August 10, 2004 9:15 AM PDT

Google sets deadline for IPO registration

Google announced on Tuesday a deadline for investors to register for its long-anticipated Dutch-auction IPO.

Investors will have until 2 p.m. PDT Thursday to request a bidder identification number to participate in the initial public offering.

Although no date has been set for the IPO, Google noted that the auction is expected to begin soon after the registration deadline.

The search engine giant is planning to offer nearly 26 million shares and currently has a price range of $108 to $135 a share. Some investors speculate that bids may come in at or below the low end of the range, due to a lackluster response from investors who have seen the company's road show, or presentation.

"They've violated all 10 Commandments of doing an IPO," said Tom Wyman, a portfolio manager for Husic Capital Management who has previously served as a investment banker at several large investment houses.

Google has two classes of stock, which gives company founders Larry Page and Sergie Brin a combined majority voting control. The company also has a large overhang of stock: 39 million shares--more than what will be offered in the IPO--have the potential to be unleashed in the market when the lock-up period expires 90 days after the offering, Wyman said.

He also noted that Google senior executives are selling their shares as part of the IPO, which is unusual for initial public offerings. Typically, executives, as well as employees, cannot sell their shares for some period after the IPO is completed.

During the road show in San Francisco last week, Wyman said, the two Google founders offered about one-third of the number of slides usually shown during such an event--missing several key elements.

"They didn't have any slides on their growth strategy, investment highlights on why we should buy the stock or an industry overview. When they were asked to compare themselves against Yahoo, all they said is, 'Our product is better than theirs. Next question?'" Wyman said. "This was supposed to be the star transaction of the year, but this is going poorly."

Google also encountered some problems with the registration of its shares. The company doled out millions of shares to employees and consultants during the past three years but failed to register them under federal and state securities laws.

Although the company is offering to buy back the 28 million shares in question for what the investors purchased them at, the company said its offer will unlikely be taken, given the IPO price range.

 

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