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Google Businesses The Internet The Almighty Buck

Google Slashes IPO price 242

Posted by CmdrTaco from the welcome-back-to-hype-island dept.
Hungry Student writes "In breaking news, Reuters and the BBC are reporting that Google has reduced the price of its IPO to between $85 and $95 per share from $108 to $135 per share. Google shareholders are also reducing the number of shares available for sale by 6.1m to 5.5m. The total number of shares available is currently 14.1m."
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Google Slashes IPO price More

Google Slashes IPO price

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  • Pre-IPO getting less shares owners selling less (Score:5, Informative)

    by stecoop ( 759508 ) on Wednesday August 18, 2004 @07:57AM (#10000058) Journal
    The initial price per share for Google stocks has been lowered [yahoo.com] to $85-$95 down from speculative high of $130. This will create a market capital less than $26 billion down from $36 billion. Noted that the confounders, Sergey Brin and Larry Page, disclosed that they intended to sell 1 million shares each but will now sell 480,000 shares in the range of $90 per share valued at about $43 Million. In addition, the pre-ipo market will get 5.5 Million shares, half the originally anticipated. View the Complete prospectus [google.com].

  • Exciting day! (Score:5, Funny)

    by Anonymous Coward on Wednesday August 18, 2004 @07:57AM (#10000059)
    Now my kidney I just sold can buy me 50 shares! Yes!

    Also, Slashdot's 10 millionth post today! Perhaps in this story even! WOW!

  • Impossible Valuation (Score:5, Interesting)

    by manmanic ( 662850 ) on Wednesday August 18, 2004 @07:57AM (#10000066)
    Who knows whether the new (or old) price is a good one? It's practically impossible to put a number on Google's future profitability. There are simply far too many unknowns:

    • What kind of growth rate [dmnews.com] will Google see from the Adsense [google.com] and Adwords [google.com] advertising networks?
    • How many millions of people will use Gmail [google.com] once it finally goes live?
    • What effect will the built-in search [searchenginewatch.com] in Microsoft's Longhorn [microsoft.com] have on Google's traffic?
    • How much will Google make reselling [google.com] search to 3rd parties such as Google Alert [googlealert.com]?

    Future successes in any of these businesses could make Google's current price seriously undervalued. And if some key ones fall through, it will have been far too high.

    • Re:Impossible Valuation (Score:5, Insightful)

      by datbox ( 800756 ) on Wednesday August 18, 2004 @08:03AM (#10000138)
      "What effect will the built-in search [searchenginewatch.com] in Microsoft's Longhorn [microsoft.com] have on Google's traffic?"

      Agreed. I think we are going to be getting to a point where the majority of the desktop users will stop going to a website to search. They will choose to use integrated solutions in the future. If google can get an app out for the desktop that *integrates* with the desktop, it will be able to battle with the longhorn search feature on it's own playing field.

      • Re:Impossible Valuation (Score:5, Insightful)

        by TexasDex ( 709519 ) on Wednesday August 18, 2004 @08:13AM (#10000239) Homepage
        If google can get an app out for the desktop that *integrates* with the desktop, it will be able to battle with the longhorn search feature on it's own playing field.

        How about the Google Deskbar [google.com]?

        Very nifty integrated search tool. I loved it (back when I actually used Windows). The only issue here (of course) is that Longhorn will come with the MSN search agent, but people will have to install Google's deskbar app.

        coughmonopolycough

      • Windows Already... (Score:2, Informative)

        by Short Circuit ( 52384 ) *
        ...HAS a built-in search.

        XP gives you the option to search the Internet from the same dialog you use to search for files on your computer.

        Unless Longhorn adds searches to a prominent toolbar, it shouldn't make any difference. Even if it does, look on the bright side: We can always look forward to another antitrust suit. :)
        • Windows already HAS a built-in search.

          Have you noticed that on older versions of Windows (Win98, for example) the command on the Start Menu is called "Find..."

          Now the feature is called "Search..."

          Does anyone else find this hilarious? These days even Windows isn't so optimistic about actually finding anything...

          BlinkX [blinkx.com] is kinda cool for those of us trying to "Find" things on your computer now...

