August 18, 2005 7:35 AM PDT

Google plans big new stock sale

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On Thursday, the eve of the first anniversary of its initial public offering, Google announced plans to seek more capital by selling 14.2 million shares of common stock on the public market.

Google, which last year raised $1.7 billion with its long-awaited initial public offering, is hoping to raise in excess of $4 billion in this secondary offering, based on a market price of about $285 a share, according to its filing with the Securities and Exchange commission.

"We anticipate that we will use the net proceeds from this offering for general corporate purposes, including working capital and capital expenditures," Google stated in its SEC filing. "In addition, we may use proceeds of this offering for acquisitions of complementary businesses, technologies or other assets."

Google noted it does not currently have any significant, or "material," merger agreements pending, according to its SEC filing.

Google's secondary offering comes at a time when the search engine giant has seen its share price rise more than threefold from its IPO price of $85. Last year, Google made its public debut with a controversial dutch auction IPO.

Rapid growth in its revenue and profits, including the 300 percent jump in second-quarter net income, has helped fuel its rising stock price.

But in its SEC filing, Google issued a word of caution regarding future growth as the company matures and competition increases.

"We expect that our revenue growth rate will decline over time and anticipate that there will be downward pressure on our operating margin. We experienced both of these trends in the three months ended June 30," Google said in its SEC filing. "We believe our revenue growth rate will generally decline as a result of increasing competition and the inevitable decline in growth rates as our revenues increase to higher levels."

In afternoon trading on Thursday, Google shares were down $5.95, or 2.09 percent, at $279.15.

 

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