Google IPO - Shares to come out at $108 to $135
 

SAN JOSE, Calif. - Clarifying some of the details behind its highly anticipated stock offering, Internet search leader Google Inc. on Monday estimated its market value to be as high as $36 billion, rivaling corporate stalwarts such as McDonald's Corp. and Sony Corp.

The Mountain View, Calif.-based company said 24.6 million shares will be sold for an estimated $108 to $135 each, depending on the unusual auction Google plans to employ as early as next month, according to a regulatory filing.

That would mean that between $2.66 billion and $3.32 billion in stock would be sold in the initial public offering. However, the amount the company itself expects to raise is $1.66 billion, because some of the shares being offered are being sold by existing stockholders.

It would be the eighth largest IPO in history, ranking higher than most that took place during the dot-com boom of the 1990s. Unlike those companies, however, Google has consistently been profitable and has posted steep revenue increases.

Google, which is offering just 9 percent of its stock, would have a market capitalization between $29 billion and $36 billion, counting shares held by insiders. The average in the S&P 500 is $21.25 billion. Rival Yahoo Inc. has a market cap of nearly $38 billion.

Once trading of the shares begins on the Nasdaq Stock Market, Google expects to have the ticker symbol "GOOG."

Google shares will be distributed in an auction designed to give the general public a better chance to buy stock before shares begin trading. In the past, companies' IPO shares have been restricted to an elite group picked by investment bankers handling the deal.

Analysts expressed some surprise that the search behemoth ? given its "Do No Evil" mantra and its desire to democratize the IPO process ? is not going to split its stock to bring the price range down to levels more appealing to average investors.

"I think that's a little bit ridiculous," said Paul Barder, an analyst at Renaissance Capital in Greenwich, Conn. If individual investors have $100 they want to invest, "they're not even going to get a single share."

Google executives appear to be following in the footsteps of star businessman Warren Buffett , who has called splits a Wall Street gimmick. Class A stock of his Berkshire Hathaway Inc. has never split and it now trades at about $88,000 per share.

Google founders Larry Page and Sergey Brin, who created the company in a Stanford University dorm room in 1998, also stand to profit handsomely from the IPO along with its venture capital investors.

In the filing, Google said Page and Brin will each sell 1 million of their shares, generating about $117 million for each based on the midpoint of the company's range, $121.50 per share. They will still own more than $4.5 billion worth of stock each, and their preferred shares will carry more voting power than the stock traded publicly.

But John Doerr of Kleiner Perkins and Michael Moritz of Sequoia Capital stand to profit even more. Doerr will sell 2.1 million of his 21 million shares for an estimated $255 million; Moritz will shed 2.4 million of his 23.9 million shares for more than $290 million.

The stock offering also will provide a big payoff for Yahoo and America Online, which each were early investors in Google. Yahoo is selling 549,000 shares; AOL will unload 867,000, according to the filing. At $121.50 per share, Yahoo would collect $67 million, while AOL would reap $105 million.

Google's filing with the Securities and Exchange Commission gave an updated picture on the company's booming growth, fueled almost entirely by advertising linked to online searches.

For the three months ended June 30, Google earned $79.1 million, or 30 cents per share, compared with $32.2 million, or 12 cents per share, in the same period last year. Sales more than doubled, to $700 million in the latest period from $311 million last year.

In the first six months of 2004, the company earned $143 million, 54 cents per share, on revenue of $1.35 billion. In the comparable period last year, the company's profit was $58.0 million, 23 cents per share, on revenue of $560 million.



Google also reported that it had 2,292 employees as of the end of the second quarter, up from 1,907 at the end of the first.

Meanwhile, some Google users reported that the company's Internet site was generating error messages instead of search results Monday. David Krane, a Google spokesman, did not immediately return a phone call seeking comment.

Monday's document was the fourth revision of Google's IPO filing, which was first released in late April.

:-)

$120 a share seems very high. :2 cents:

that is high and i heard its a dutch auction process which will drive the prices higher

I'd love to see where they get that $36 billion value from...

Cheers,
Matt

It's explained in the first post?

There is no way you could buy this stock and get a significant return on your investment. If you want to get in on an IPO with more upside I recommend SalesForce.com.

:2 cents:

Matt,

That would be by taking the total outstanding shares issued and multiplying it by the stock price. ;)

wow its looking like it might be big on the first day I can easily see 200$ by the end of the day or the day after. reminds me of the good ol dot bomb days

It'll never happen. Those shares have been priced to maximize funds raised in the round. I'll bet anyone here 1000 dollars that the price closes at less than 150 dollars day 1.

So, buy at $108 and put in a sell order at $200. Could do that couldnt you and cash right out?

Seems nuts to me, but I can forsee a flurry of activity from this.

Dont know shit about stocks though, except I own some.

Basically the reason the numbers dont seem to add up is.. that Google is only releasing about 10% of their shares. The other 90% are going to the founers and the venture cap people and google employees.

Their P/E is around the same as Yahoo's, once you crunch the numbers.