          . . . . . . . . .
          The List [militarycity.com]
      • IDK about this. Integrated search engines have been available for several years now [apple.com], and I don't see them making a huge impact. It's just more convenient to search from the browser's address bar than to open a separate application for it.

      • Re:Impossible Valuation (Score:3, Insightful)

        by mcc ( 14761 )
        I think we are going to be getting to a point where the majority of the desktop users will stop going to a website to search. They will choose to use integrated solutions in the future.

        Not so sure the desktop users will bite. Mac users have had an excellent meta-search utility built into the desktop since... I think since about 1998 or so. Most of us don't use it. We mostly just use google now. In fact in the end Apple just put a "search google" field in its web browser's button bar.

        If I go to Google, it
    • The final numbers are going to be determined by the public mood at the time of auction clearing. The recent delays will probably not bode well for that...

      After a few weeks, the price should settle at something financially sound.

      I do believe that many on Wall Street want this thing to sink. Here's hoping it doesn't.

    • Re:Impossible Valuation (Score:5, Funny)

      by sadcox ( 173714 ) on Wednesday August 18, 2004 @08:14AM (#10000256) Homepage Journal
      Future successes in any of these businesses could make Google's current price seriously undervalued. And if some key ones fall through, it will have been far too high.

      The scariest unanswered question to me is what happens when the next "google" comes along? Tech moves quickly, and traditionally the bigger a company is the slower they move...all of us who work for large firms can attest to that.

      I stick to a pretty basic investment philosopy: Invest in a company only if any idiot could run it. Eventually one will.

  • Good (Score:3, Interesting)

    by kc0re ( 739168 ) on Wednesday August 18, 2004 @07:58AM (#10000075) Journal
    I was hoping Google would come off their high horse. They aren't Microsoft, in fact, I don't even think Microsoft stock is running that high (no I didn't check, and no I am not checking). Don't get me wrong, I'd love to own some Google, however, I wasn't paying that much for it.

    • Re:Good (Score:2, Informative)

      by evslin ( 612024 )
      I just looked. Microsoft's running at 27 right now.

    • Re:Good (Score:4, Informative)

      by AliasTheRoot ( 171859 ) on Wednesday August 18, 2004 @08:13AM (#10000248)
      Share price is irrelevent, it's the number of shares that exist (either on the market, or held internally) that determine overall value.

      (roughly anyway, i'm sure it's more complex than that).

      • Re:Good (Score:5, Informative)

        by Asprin ( 545477 ) <gsarnoldNO@SPAMyahoo.com> on Wednesday August 18, 2004 @08:21AM (#10000322) Homepage Journal

        No, that's pretty much it. That's where market capitalization comes in - in simple terms it's the total of all the outstanding shares multiplied by the share price. A sort-of "net value" of the company if you wanted to pay cash for all of it.

        One $10 share in a company with a market cap of $1,000 is a greater percentage of ownership than one $100 share in a company with a market cap of $1,000,000.

        However, that doesn't change the rules of arithematic. The $100 share is still worth - on its own - 10 times the $10 share.

  • Correlation? (Score:5, Interesting)

    by StevenHenderson ( 806391 ) <stevehenderson@NOspam.gmail.com> on Wednesday August 18, 2004 @07:59AM (#10000084)
    From the article:

    "The company may face fines if the SEC finds that the share issue was contrary to stock market regulations."

    How much is this tied to the decrease in price? Also, did the interview with Playboy have the negative effect analysts anticipated?
    • How much is this tied to the decrease in price? Also, did the interview with Playboy have the negative effect analysts anticipated?

      The answers would be very little and no. The Playboy interview, if it indeed violated SEC rules (which is in doubt) would likely result in a modest one-time fine. Investors (not speculators) are more concerned with earnings growth over time.
      • "Google continues to insist it does not believe the interview, conducted after the company announced plans for the IPO, was a violation of securities law, and it said it would fight any such finding by courts. But it does list the article as a risk factor for the IPO that could force it to repurchase shares from investors, the same boilerplate warning it gave in an SEC filing Friday." http://money.cnn.com/2004/08/18/technology/google p rice/index.htm That will be a hefty chunk of change if they have to bu

  • If we all knew, we wouldn't be predicting (Score:5, Interesting)

    by LostCluster ( 625375 ) * on Wednesday August 18, 2004 @07:59AM (#10000085)
    At this hour, nobody really knows how much Google as a whole is worth. That's the whole point of this Dutch Auction system that hasn't quite finished being played out yet.

