RealTime IT News

The Google Countdown Begins

Google's long-awaited IPO could price as soon as Tuesday night and begin trading Wednesday morning.

Google has asked the SEC to declare its IPO registration statement effective as of Tuesday's market close. The underwriters may begin accepting bids as soon as an hour after bidders have been notified that the registration has been accepted, Google said.

Perhaps no IPO in history has been as eagerly awaited or dissected. Google hopes to price the offering between $108 and $135 a share. In the middle of that range, at $121.50, the stock would be valued at 170 times trailing twelve month earnings and 14 times sales.

But the company has a growth rate to match such a lofty valuation.

Mark Mahaney of American Technology Research, one of the earliest analysts to track Google, estimates that the company will earn $1.30 a share this year and $2.37 in 2005, which means the stock will be priced at about 50 times next year's earnings — a slightly higher valuation than eBay , but lower than Yahoo's forward price-to-earnings ratio of 60.

Still, in a research note two weeks ago, Mahaney struck a cautious note because of greater than expected deceleration in the company's growth rate.

"We think investors with a long-term perspective can make money buying GOOG at $122 (the mid-point), but we also believe they could be in for a lot of volatility," he wrote.

"We continue to think the mid-point of the filing range ($108-135) is within striking distance of fair value, but we clearly want to shade to the low end in thinking of a bid price."

Also on Monday, Google disclosed that the SEC has begun an informal inquiry into the company's failure to register millions of shares and options with the SEC, but the investigation does not appear likely to affect the timing of the IPO.

Stocks surged Monday on a drop in oil prices and strong results from Lowe's and Kmart .

The Nasdaq surged 25 to 1782, the S&P 500 rose 14 to 1079, and the Dow rallied 129 to 9954. Volume rose to 1.21 billion shares on the NYSE, but declined to 1.3 billion on the Nasdaq. Advancers led 25-7 on the NYSE, and 21-10 on the Nasdaq. Upside volume was 90% on the NYSE, and 79% on the Nasdaq. New highs-new lows were 36-49 on the NYSE, and 30-119 on the Nasdaq.

After the close, Applied Materials — which reports earnings Tuesday night — announced the acquisition of Metron . Photon raised guidance.

During the day, Intel slipped on reports of an HDTV chip delay.

Research In Motion jumped 5% on a deal with Sprint .

Gateway surged 9% on a deal with CompUSA.

McAfee rose 4% on an acquisition.

eBookers surged 13% on its results, and Simclar soared 45% on its numbers.

iPass rose 6% on a contract win.