RealTime IT News

Google Sets IPO Price Range

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.