    Once Google's on the market, we'll be able to multiply the share price by shares outstanding to get a "market cap" number that'll be an approximation of Google's total value... but clearly an indicator that'll be bouncing that fast can't tell us too much info perfectly either.

    Sure, we'd all want this to be simple, but nothing ever is on Wall Street.

    • Re:If we all knew, we wouldn't be predicting (Score:5, Insightful)

      by qmchenry ( 266894 ) on Wednesday August 18, 2004 @08:10AM (#10000206)
      I'm conflicted about Google going public. On the one hand, it will provide vital data in my nonsanctioned research about how concern for shareholder confidence destroys good companies, while, on the other foot, Google's new concern for shareholder confidence could, well, you know. I think going public causes a company's principle focus to shift from what would be good and profitable for the company to what shareholders think would be good and profitable for shareholders. I believe the two are typically mutually exclusive.

      Are IPOs becoming like Hollywood where the take during the first weekend of a new movie is the sole measure of it's success? That means lots of good movies aren't made because they won't top that list and movies that are made are done so to optimize their profitability, not their cinematic quality.
  • Here we go dot-com boom #2, I'll be getting off now... Perhaps I'll become a nurse, before they outsource it.

  • 1/2 share (Score:4, Funny)

    by minotaurcomputing ( 775084 ) on Wednesday August 18, 2004 @08:04AM (#10000144) Homepage Journal
    Uhhh, is it possible to buy half of a share? That seems to be all that I can afford.

    • Re:1/2 share (Score:5, Informative)

      by LostCluster ( 625375 ) * on Wednesday August 18, 2004 @08:12AM (#10000230)
      You can't directly buy a fractional share on the stock market, but there are companies like ShareBuilder.com and FolioFN.com who only go to the market during "trading windows" where they group all of their customers purchases and sales together in order to avoid unneeded market activity costs and they can divide the shares into fractional numbers among the customers. Whatever less-than-a-share fraction goes unallocated ends up being owned by the company as part of the cost of doing business.
      • We used to have a Shares Club at work. About a dozen of us chipped in between 10 GBP and 50 GBP a week. We did alright out of it until redundancies split the club up.

  • Nice! (Score:4, Funny)

    by The-Bus ( 138060 ) on Wednesday August 18, 2004 @08:06AM (#10000170)
    So now it's overpriced by a factor, of what, 6? Instead of 10?

  • I knew it! (Score:3, Insightful)

    by Donny Smith ( 567043 ) on Wednesday August 18, 2004 @08:06AM (#10000172)
    I knew it!

    I said here before it would get down to $80 within 4 weeks (once people who got their shares for free sell out) after the IPO and I think that will indeed happen.

    It's not only the lame pre-IPO management, it's the fact that they're a single product company and that product (ads) is a commodity.

    Their placement technology is probably the best at the moment, but once someone else does that part better and sells it to Yahoo or Microsoft, they head further south...

    • Re:I knew it! (Score:2, Interesting)

      by blankslate ( 748549 )
      Methinks the major asset Google has at this point in time is its brand. Think Apple through all those years they made shithouse hardware (pre OS X) - it was hard to find anyone who had an opinion who wasn't swept into the starry-eyed Mac enthusiasm for what was, at that time, inferior hardware and software with a higher price tag (than Wintel)** Apple failed to disappear because marketing (and initially leagues-ahead technology) left such an impression ("mindshare" if you like) that they effectively rode o
    • Google doesn't set these prices. They are simply responding to the market, and as they get better and better estimates of what the dutch auction is LIKELY to set, they are required by law to tell the SEC what they think it will go out at. They're estimating on the high side as they should, but if they get information that indicates with a high degree of certainty that it will go out lower, they need to disclose that.

