June 21, 2004 1:58 PM PDT

Google crosses off Merrill Lynch

Google omitted Merrill Lynch from the list of underwriters for its upcoming auction-style public offering, according to a filing with the U.S. Securities and Exchange Commission released Thursday.

In late April, the Mountain View, Calif.-based company filed for a $2.7 billion initial public offering. At the time, it named Morgan Stanley and Credit Suisse First Boston as its lead underwriters. Last month, the company submitted an amendment that named 29 additional bankers, including Merrill Lynch.

Representatives for Merrill Lynch and Google were not immediately available for comment.

In the filing, Google highlighted potential stresses on its advertising programs, which make up 95 percent of the company's revenue. It expanded on information about its legal dispute with rival Overture Services, a subsidiary of Yahoo, and underscored legal uncertainty over trademark infringement claims against the company.

Overture has sued Google for patent infringement on its bid-for-ad placement service. Google refuted the suit by claiming that the patent is invalid, among other arguments. But the search king cautioned in the filing that if Overture wins, its advertising service would be restricted, and it would be required to pay damages.

In addition, government regulation is looming over Google, as it prepares to introduce its free e-mail service, Gmail, according to the newest filing. Google added a section in the prospectus that addressed government regulations as a wild card that could hamper its business.

"At least two states have recently introduced proposed legislation that could interfere with or prohibit our Gmail free advertising-supported Web mail service," according to the filing.

"The legislation, as originally proposed in California and Massachusetts, would make it more difficult for us to operate or would prohibit the aspects of the service that process the contents of users' e-mail messages for the purpose of identifying and displaying ads relevant to that content," the filing stated.

Google has worked with legislators to ensure that new laws will not impede its business, but the company warned that proposed laws have yet to be finalized and could still cut into its operations.

Google also set the minimum number of shares an investor can buy at five shares. However, investors can bid more than once, according to the filing.

 

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