Google Files to Sell 14.2 Million More Shares 407
dabug911 writes "Google Inc. on Thursday said it has filed with the Securities and Exchange Commission to sell 14.2 million shares of class A common stock, an offering worth more than $4 billion at Wednesday's closing stock price.
Could they be getting the money together to finance all these rumors we keep reading about?"
21% profit margins are impressive (Score:5, Interesting)
Whether or not these dilute the current holdings, the company has a very nice financial profile. It will be interesting to see if they can keep profits up while they start to expand.
Or maybe... (Score:4, Interesting)
Just Jealous (Score:3, Interesting)
Why? What did you think they were going to do? Free wireless access, with a VPN client that also delivers advertising (textads only, no flash animation) based on the web page you are currently looking at, or based on your browsing history if you aren't looking at web pages? With direct support for Internet Explorer, and support for alternate browsers if you use the Google Web Accelerator?
I never did understand... (Score:2, Interesting)
Sorry for the dumb question. It just came to me when I was reading the story.
Bad idea in my opinion (Score:4, Interesting)
After all, the people who buy into Google really don't give a shit what it does or how it does it as long as it makes money and pays good dividends. I don't know exactly what portion of Google will be in "public hands" after this, but if they've sold off enough of the company they could just wind up like almost every other company in the business.
Maybe I'm sounding a little paranoid, but I really think that going public and giving partial ownership of your company to people who don't share your creative vision is just a bad idea. I don't invest in the market myself, so I can't speak for everyone, but isn't the point to make money? Eventually a unique company like Google that's been pushing new and innovative technology and forcing competitors to work just as hard to keep up, will eventually stagnate and become more of a conservative business that would rather rest on its laurels and make money rather than strike out an pioneer new grounds in the industry.
Would a company all about the money offer 2GB email inbox sizes, a wonderful and easy to use online mapping service, and a great search service? Personally I think they'd turn out a little more like Microsoft, spending more time talking about all the innovative things they're doing rather than actually doing them and settling into a state of mediocrity.
"possible acquisitions" (Score:3, Interesting)
One of the recent ones that I have not read about on slashdot is android [businessweek.com]
What's interesting about that one is that it's being speculated that they have been creating an Operating System for cell-phones.
(That should be enough to have another 50 stories on slashdot about people pondering what technology is going get involved with next.
Re:um...Where's Google's money come from? (Score:2, Interesting)
Most of their other products are in beta anyway, so they don't count.
No, no, no! (Score:3, Interesting)
1. Google has perhaps loaded up on more talent in their field than any company since Edison.
2. They aren't actually breaking new ground yet. They're just executing an existing industry/strategy - online search funded by online ads - better than anyone else.
And difference #2 is good news for investors. They aren't a bolt of lightning like Netscape, they more or less earned their good fortune. Netscape = Apple, Google = M$.
I'm pretty confident they have a good idea of what to invest in, as M$'s attempt to catch up online continues into another decade...
->This advice is provided for entertainment purposes only-
From the services it can charge (Score:4, Interesting)
Google could sell company denial-of-service protection. Traffic could be routed through google's farm. Google could filter the wheat from the chaff. Also google know lots about valid clients via GoogleCaching, cookies, GMail accounts, GoogleDesktop, etc...
Google could automatically vet valid clients versus zombie attackers. With googles huge server farm it could withstand a zombie attack of a hundred thousand boxes.
Re:Cafeteria (Score:5, Interesting)
Wrong. But, it sounds so true, and so fair, and so, so... liberal
Proof: You spend 1 man-year acquiring a shovel and digging a ditch. I spend 364-man days designing, acquiring parts and building a back-hoe, and 1 day digging 100 times as much ditch.
You are claiming that these man-years are identical. They are clearly not, hence your premise is false, by reductio-ad-absurdium.
Marx argued that everyone deserved to own the means of production, equally. Lefties argue mostly the same thing -- that everyone is equal.
Capitalism is not the inverse of this (as most Lefties mis-interpret it). It declares that the capital (and means of production) should (and eventually will) flow to those most capable of using it efficiently; to produce a maximal, non-trivial result.
It may take generations, but this is generally true. My hope is that, finally, some individual or company will use their vast wealth-accumulation capacity to do someting so non-linear, so status-quo-shatteringly huge, that it will re-set the baseline, forever.
Entities such as Bill Gates, Google, Citigroup (and several others) have the capacity to raise a significant fraction of a Trillion dollars of liquid capital. Lets say that one of them actually decided to leverage that, again, to incent another space-race, but this time between free men and women, instead of governments (think Scaled Composites, tSpace, etc.)
Imagine if, in 10 years, they actually had a functional fleet on orbit, and processing facilities on the Lagrange points to begin processing megatons of Nickel/Iron/etc./etc. from the asteroid belt, and to collect and transmit Peta-Watt-Hours of electrical energy, per day, to ground collection stations.
Suddenly, they have transformed that several Billion dollars into orders of magnitude greater results than the same number of man-hours could have produced.
Because they were visionaries.
I propose that this is a fact: Every truly interesting result comes from a Visionary, not just plain old Worker.