      The real problem here is that the SEC's regulations make it quite difficult to comply while

  • Two class of voting shares - Founders keep power. (Score:5, Informative)

    by deragon ( 112986 ) on Wednesday August 18, 2004 @08:07AM (#10000175) Homepage Journal
    And for those who are not aware, there exist two classes of voting share, one class that offers 10 votes per share reserved to the founders and CEO, and another which as 1 vote per share, for the rest of us.

    See: http://www.usatoday.com/money/industries/technolog y/2004-05-16-google-nonvoting_x.htm/ [usatoday.com]

  • rather than buy shares... (Score:3, Interesting)

    by Ev0lution ( 804501 ) on Wednesday August 18, 2004 @08:07AM (#10000182)
    Rather than buy shares, i've placed two bets on it: Opening price below $110, and close UP on 1st day. If the price is down because the institutions aren't buying into an auction that deprives them of big fees - as the conspiracy theory says - then the price should move up as they start buying in at the lower price...

  • Watching Google (Score:5, Informative)

    by p0 ( 740290 ) on Wednesday August 18, 2004 @08:11AM (#10000217)
    For those interested, you might want to try Watching Google Like a Hawk [watchinggo...eahawk.com]. They provide news and analysis of Googles IPO, their services and future plans. A lot of information for anyone looking forward to the IPO.

  • Why buy? (Score:5, Interesting)

    by Phoenix-IT ( 801337 ) on Wednesday August 18, 2004 @08:11AM (#10000222)
    I think it's pretty pointless to buy Google stock anyway... It's not like you're getting in on the ground floor of a penny-stock IPO. It it was a small company selling out stocks to get investment capital it would be different. With companys like Yahoo and Cisco no one knew how big they were going to become. So when they did make it big, the stock you bought for a penny ended up being worth hundreds. Google is already big, so the only instant millionares to come of this will be the people who work there.

    • Re:Why buy? (Score:2, Interesting)

      by Hassman ( 320786 )
      You are exactly right. I'm sad to say but to me it looks like one of the reasons they are doing this is to make millionaires out of the employees.

      Google is a search engine and they are making a lot of money (supposedly). The reason to go public is to raise capital for future ventures... What is google going to do?

      They aren't a Yahoo, and I don't see them becoming a Yahoo. Even if they wanted to be more like a Yahoo, they don't need an IPO to do so.

      They aren't a software / consulting company trying to

      • Re:Why buy? (Score:3, Insightful)

        by Tazzy531 ( 456079 )
        They actually would have preferred not to go IPO. However, due to a SEC regulation, it was more beneficial for them to do it. I think [off the top of my head], if a company has over 1000 stockholders [ie stocks they give to employees] and $XXX in revenue, they have to make their financial information public. This gives the competitor an edge without any benefit to google, if they didn't IPO.

        Google was a profitable company to begin it. It is not going IPO to bring in more capital.

      • Re:Why buy? (Score:3, Interesting)

        by R.Caley ( 126968 )
        I'm sad to say but to me it looks like one of the reasons they are doing this is to make millionaires out of the employees.

        The bastards! Fancy them wanting to give money to their employees! I bet those employees are really pissed off at be ing exploited this way.

        You seem to be saying that this whole thing is a scheme to take money from well-off idiots and give it to the people who built a tool I use every day and which has made my life much easier.

        That's not just a good thing, not even just a Good Thi

  • Further SEC problems (Score:2, Informative)

    by Ignignokt ( 803398 )
    The SEC has also requested [thestreet.com] further information about their Playboy interview, which will delay the IPO further.

  • why (Score:2, Interesting)

    by Nuttles ( 625038 )
    My question is why is there even this much intersest in google stock. Sure, they are undeniably the best search engine around. Also, they had made millions upon millions in their ads. Also, techies love them because of their 'do no harm' policy. The problem with google is that they absolutely dominate their market, searching with ad revenue. In searching pretty much all they can go is down. Has google tried much else that can't be tied directly to their search portal? Not that I am aware of. Does th

    • Re:why (Score:3, Interesting)

      by Throtex ( 708974 )
      I submitted a site over a month ago to Google. I put links to it on a few sites already indexed by Google.

      Every other freakin' search engine on the planet found the link by themselves and indexed it.

      Google just found it the other day, and still hasn't added it to their index.

      Yea, go Google...

