UPDATED: Google’s much-anticipated IPO just got a little closer with an amended
filing that prices the company’s shares between $108 and $135 each, with
proceeds expected at around $1.66 billion from common stock.
Google is offering 14.1 million Class A common stock, and the selling
stockholders are offering about 10.5 million shares of Class A common stock,
the prospectus said. Current company stockholders, including founders and
members of Google’s management team, are selling, not buying, shares of
Class A common stock as part of the IPO.
Based on about the over 24 million shares in the offering, and at an average
price of $121 a share for a piece of Google, the company’s market
capitalization could come in at around $32.6 billion after trading begins. Overall proceeds could come in at around $3.6 billion.
But much depends on how the offering price is received among investors,
as well as how its planned Dutch auction format for offering shares to the
public unfolds when the company trades on the Nasdaq under the symbol
“GOOG.”
Investors also got an update on its profits in Google’s latest S-1 SEC
filing Monday. For the six months ended June 30, Google’s profit was $143
million, on revenues in the same period of $1.35 billion.
The SEC filing
brings the white-hot search leader closer to one of the
most anticipated debuts as a public company in recent years.
In April, the company filed its initial S-1 filing, which discussed, among
other items, the planned auction method of offering its shares. In the
latest filing, Google provided more details on how it intends to run the
auction-style offering, which is designed to enable smaller investors to get
in on the hot offering.
“The auction process being used for our initial public offering differs
from methods that have been traditionally used in most other underwritten
initial public offerings in the U.S. In particular, the initial public
offering price and the allocation of shares will be determined by an auction
process conducted by us and our underwriters,” the filing said.
“We seek to enable all interested investors to have the opportunity to
qualify to bid and, following qualification, place bids in the auction for
our initial public offering. To help meet this objective, we have selected
an underwriter group that serves a broad range of the investing public.”
The list includes the main underwriters, Morgan Stanley and Credit Suisse
First Boston, as well as all the major Wall Street banks. In addition,
brokers such as WR Hambrecht + Co., which has used the online/auction
process in prior IPOs, are involved, as well as Ameritrade,
M.R. Beal & Company, William Blair & Company, Blaylock & Partners,
Cazenove, E*TRADE and Epoch
Securities.
The filing said a significant amount of existing shares would be available
for sale to the public, as early as 15 days after the IPO.
For starters, a minimum bid of 5 shares of its Class A stock is allowed.
The company’s objective with the auction method is that bidders submit
informed bids. The company’s www.ipo.google.com is slated to offer more
details about the auction process in the next few days, including
information about “How to Participate in the Auction for Our IPO.”
Google discussed competition from other
search players, notably Microsoft and Yahoo, which is atop its list of risk factors
For starters, the S-1 said, Microsoft has announced plans to develop
a new Web search technology that may make Web search a more integrated part
of the Windows operating system.
“We expect that Microsoft will increasingly use its financial and
engineering resources to compete with us. Yahoo has become an increasingly
significant competitor, having acquired Overture Services, which offers
Internet advertising solutions that compete with our AdWords and AdSense
programs, as well as the Inktomi, AltaVista and AllTheWeb search engines,”
it continued.
“Both Microsoft and Yahoo have more employees than we do (in Microsoft’s
case, currently more than 20 times as many). Microsoft also has
significantly more cash resources than we do. Both of these companies also
have longer operating histories and more established relationships with
customers.
If Microsoft or Yahoo are successful in providing similar or better
Web search results compared to ours or leverage their platforms to make
their Web search services easier to access than ours, the filing continued,
Google could experience a significant decline in user traffic — which would
impact its revenues.
The company also disclosed that its vice president of corporate
development, David Drummond, was advised by the SEC staff on July 20 that
it would recommend a civil action against Drummond by the SEC charging he
violated federal securities laws, including the anti-fraud provisions, while
he was CFO of SmartForce (before he joined Google).
The filing said the recommendation involves certain disclosures and
accounting issues relating to SmartForces financial statements, and that
none of the allegations involve Google.
As is customary, Drummond, who was also a partner at the tech-IPO law
firm Wilson Sonsini Goodrich & Rosati, plans to file a so-called Wells
Submission that gives him a chance to argue against the civil charges.
