Google Finally Pops Out an IPO

After breathless anticipation by -- let's face it -- pretty much everybody on the Internet, Google has finally announced its IPO. For fun here are some resources with which you may follow along at home. I am still digesting the news and the filings and may have coherent thoughts last week.

Someone asked me today if I was going to buy Google stock. I said reflexively "Good GRIEF, no!" which made the wrong impression. It's not that I think Google is a bad investment. In fact, their numbers were much stronger than I imagined. It's just that I don't feel I could sit over here and kibitz them if I had stock. For the same reason I don't own Yahoo, Ask Jeeves, LookSmart, etc. If I ever end up with Google stock (I don't see how that could happen, but if it drops out of the sky or something), I will donate it to the American Indian College Fund ( http://www.collegefund.org/d86/basic.html ).

Google's Announcement -- http://www.google.com/press/pressrel/reg_statement.html

Google's SEC Filings -- http://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0001288776&owner=include

From the REGISTRATION STATEMENT ON FORM S-1: http://www.sec.gov/Archives/edgar/data/1288776/000119312504074059/dex991.htm

The entire letter is well-worth reading. These are highlights.

"Google is not a conventional company. We do not intend to become one. Throughout Google?s evolution as a privately held company, we have managed Google differently. We have also emphasized an atmosphere of creativity and challenge, which has helped us provide unbiased, accurate and free access to information for those who rely on us around the world.

Now the time has come for the company to move to public ownership. This change will bring important benefits for our employees, for our present and future shareholders, for our customers, and most of all for Google users. But the standard structure of public ownership may jeopardize the independence and focused objectivity that have been most important in Google?s past success and that we consider most fundamental for its future. Therefore, we have designed a corporate structure that will protect Google?s ability to innovate and retain its most distinctive characteristics. We are confident that, in the long run, this will bring Google and its shareholders, old and new, the greatest economic returns. ...

Many companies are under pressure to keep their earnings in line with analysts? forecasts. Therefore, they often accept smaller, but predictable, earnings rather than larger and more unpredictable returns. Sergey and I feel this is harmful, and we intend to steer in the opposite direction. ...

Our business environment changes rapidly and needs long term investment. We will not hesitate to place major bets on promising new opportunities.

We will not shy away from high-risk, high-reward projects because of short term earnings pressure. Some of our past bets have gone extraordinarily well, and others have not. Because we recognize the pursuit of such projects as the key to our long term success, we will continue to seek them out. For example, we would fund projects that have a 10% chance of earning a billion dollars over the long term. Do not be surprised if we place smaller bets in areas that seem very speculative or even strange. As the ratio of reward to risk increases, we will accept projects further outside our normal areas, especially when the initial investment is small. ... Don?t be evil. We believe strongly that in the long term, we will be better served?as shareholders and in all other ways?by a company that does good things for the world even if we forgo some short term gains. This is an important aspect of our culture and is broadly shared within the company. ...

We aspire to make Google an institution that makes the world a better place. With our products, Google connects people and information all around the world for free. We are adding other powerful services such as Gmail that provides an efficient one gigabyte Gmail account for free. By releasing services for free, we hope to help bridge the digital divide. AdWords connects users and advertisers efficiently, helping both. AdSense helps fund a huge variety of online web sites and enables authors who could not otherwise publish. Last year we created Google Grants?a growing program in which hundreds of non-profits addressing issues, including the environment, poverty and human rights, receive free advertising. And now, we are in the process of establishing the Google Foundation. We intend to contribute significant resources to the foundation, including employee time and approximately 1% of Google?s equity and profits in some form. We hope someday this institution may eclipse Google itself in terms of overall world impact by ambitiously applying innovation and significant resources to the largest of the world?s problems."

From a section titled "Risk Factors":

"We face significant competition from Microsoft and Yahoo.

"We face formidable competition in every aspect of our business, and particularly from other companies that seek to connect people with information on the web and provide them with relevant advertising. Currently, we consider our primary competitors to be Microsoft and Yahoo. Microsoft has announced plans to develop a new web search technology that may make web search a more integrated part of the Windows operating system. We expect that Microsoft will increasingly use its financial and engineering resources to compete with us. Yahoo has become an increasingly significant competitor, having acquired Overture Services, which offers Internet advertising solutions that compete with our AdWords and AdSense programs, as well as the Inktomi, AltaVista and AllTheWeb search engines. Since June 2000, Yahoo has used, to varying degrees, our web search technology on its web site to provide web search services to its users. We have notified Yahoo of our election to terminate our agreement, effective July 2004. This agreement with Yahoo accounted for less than 3% of our net revenues for the year ended December 31, 2003 and less than 3% for the three months ended March 31, 2004."

From a section titled "Products and Services":

"Google News gathers information from nearly 10,000 news sources worldwide and presents news stories in a searchable format within minutes of their publication on the web. The leading stories are presented as headlines on the Google News home page. These headlines are selected for display entirely by a computer algorithm, without regard to political viewpoint or ideology. Google News uses an automated process to pull together related headlines, which enables people to see many different viewpoints on the same story. Because topics are updated continuously throughout the day, people generally see new stories each time they check Google News. We currently provide our Google News service tailored to 10 international audiences."

Note that all Google News front pages in English say 4,500 sources. The non-English pages display varying numbers which, added to 4,500, total about 6,600. Error? Has this upgrade not been announced yet? Are the sources spread over the ten international sites in a certain way? The strange thing is that I asked someone at Google about this last week as I seemed to be getting a strong number of Google News alerts. They didn't have an answer for me.

Feedster's Got an Google IPO NEws Roundup: http://now.feedster.com/googleipo

Google IPO Central -- http://www.google-ipo.com/

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