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Google files plan to sell 25 million of its shares

MATTHEW FORDAHL, THE ASSOCIATED PRESS
The Record (Bergen County, NJ)
07-27-2004

Google files plan to sell 25 million of its shares -- Long-awaited IPO exciting investors
By MATTHEW FORDAHL, THE ASSOCIATED PRESS
Date: 07-27-2004, Tuesday
Section: NEWS
Edtion: All Editions.=.Two Star B. Two Star P. One Star B

SAN JOSE, Calif. - Google announced plans Monday to sell about 25 million shares at up to $135 each when it goes public as early as next month - giving the Internet search engine a market capitalization of as much as $36 billion, on par with the likes of McDonald's and Sony.

The details of one of the most highly anticipated initial public offerings in years were spelled out in a filing with the Securities and Exchange Commission.

It would be the eighth-largest IPO in history, bigger than most of those that took place during the dot-com boom of the 1990s. An exact date for the IPO has not been set yet.

Google plans to offer just 9 percent of its stock at an estimated price range of $108 to $135 per share. Based on that price range, the company would have a market capitalization of $29 billion to $36 billion, counting shares held by insiders.

The average in the S&P 500 is $21.25 billion; rival Yahoo's is nearly $38 billion.

The company's plan would mean that between $2.66 billion and $3.32 billion in stock would be sold in the initial public offering. However, the amount the company itself expects to raise is $1.66 billion, because some of the shares being offered are being sold by existing stockholders.

Once trading of the shares begins on the Nasdaq Stock Market, Google expects to have the ticker symbol GOOG.

Google shares will be distributed in an unusual auction designed to give the public a better chance to buy stock before shares begin trading. In the past, companies' IPO shares have been restricted to an elite group picked by the investment bankers handling the deal.

Google founders Larry Page and Sergey Brin, who created the company in a Stanford University dorm room in 1998, stand to profit handsomely from the IPO. In the filing, Google said Page and Brin will each sell 1 million of their shares, generating about $117 million for each based on the midpoint of the company's range, $121.50 per share.

They will still own more than $4.5 billion worth of stock each, and their preferred shares will carry more voting power than the stock traded publicly.

Analysts expressed some surprise that the company, given its desire to democratize the IPO process, is not going to split its stock to bring the price range down to levels more appealing to ordinary investors.

"I think that's a little bit ridiculous," said Paul Barder, an analyst at Renaissance Capital in Greenwich, Conn. If individuals have $100 they want to invest, "they're not even going to get a single share."

Google executives appear to be following in the footsteps of star businessman Warren Buffett; Class A stock of his Berkshire Hathaway Inc. has never split and it now trades at about $88,000 per share.

But John Doerr of Kleiner Perkins and Michael Moritz of Sequoia Capital stand to profit even more. Doerr will sell 2.1 million of his 21 million shares for an estimated $255 million; Moritz will shed 2.4 million of his 23.9 million shares for more than $290 million.

The stock offering also will provide a big payoff for Yahoo and America Online, which each were early investors in Google. Yahoo is selling 549,000 shares; AOL will unload 867,000, according to the filing. At $121.50 per share, Yahoo would collect $67 million, while AOL would reap $105 million.

Google's filing with the Securities and Exchange Commission gave an updated picture on the company's booming growth, which has been fueled almost entirely by advertising linked to online searches.

In the first six months of 2004, the company earned $143 million, or 54 cents per share, on revenue of $1.35 billion. In the comparable period last year, the company's profit was $58.0 million, or 23 cents per share, on revenue of $560 million.

Google also reported that it had 2,292 employees as of the end of the second quarter, up from 1,907 at the end of the first.

Meanwhile, some Google users reported that the company's Internet site was generating error messages instead of search results Monday. David Krane, a Google spokesman, did not immediately return a phone call seeking comment.

Monday's document was the fourth revision of Google's IPO filing, which was first released in late April.

Keywords: INTERNET, BUSINESS, STOCK, SALE


Copyright 2004 Bergen Record Corp. All rights reserved.

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