  • Do No Evil vs Shareholders (Score:3, Interesting)

    by Anonymous Coward on Wednesday August 18, 2004 @08:12AM (#10000233)
    I'm just waiting for the inevitable showdown between the "Do No Evil" motto and "responsibility to shareholders" battle that will eventually play out.

    There will be a point where these two will collide, and it'll be interesting to see the result.

  • This is disturbing (Score:3, Funny)

    by spidergoat2 ( 715962 ) on Wednesday August 18, 2004 @08:13AM (#10000245) Journal
    First I find out that Google is lowering their stock price, then, Mariam Abacha from Nigeria emails me and tells me that I'll only be getting 7% instead of 25% of the 8.5 million I'm going to bank for her. I'm losing cash everywhere!
  • This is the inevitable result of Google management using old and busted, Old Economy measures like P/E or EPS to judge when to go with an IPO. Don't they know that Clicks per Million [cyberwave.com] (CPM) or Eyeballs per Million [flatrock.org.nz] (EPM) are the new hotness?!?

    Now if you'll excuse me, I've got to leave for a First Tuesday [firsttuesday.com] party; I don't want to settle for just reading about it on SFGirl [sfgirl.com] afterwards.

  • Just a Marketing Ploy... (Score:3, Funny)

    by Aceto3for5 ( 806224 ) on Wednesday August 18, 2004 @08:18AM (#10000291)
    I heard you only got the reduced rates if you used Froogle.Google.com

  • Google doesn't set the price (Score:5, Informative)

    by BillFarber ( 641417 ) on Wednesday August 18, 2004 @08:19AM (#10000303)
    Google has reduced the price of its IPO to between $85 and $95 per share from $108 to $135 per share.

    This is a dutch auction. Google is not setting the price. The price they mention is simply an estimate of what they expect the final offering price to be.

    • Although they now have some actual market data (i.e. bids) on which to base that estimate.

      Picture it: somewhere inside Google is a screen that displays the demand curve for their stock--as defined by actual bids--being updated in real time as people place bids.

      It probably also computes
      - the market-clearing price for the number of shares in the offering
      - the volume/price point on the demand curve that maximizes revenue from the offering

      With data like that, economics could be an empirical science...
    • But they are really setting the price. Let's say n is the number of shares they are selling.

      They already have a bunch of bids in; and with the dutch auction it's the n'th lowest bid that counts- that's the price that everyone pays.

      Presumably they've looked at the current price, and realised that at the old 'n', the price is in the dirt, so they've reduced 'n' to push up the price- and *increase* the overall money they take.

      Of course not all the bids are in yet- that's why there's some variability on t

    • You seem to have missed the part of the prospectus where they explain that they reserve the right to set the stock price to a value other than that determined by the auction.

      During the bidding process, we and our managing underwriters will monitor the master order book to evaluate the demand that exists for our initial public offering. Based on this information and other factors, we and our underwriters may revise the public offering price range for our initial public offering set forth on the cover of thi

  • It would seem... (Score:3, Insightful)

    by goldspider ( 445116 ) on Wednesday August 18, 2004 @08:23AM (#10000339) Homepage
    ...that the world outside of Slashdot isn't giving Google a free pass.

    When all of the dirty laundry is aired and skeletons are pulled from the closets, I wonder what Google and their IPO will look like in the eyes of the Slashdot community. So far, they've gotten off relatively light, IMHO.

  • Google's SEC Filings are available online (Score:5, Informative)

    by bludstone ( 103539 ) on Wednesday August 18, 2004 @08:25AM (#10000355)
    here:

    http://www.sec.gov/cgi-bin/browse-edgar?action=get company&CIK=0001288776&owner=include [sec.gov]

    The S files are the interesting ones.
  • I can't fathom how they arrived at such a high opening price. Nuts.
    • Exactly right. With a starting price of $95, they have nowhere to go but down. Insiders get rich while everyone else gets screwed. Whatever happend to "do no evil"?

      • I think what they are doing is right in mind. Let's look at it this way: setting the price high will limit the type of investors that join the foray. The people that can afford to buy at such a high price know a little more about what they are doing and can handle a big loss. On the otherhand, if you set it at $8.50 per se, everyone and their grandmothers would buy into this. If the stock were to go down a little bit, these people would be bailing immediately leading to a further decline.

