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View Full Version : Google files share offering, est @ $US2.7b


laracroft8290
30-04-04, 13:47
Internet search powerhouse Google has filed for its long-awaited public share offering, proposing to raise some $US2.7 billion ($A3.74 billion) and making public some of the company's long-held secrets.

The initial public offering (IPO), seen as one of the hottest since the dot-com boom, will be led by Morgan Stanley and Credit Suisse First Boston, according to documents filed with the US Securities and Exchange Commission yesterday.

The pricing of the shares will be determined by auction, Google said, an unusual practice apparently aimed at averting the abuses of the 1990s in which hot IPO shares were allocated to favoured brokerage clients.

The IPO will lift the veil of secrecy over the Mountain View, California, company, which has developed the world's most important search engine.

"Google is not a conventional company. We do not intend to become one. Throughout Google's evolution as a privately held company, we have managed Google differently," said a letter included in the SEC filing from company co-founders Larry Page and Sergey Brin.

"Now the time has come for the company to move to public ownership. This change will bring important benefits for our employees, for our present and future shareholders, for our customers, and most of all for Google users."

The documents filed with the SEC said Google has been profitable since 2001 and in 2003 earned a net profit of $US105.6 million ($A146.44 million) on revenues of $US961.9 million ($A1.33 billion).

The papers showed a sharp rise in profits in the first quarter of 2004, with a net profit of $US63.9 million ($A88.61 million) - more than double the figure from the same period a year earlier - on revenues of $US389.6 million ($A540.29 million).

It showed cash on hand of some $US454 million ($A629.59 million) as of March 31.

Google, with some 1900 employees, derived some 95 per cent of its revenues from advertising last year. This comes largely from the company's so-called paid search that directs ads to customers based on their web search.

The company said it faces "significant competition" with Yahoo and Microsoft, its main rivals.

The document said Google would end its relationship with Yahoo in July, but that this would have little financial impact. Yahoo accounts for less than three per cent of Google revenues, it noted.

"We face formidable competition in every aspect of our business, and particularly from other companies that seek to connect people with information on the web and provide them with relevant advertising," said the IPO document. "Currently, we consider our primary competitors to be Microsoft and Yahoo!."

Page and Brin, who founded the company in 1998 as doctoral students at Stanford University, said it is run as a "triumvirate" with chief executive Eric Schmidt.

"The three of us run the company collaboratively with Sergey (Brin) and Larry (Page) as presidents," the statement said. "The structure is unconventional, but we have worked successfully in this way."

The letter provided an insight into the founders' idealistic goals.

"Don't be evil. We believe strongly that in the long term, we will be better served - as shareholders and in all other ways - by a company that does good things for the world even if we forego some short-term gains. This is an important aspect of our culture and is broadly shared within the company," they wrote.

"We believe it is important for everyone to have access to the best information and research, not only to the information people pay for you to see. We aspire to make Google an institution that makes the world a better place."

Instead of setting an IPO price and allocating shares through the brokers, Google chose an unusual auction strategy.

"Our goal is to have an efficient market price - a rational price set by informed buyers and sellers - for our shares at the IPO and afterward," the document stated.

"We are working to create a sufficient supply of shares to meet investor demand at IPO time and after. We are encouraging current shareholders to consider selling some of their shares as part of the offering. These shares will supplement the shares the company sells to provide more supply for investors and hopefully provide a more stable fair price."

Sydney Morning Herald (http://www.smh.com.au/articles/2004/04/30/1083224557821.html)

laracroft8290
30-04-04, 13:51
BBC Online (http://news.bbc.co.uk/2/hi/business/3670951.stm) also has an article.

tlr online
30-04-04, 14:11
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