Google IPO downsized

  • Associated Press
  • Wednesday, August 18, 2004 9:00pm
  • Business

SAN JOSE, Calif. – Google Inc. dramatically lowered expectations for the Internet search giant’s value Wednesday ahead of its much ballyhooed coming out party in the public markets. The offering is still one of the biggest and most highly anticipated for an Internet company, surpassing the hot issues of the dot-com boom.

The world’s most popular search engine said Wednesday it now expects its stock to sell for $85 to $95 a share, down nearly a third from its previous forecast of $108 to $135. It also said the total number of shares sold will be cut to 19.6 million from 25.7 million.

Google closed the unorthodox auction to set its initial stock price Wednesday after receiving final approval by the Securities and Exchange Commission to proceed with the long-awaited sale.

Before trading begins, probably today, the company and its underwriters had to announce the share price of the initial sale, notify winning bidders and allocate shares. That was expected to occur late Wednesday.Google would raise $1.86 billion if the final stock price is set at $95, rather than the $3.6 billion it initially hoped to raise. Google’s market capitalization at $95 a share would be less than $26 billion, down from the original high-end estimate of $36 billion.

Investors who bid above the selling price will only pay the per-share IPO price. If there’s demand for more than the company’s 19.6 million shares, successful bidders may get just a percentage of what they requested.

Once the price is set and the initial shares sold, the stock could begin trading, possibly as early as Thursday morning, under the symbol “GOOG” on the Nasdaq Stock Market.

The bumpy IPO process has created several clouds over the company, which has been criticized for being too idealistic, arrogant and reckless since it began the IPO process four months ago.

Its prospectus indicates that Google still faces regulatory questions. In one case, it said the SEC “has requested additional information concerning the publication” of an interview of Google founders Sergey Brin and Larry Page that appeared in September’s issue of Playboy magazine. That was a potential violation of the SEC’s rules against talking publicly before an IPO about information that is not included in the prospectus.

Google also has admitted that the agency has launched an informal inquiry into its issuance of millions of pre-IPO shares and options without registering them.

The auction – another source of controversy – was supposed to democratize the IPO process, which is usually limited to investors connected to investment banks. However, many analysts questioned whether Google’s projected price was affordable to average investors.

Before the surprise announcement early Wednesday, first announced in an e-mail to potential investors, some observers had questioned whether Google’s triple-digit price estimate was realistic, given the rocky stock market conditions in recent weeks. Several companies, in fact, have delayed or abandoned plans to go public.

But Google until Wednesday surprised many by bucking the market trends for so long. In fact, it has repeatedly been a source of surprises since it announced its public stock offering in April.

It eschewed Wall Street tradition and decided that the final IPO price would be set by an auction. Its founders wrote an idealistic letter in its prospectus, outlining the company’s “Don’t Be Evil” mantra, and plan to avoid the trappings of traditional companies.

Talk to us

> Give us your news tips.

> Send us a letter to the editor.

> More Herald contact information.

More in Business

A closing sign hangs above the entrance of the Big Lots at Evergreen and Madison on Monday, July 22, 2024, in Everett, Washington. (Ryan Berry / The Herald)
Big Lots announces it will shutter Everett and Lynnwood stores

The Marysville store will remain open for now. The retailer reported declining sales in the first quarter of the year.

George Montemor poses for a photo in front of his office in Lynnwood, Washington on Tuesday, July 30, 2024.  (Annie Barker / The Herald)
Despite high mortgage rates, Snohomish County home market still competitive

Snohomish County homes priced from $550K to $850K are pulling in multiple offers and selling quickly.

Henry M. Jackson High School’s robotic team, Jack in the Bot, shake hands at the 2024 Indiana Robotics Invitational.(Henry M. Jackson High School)
Mill Creek robotics team — Jack in the Bot — wins big

Henry M. Jackson High School students took first place at the Indiana Robotic Invitational for the second year in a row.

