July 26, 2004 8:21 AM PDT
Google searches for $135 per share
The search giant set a price range of $108 to $135 a share, according to the filing. Based on those per-share numbers and the expected issuance of 24.6 million shares, the search giant hopes to raise between $2.7 billion and $3.3 billion. That would make it among the largest-ever IPOs.
Google reportedly exploring IPO
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Google reportedly exploring IPO
If Google begins trading at $135 a share, it would have a market capitalization of $36.3 billion, according to its SEC filing. That would put it in range with Yahoo, which had a market cap of $37.8 billion in early-morning trading Monday, but far short of Microsoft's $308 billion.
After its IPO, Google expects to have 268.5 million shares outstanding, largely consisting of its series B shares.
After a long, listless period following the dot-com downturn that began in 2000, the market for tech IPOs has been heating up recently. Google's planned venture into public trading has been one of the most anticipated of the bunch.
Other prominent IPOs include the market debut of software specialist Salesforce.com, which saw a quick run-up in its first hours of trading but has since settled down to about 20 percent above its initial price of $11 per share.
In Monday's SEC filing, Google also revealed recent financial results, a key step in preparing for the stock offering. During the six months ended June 30, Google posted revenue of $1.4 billion, up from $560 million in the same period a year ago.
The company's net income jumped to $143 million in the six-month period, compared with $58 million a year earlier.
The public offering is expected to take place via a Dutch auction, which means that investors will offer a bid price for the number of desired shares. The final IPO price will be based on the lowest bid price received that would result in the sale of all 24.6 million shares.
The three-figure price range may not sit well with some potential investors, one analyst said.
"This $108 to $135 price range is a very high share price to drop in the average investor's lap," said David Menlow, president of research firm IPO Financial Network. "Institutional investors--if they feel the offering is fairly valued--don't have a problem investing $200 a share in an IPO. But for the mom-and-pop investor, it's a psychological barrier to pay $108 to $135 to buy a share of stock."
Menlow added, however, that it's unlikely that Google's IPO will sell for less than $100 a share.
While other IPOs have topped Google's anticipated multibillion offering by presenting a larger number of shares, such as AT&T Wireless' $10 billion IPO in April 2000 and Kraft Foods' $8.7 billion offering in June 2001, the Internet company's range is the highest in recent history, Menlow noted.
Previously, biotechnology giant Genentech had one of the highest IPO ranges, at $85 to $95 a share. Ultimately, Genentech priced its IPO at $97, Menlow said.
Meanwhile, Google's general counsel is facing a potential civil injunction from the SEC regarding his former work at educational software applications maker SmartForce, where he served as chief financial officer, according to Google's SEC filing.
David Drummond, who worked at SmartForce from July 1999 to February 2002, was notified by the SEC on Tuesday that its staff planned to recommend the agency bring a civil injunction against him for allegedly violating federal securities laws and antifraud provisions, according to the SEC filing. The issue centers on certain disclosure and accounting issues related to SmartForce's financial statements.
Google noted that none of the allegations involve the search company and that Drummond was hired in February 2002.
The Internet giant is also facing continuing attrition among its underwriters. In its most recent SEC filing, Google no longer lists RBC Capital Markets and SunTrust Robinson Humphrey among its underwriters. Google now has 28 underwriters, down from its initial 31.
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