The question is: are the founders (and now, the Directors) of Google visionary enough to do something truly remarkable with the wealth-accumulating power that they have very temporarily been blessed?
Re:Dot Com all over again? (Score:3, Interesting)
If Google was in any position to make tons of cash in comparison to current stock prices, you wouldn't see the enormous insider trading that's been going on. Many highly-ranked employees have already sold most of their stock, and that's a pretty clear indication that the stock is badly overvalued. In fact, if anything it means that the employees in question think that the stock price will drop precipitously when the current speculation craze comes to an end. If they had some great money-making idea they were about to spring on the public they wouldn't be dumping their stock as quickly as they could, but rather hanging on to it in anticipation of higher valuation after their neat new product announcement.
Combine this with Googles legal troubles over its primary cash cow (advertising) and it's pretty clear that investing in Google is a fuck-all bad idea for anyone with half a brain. But I'll be the first to admit that hardly matters, as most investors (and their brokers) seem to lose all traces of common sense when they see a get-rich-quick scheme in action.
Max
Re:um...Where's Google's money come from? (Score:4, Interesting)
Re:Beer Money (Score:3, Interesting)
But if they have credit card debt, they probably should not be investing in the stock market at all.
Paying off credit card debt should be assessed as if it were any other type of investment. How many investments do you know that...
I drool over such an investment. I wish I had credit card debt, just so I could pay it off!
Re:Incorrect... (Score:5, Interesting)
If you want real analysis, I suggest hiring a financial analyst and have them spend about 4 hours with spreadsheets... not ask for it on Slashdot...
But, in a nutshell, if Google has a business plan for deploying $4m that will let them extract monopoly rents for the next 5 years, then that would drastically increase their profits once the monopoly is secured and allowing them to extract monopoly rents (monopoly rents = economics term for the excess profit generated by a monopoly or partial monopoly... i.e. Internet Companies in general are in a monopolistically competitive field, where each company is differentiated... unlike say, farmers with corn... so there is a small monopoly rent, but it isn't like Microsoft that carries a monopoly on a complete market... the fewer competitors, the more "rents" extracted, and an oligopoly, like the search engine market, has each player potentially extracting large "rents")...
I mean, Google did something short of $1b last 12 months (or run rate, or something, I forget, I'm not an analyst and don't really follow Google's financials)... If you assume that with a monopoly on the market (to the point where everyone else takes what Google leaves on the table, Google's earnings go from $1b to $4b, then Google should increase 400%... except that the P/E probably drops in half as growth slows, so Google marketcap should increase 200%...
In any scenario where Google puts the money to profitable use, this SHOULD be a good deal for the shareholders.
However, in the likely scenario where Google wants to use its "overvalued" Marketcap to raise money, this is BAD for shareholders... NOTE: this isn't inherently bad... I'm not suggesting that they are being bad fiduciaries... I'm suggesting that they may want to use this small 5% dilution to increase earnings by 20% or more, making this a GOOD fiduciary action, but it is likely that the company is doing it now because they expect the price to fall, making this a bad omen, even if the right financial mood.
A high P/E stock has a HIGH discount factor of future cash flows, with an expected return on investment FAR ABOVE the worst of the junk markets... If Google didn't expect a price drop, they should fund via debt, not equity, to maximize shareholder value... That said, tech companies tend to not like debt, and not pay dividends, trying to increase their internal value.
Alex
Re:Dot Com all over again? (Score:3, Interesting)
To some degree yes, however, Ben Graham - author of "The Intelligent Investor" and teacher to Warren Buffett (And 40 other VERY successful investors) disagrees in his book.
He outlines specifically the difference between "Speculation" and "Investing". There is a fine, but subtle difference. The book is good enough that Buffett himself wrote the forword and the appendix. You may want to check it out.
There's bears in them hills (Score:3, Interesting)
98% / year revenue growth cannot be sustained for long in any but the smallest of companies. Indeed, it has already significantly slowed for Google. Exponential extrapolation is always a dangerous business.
What's more, Google has a rival - Yahoo - which will likely result in reduced profit margins. And the smell of profits has attracted the attention of that big fat stinky bear Microsoft.
One has to make too many optimistic assumptions to value Google at $280/share for my tastes. Course my opinion is worth everything you paid for it.
this is not a good sign (Score:3, Interesting)
offer is unusual in that the vast majority of aquisitions are
stock based, sometimes with a cash kicker but rarely all cash
except for relatively small deals (a few 100 million).
So why does Google go this route of raising cash first when
they already have about 2.5B in liquidity? My suspicion is
they either a)expect a significant decline in the stock
price and are taking advantage of the current high price to
increase liquidity (note they said general corporate purposes
which does not in any sense obligate them to make a takeover),
b) expect a significant decline in their stock price which
could present difficulties for an all stock deal and hence
wish ot increase cash on hand in case it is needed to
sweeten the pot
This also could be, though a review of the original filing
would be needed, a way for the insiders to unload some
stock down the road. Issue new stock today to raise cash,
buy some company down the road for stock, arrange an
internal private equity deal where insider sells all or
some portion of the necessary shares back to the company and
receives cash at the current market price. This would be
advantageous to the company were the stock price below where
they float this new offering as they would have excess cash
left on the books.