August 13, 2004 8:27 AM PDT

Google says Playboy article could be costly

Google is standing behind a controversial interview of its co-founders in Playboy magazine, even as it acknowledges that the article could put the company in violation of federal rules regarding initial stock offerings.

The search engine company on Friday amended its earlier IPO filing with the Securities and Exchange Commission to take the Playboy article into account. The interview with Sergey Brin and Larry Page, which is hitting the Web and newsstands just days before Google's highly anticipated market debut, could throw a monkey wrench into the proceedings.

The SEC could impose a "cooling off" period that would delay the IPO, currently expected to happen next week, or it could impose a much more expensive requirement that Google buy back shares. The company has said it expects the shares to have an initial price of between $108 and $135 apiece, which could value the company as high as $36 billion.

Despite the last-minute flap, an auction meant to determine the company's initial stock price began as expected Friday morning. The SEC declined to comment on the Playboy article.


Flashback
News.com's related coverage
of Google's IPO

Google files for unusual
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Google IPO mania slows
SEC Web site
(April 29, 2004)

Want in on Google
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Lifting the lid on Google
(April 29, 2004)

Co-founders release 'owner's
manual'
(April 29, 2003)

Technology smoothes Google's
IPO path
(May 3, 2004)

Google sizes up
the competition
(May 3, 2004)

Google's hard bargain
(May 3, 2004)

AOL exercises
Google warrants
(May 7, 2004)

Google names 31
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Google registers to
list on Nasdaq
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Google searches for
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(July 26, 2004)

Google may have issued
shares illegally
(Aug. 5, 2004)

Google IPO no longer
a sure thing?
(Aug. 5, 2004)

Google sets deadline for
IPO registration
(Aug. 10, 2004)

Google revealed in
Playboy interview?
(Aug. 12, 2004)

Excerpts from Google
Playboy interview
(Aug. 12, 2004)


In its amended filing, Google said it would "vigorously" contest any claim that it violated federal regulations. It acknowledged, however, the potential for penalties if it were found guilty of such a charge.

"We do not believe that our involvement in the Playboy Magazine article constitutes a violation of Section 5 of the Securities Act of 1933. However, if our involvement were held by a court to be in violation of the Securities Act of 1933, we could be required to repurchase the shares sold to purchasers in this offering at the original purchase price for a period of one year following the date of the violation," Google stated in its SEC filing.

Companies going public must go through a "quiet period" before their stock offering, meaning that they can say nothing that would materially influence the way investors perceive the stock. Earlier this year, regulators imposed a delay on the IPO of software company Salesforce.com after The New York Times published a profile of the company's chief executive.

Google's filing said that the Playboy article presented information "in isolation" and "did not disclose many of the related risks and uncertainties" connected with the stock offering, and the company urged potential investors to read its prospectus before making any investment decisions.

The company also clarified and updated some of the statements made in the Playboy interview, which was conducted in April--a week before Google filed its IPO registration statement with the SEC.

For instance, Google said that it now has more than 2,000 employees, not the 1,000 cited in the article, and that its Gmail service no longer has the significant advantage in storage space that it had over rival free e-mail services earlier this year.

More significantly, the company noted that its domestic traffic of 65 million people reflects a monthly figure, not a daily one, and is compiled by third-party research firms.

Below is a copy of the Google's response to the Playboy interview, as taken from the company's SEC filing:

Risks Related to Our Offering

If our involvement in a September 2004 magazine article about Google were held to be in violation of the Securities Act of 1933, we could be required to repurchase securities sold in this offering. You should rely only on statements made in this prospectus in determining whether to purchase our shares.

Information about Google has been published in an article appearing in the September 2004 issue of Playboy Magazine and entitled "Playboy Interview: Google Guys." The text of the article, which is included in this prospectus as Appendix B, contains information derived from an interview of Larry and Sergey conducted in April 2004, prior to the filing of our registration statement of which this prospectus is a part. The article presented certain statements about our company in isolation and did not disclose many of the related risks and uncertainties described in this prospectus. As a result, the article should not be considered in isolation and you should make your investment decision only after reading this entire prospectus carefully.