The computer science and robotics and artificial intelligence department faculty includes (left to right) faculty department head Allison Obourn; Dean Carey Schroyer; Ishaani Priyadarshini; ROBAI department head Sirine Maalej and Charlene Lugli. PHOTO: Arutyun Sargsyan / Edmonds College.
Edmonds College to offer 2 new four-year degree programs

The college is accepting applications for bachelor programs in computer science as well as robotics and artificial intelligence.

FILE — Boeing 737 MAX8 airplanes on the assembly line at the Boeing plant in Renton, Wash., on March 27, 2019. Boeing said on Wednesday, Feb. 21, 2024, that it was shaking up the leadership in its commercial airplanes unit after a harrowing incident last month during which a piece fell off a 737 Max 9 jet in flight. (Ruth Fremson/The New York Times)
Federal judge rejects Boeing’s guilty plea related to 737 Max crashes

The plea agreement included a fine of up to $487 million and three years of probation.

Neetha Hsu practices a command with Marley, left, and Andie Holsten practices with Oshie, right, during a puppy training class at The Everett Zoom Room in Everett, Washington on Wednesday, July 3, 2024. (Annie Barker / The Herald)
Tricks of the trade: New Everett dog training gym is a people-pleaser

Everett Zoom Room offers training for puppies, dogs and their owners: “We don’t train dogs, we train the people who love them.”

Andy Bronson/ The Herald 

Everett mayor Ray Stephenson looks over the city on Tuesday, Jan. 5, 2015 in Everett, Wa. Stephanson sees  Utah’s “housing first” model – dealing with homelessness first before tackling related issues – is one Everett and Snohomish County should adopt.

Local:issuesStephanson

Shot on: 1/5/16
Economic Alliance taps former Everett mayor as CEO

Ray Stephanson will serve as the interim leader of the Snohomish County group.

Molbak's Garden + Home in Woodinville, Washington will close on Jan. 28. (Photo courtesy of Molbak's)
After tumultuous year, Molbak’s is being demolished in Woodinville

The beloved garden store closed in January. And a fundraising initiative to revitalize the space fell short.

Everett Mayor Cassie Franklin, Advanced Manufacturing Skills Center executive director Larry Cluphf, Boeing Director of manufacturing and safety Cameron Myers, Edmonds College President Amit Singh, U.S. Rep. Rick Larsen, and Snohomish County Executive Dave Somers participate in a ribbon-cutting ceremony on Tuesday, July 2 celebrating the opening of a new fuselage training lab at Paine Field. Credit: Arutyun Sargsyan / Edmonds College
‘Magic happens’: Paine Field aerospace center dedicates new hands-on lab

Last month, Edmonds College officials cut the ribbon on a new training lab — a section of a 12-ton Boeing 767 tanker.

Gov. Jay Inslee presents CEO Fredrik Hellstrom with the Swedish flag during a grand opening ceremony for Sweden-based Echandia on Tuesday, July 30, 2024, in Marysville, Washington. (Ryan Berry / The Herald)
Swedish battery maker opens first U.S. facility in Marysville

Echandia’s marine battery systems power everything from tug boats to passenger and car ferries.

Helion Energy CEO and co-founder David Kirtley talks to Governor Jay Inslee about Trenta, Helion’s 6th fusion prototype, during a tour of their facility on Tuesday, July 9, 2024 in Everett, Washington. (Olivia Vanni / The Herald)
State grants Everett-based Helion a fusion energy license

The permit allows Helion to use radioactive materials to operate the company’s fusion generator.

People walk past the new J.sweets storefront in Alderwood Mall on Thursday, July 25, 2024, in Lynnwood, Washington. (Olivia Vanni / The Herald)
New Japanese-style sweets shop to open in Lynnwood

J. Sweets, offering traditional Japanese and western style treats opens, could open by early August at the Alderwood mall.

Support local journalism

If you value local news, make a gift now to support the trusted journalism you get in The Daily Herald. Donations processed in this system are not tax deductible.