        By setting
      • Do any of you guys have a clue how shares actually work? That the price, whether its $95 or $.50 is irrelevant when viewed alone. The only relevant thing is the price * number of shares, i.e. the market capitalisation.

        Now you can argue whether or not the expected capitalisation of $24 billion is too high or too low. Then you're just saying you know more than the exports that have guessed this figure (and its _not_ set by google - its just an expectation). And since the actually share price will be determin
  • http://www.fuckedgoogle.com

    seriously funny shit- too bad the original fuckedcompany has absolutely NOTHING about this disaster.

  • If you really think the prce will fall... (Score:3, Insightful)

    by winkydink ( 650484 ) * <sv.dude@gmail.com> on Wednesday August 18, 2004 @09:02AM (#10000767) Homepage Journal
    then short the stock as soon as you can. I mean if your so positive. It's easy money, yes?
  • Would someone please explain to me why google is going public at all? Is it running on a deficit, does it need money? Is it for expansion? To where? It is the #1 search engine and, by all accounts, gmail is set to be a winner. What exactly is the point?

    -Derek
    • "What exactly is the point?"

      To make a few Google insiders rich. There is no other point to an IPO.

      • Re:why an IPO at all? (Score:4, Informative)

        by CommieOverlord ( 234015 ) on Wednesday August 18, 2004 @10:28AM (#10002025)
        There is no other point to an IPO.

        Yes there is actually. Say you have a company that is getting off the ground and you need to raise $50M to build a factory or whatever, then there are three ways to finance the factory:
        1. Self-Financed: Have the company start really small and save up enough to money to buy it. Problem is that this could take a really long time. Decades maybe.
        2. Debt-Financed: Talk to banks or venture capitalists to arrange a loan. Problem is that you owe people money, and interest as well.
        3. IPO: Sell $50M worth of shares and use that to finance the factory. It's fast and it leaves the company debt free.
        • The most expensive way to finance is by IPOing. When you IPO you're giving away ownership in the company, which if your company is successful will cost you many times over what interest would have cost you. You would also not want to run a company completely debt free. With interest rates so low it makes sense to use someone elses money to help you grow (if you needed money to grow) because of leverage.

          Now, it has been stated that Google doesn't need the money and doesn't have any plans on how to use th

          • Re:why an IPO at all? (Score:4, Insightful)

            by CommieOverlord ( 234015 ) on Wednesday August 18, 2004 @04:05PM (#10006268)
            Let's experiment.

            1) Company A raises $100M through debt-financing, talking a 20year loan at a 5% interest compounded annually. Over the 20 years has an average pre-debt-payment profit of $8M. Given yearly debt-payments of $6M, this leaves $2M/year for the company founder, who then has a net worth at the end of 20 years ~$40M.

            2) Company B raises $100M through an IPO, with the founder retaining 20% of shares. Given the same profit, the company is free to give out say $6M in dividends (take off some from taxes). The founder then receives $1.2M for a total of $24M at the end of 20 years.

            So it appears you're right then and the IPO way isn't as good....right? But wait, the founder still has stocks initially worth $20M which now puts him out ahead. But, then consider that given a standard P/E ratio of 30 the market capitalization for the company is ~$240M, making the founders stake worth $48M, giving him a total worth of $72M.

            Of course there's a whole host of other things that affect things one way or the other. Like personal income taxes. Founder A is paying tax on $40M, while Founder B pays on only $24M, since stocks aren't taxed until you sell of them.
  • Even at the reduced IPO price, I don't think this is sustainable. As one poster has already mentioned, there are too many variables with respect to Google's long term prospects. But that doesn't really matter because the IPO is all about raising money for Google. Yeah investors would like to see their share values grow over time, but whether they do or not, Google still gets to keep the money they raise in the initial offering.

    So what am I saying? I'm saying that there is a good chance that the initial out

  • That's genius! (Score:4, Insightful)

    by melted ( 227442 ) on Wednesday August 18, 2004 @11:43AM (#10002953) Homepage
    First list your goods at $99.95, and then (a day later) put a "25% off" on them. Trained American consumer will flock to whatever you sell because it's now "on sale".

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