You couldn't buy the stock at 108 unless you've already cut that deal. Unless you have options or you have an account/relationship with one of the underwriting brokerage firms you can't buy the shares until they have all been sold at least once. In other words, if you aren't buying them from the underwriters you are buying them from a stock holder. That said, you could only buy them at 108 if the stock comes out trading flat or down which won't happen. My prediction, it closes the day at 133.

Agreed.

Not worth it, at all.

Google will have to execute flawlessly in the next five years after its IPO to justify these prices. I don't see it happening, there is too much competition in this market with Yahoo, Microsoft and even Amazon fighting it out. Is there really that much potential growth in the search market to justify a P/E of 110?

I know yahoo has a similar P/E but the 120 vs 28 price entry points per share is a big deal. This will likely be a volatile stock with both put and call buyers taking large positions.

the most disturbing news this week for me (besides the walking monkey) was that only 2% of google's 1900 employees are older than 30 ...

LOL that's what I said back in the 80's when my broker at the time wanted to know if I wanted to invest in a company call Microsoft.

I figured the software field would become a battlefield of companies dealing with constantly and rapidly advancing technologies and it would be hard for any single company to be the dominant player.

That was one of my biggest stock decision regrets ever. :1orglaugh

Yeah, but Microsoft had a very low valuation at that time. It isn't a fair comparison.

This is good news for Google and those who got a deal. Everybody else got a good chance of actually losing money, should you trade the first day.

I can't see the stock staying above $100 that long either. :glugglug It will most definitely close somewhere around $130, as Rick said.

True, but the stock market runs on emotion not logic and emotion doesn't know how to read numbers.

:glugglug

UPS finally went public in the year 2000. Their stock was priced at everything they could get out of the public while the topic was hot. Take a hard look at their all data chart because Google's will look the same. Googles stock will be worth 133 dollars in 5 years, mark my word. It would be better to short it now then parlay it into a long hold in 2 years.

This is a UPS all data chart

P.S. Another strong comparison between UPS and Google is that UPS also dumped executive shares on the market at launch. I guarantee you that when the real owners dump their shares at the IPO the shares are priced at everything they can get. Buying this stock now would be a very big mistake.

can google do what microsoft did and create a monopoly? especially when microsoft is one of their competitors.

nowhere near the same situation, but people are always thinking they can find the next microsoft

The investors you are describing above are not part of the smart money class of investors. Not saying that I am part of the smart money either, but one thing I do know is to get cautious when the herd all wants to move in one direction. History has shown time and again that the herd may move in the middle of a trend with force but gets chewed up horribly at the top and bottom.

smart money? most institutional investors are nothing more than sheep

smart money comes from guys like buffet. very few mutual fund managers are worth toilet paper they wipe their ass with

Let's see

"between $2.66 billion and $3.32 billion in stock would be sold in the initial public offering"

"Google, which is offering just 9 percent of its stock, would have a market capitalization between $29 billion and $36 billion, counting shares held by insiders."

"In the first six months of 2004, the company earned $143 million"


So assuming google ends the year with $300mil profit, they'll have introduced shares of $2.66bil to $3.32bil and that will be just the 9% of their stock. I'll pass.

Anyone put any VC in google? Probably off to the bahames now:)

Yeh really. Smart money? Where? Who? A handful of true market wizards and that's all. Most institutional money guys are sheep too.

Buffett though isn't a wizard. He's even said so himself. His stock market philosophy is incredibly simple.

"I buy companies for less than they are worth, that sell products and services I understand, and then hold them forever."

Warren Buffett

Problem is there is to few shares being offered. What 24million(half are the founders and other investors like aol and yahoo) That and the dutch auction to get mom and pops in on it, and what are they going to do when it drops 5-10$.......sell sell sell(with not many open shares on the market it will impact it pretty quick) and that stock will be sub 100 in a month or two as they dont want to watch their money be pissed away like the dot bomb. Just a guess. All this is for is to get a bigass return to the founders and the early investors, its not like they need the money(as a company).

he has a very good eye for value. you don't get to be in the to 5 of the richest people without being very smart.

there's people with better track records, but they're typically investing less money. gets harder when you're running a multi billion dollar portfolio of companies.

Smart ass! :winkwink:

Cheers,
Matt

my father who used to trade for a living used to refer to that as 'pigs going to slaughter' or something of the sort...


lately he's been trying to talk me into learning more about point & figure charting...as soon as I get some spare cash I think I'm gonna start playing...seems much more fun than buying clicks :)

KRL, best thread I've read in a long time:)

Yeah Way too high.....
:1orglaugh

Im sure a lot of them are over 30 now.

And a lot richer.

Lol, great bump

i have it marked :)

they must be up for a HUGE stock drop pretty soon now eh :winkwink:

hahah best bump EVER haha

hehe... nice bump

Yeah kinda hard to see the future.
The best part of it is KRL's post about Microsoft...DOOHHHHH

oh man....this is classic...some of the posts should be embarrassing to the posters :1orglaugh

awesome, but never heard of them. :)

gfy wisdom at it's best :1orglaugh

Google stock will never go over $1000 a share.... mark my words.

I know Google has blow up since its IPO, but I still think it is over valued. Honestly right now who cares when there are so many A grade financials that beat up and cheap right now?

Who bumped this?

boneprone, as identified by the 40 month gap between his post and the last.