You should carefully evaluate all the information in this prospectus, including the risks described in this section and throughout the prospectus. We have in the past received, and may continue to receive, a high degree of media coverage, including coverage that is not directly attributable to statements made by our officers and employees. You should rely only on the information contained in this prospectus in making your investment decision.

We do not believe that our involvement in the Playboy Magazine article constitutes a violation of Section 5 of the Securities Act of 1933. However, if our involvement were held by a court to be in violation of the Securities Act of 1933, we could be required to repurchase the shares sold to purchasers in this offering at the original purchase price for a period of one year following the date of the violation. We would contest vigorously any claim that a violation of the Securities Act occurred.

Investors should be aware of the following modifications and updates to the article's content:

•  The article states that our Gmail service, with one gigabyte of storage, has 200 times more storage than our primary competitors. While at the time of its introduction, Gmail had such a substantial storage capacity advantage over competitive offerings, competitors have substantially narrowed the gap.

•  The article indicates that we had about 1,000 employees. Currently, we have approximately 2,292 employees.

•  The article states that more than 65 million people use our search engine each day. We believe that this number represents monthly, not daily, domestic visitors data as compiled by a third party research organization.

5 comments

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Google, the KING of ALL MEDIA
Howard Stern, he could not hold a candle to Larry and Sergey, they are the new KINGS of ALL MEDIA.

These guys are the best thing to happen to the press since WACKO JACKO......

Now they have all of those PLAYBOY MODELS calling them, what more could a young man want, money, fame and now every young Playboy Bunny wanting to go on dates with them!

As far as the Google IPO, if anyone is really interested in reading about it anywhere else other than Playboy, check out the following URL

<a class="jive-link-external" href="http://www.webcenter.squarespace.com/google-ipo/" target="_newWindow">http://www.webcenter.squarespace.com/google-ipo/</a>
Posted by anthonycea (103 comments )
Reply Link Flag
The Google Turbocharged IPO
This IPO might be the most unique offering ever. Google has seemed to build an investment model based on the idea that speed kills. Now we have a whole new way of investing without the need for checking facts or wasting time. This thing is moving so fast, that the facts change faster than the investors ability to analyze them. You could bid on Google and by some the time you know what happens, well something else just happened. So maybe it was good and well then again maybe it wasn't so good! Wall Street has a way of slowing things down, the value of which is that any analysis is given the chance to be proven or disproven in good time. Automating the process may speed thing along, but speed kills.

If you really want to slow down things a few notches, look for the SEC to enforce the speed limits. Google may be getting a few speeding tickets. This is better than crashing and it means less burning. There are limits to how fast a company can grow, even with a turbocharged IPO. Google might want to get a NASCAR team together with some of that cash from the IPO. Go Team Google Go!
Posted by (7 comments )
Reply Link Flag
...and by the way
Don't hit the wall!
Posted by (7 comments )
Link Flag
This is utter bullshit
The institutions are clearly just trying to talk the price down so that they can get in on the cheap. The Playboy interview doesn't violate diddly-squat. The regulators will likely jump on it because all they can do is respond in their pavlovian way to media hype.
Posted by (3 comments )
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PO you are a nice guy, but how much Google stock do you own?
PO,you are a insider in this deal, why don't you just tell us if you are going to make a Billion off of the Google deal?

You would not happen to be bias in all of this would you?

Sir, I like you personally and you are a Billionaire already, but really, do you think in reality that this IPO was done the RIGHT way.

Just come out and say it, Google _________ up on this one.

Bill Gates is laughing his ________ off right now.

Why don't you help a little guy like me PO, I have great ideas too......
Posted by anthonycea (103 comments )
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