting)
Greed and arrogance will be their undoing (Score:2, Interesting)
Agreed, Schmidt is majorly wrong on this (Score:2)
Market conditions are possibly the best they will be through to 2007. The stimulus echo bubble created last year is beginning to fade and the market is already moving back to a sell mentality. It is likely that if Schmidt goes public in 2005 or 2006, he will face a serious bear market in no mood fo
I hope the postpone it indefinitely. (Score:2, Insightful)
Not disappointed at all (Score:5, Insightful)
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:Not disappointed at all (Score:2, Insightful)
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 fundra
M$ will never duplicate this technology (Score:5, Funny)
I can say no more the links speaks for itself.
MOD PARENT UP. +5 Funny! (Score:2)
If it wasn't from google.com I'd be convinced it was a spoof!
Chairman and CEO (Score:2, Interesting)
It's not the Times of London!!! (Score:2, Informative)
Schmidt will instead IPO in a bear market (Score:4, Interesting)
Schmidt needs to IPO NOW, this market is already moving into selloff range. Sentiment has changed now that everyone knows the Fed will raise rates in 2004 and the evacuation from stocks has begun.
If I were in charge.. (Score:4, Insightful)
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.
First time! (Score:2, Funny)
Don't worry everyone (Score:3, Funny)
yanking their (our?) chains (Score:2, Funny)
My theory: MSN will buy Google (Score:3, Insightful)
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.
Thank God. (Score:3, Informative)
As it is (as a privately held company) they can take such news as information and plan carefully and intelligently. Sure they're concerned, sure the VC folks are telling them they need to watch out. But it's nothing like watching your company's valuation drop 60% overnight and be left with fear of lawsuits and hostile takeover based on rumors.
Going public is way overrated.
Cheers.
Re:Distributed search machinery (Score:2)
A centralized search engine has inherent speed advantages that can not be overcome by P2P systems until the speed of light is increased by a few factors of magnitude.