GOOG Headline Roundup
There's blood in the water. WashPost (reg required) rounds up the scathing headlines and commentary here. The Merc, NYT, WSJ, the Post, the FT....the list goes on and on. The journos are piling on. And Google is in a quiet period, so it can't defend itself. But there are plenty of folks willing to say nasty things, especially those on Wall St. who felt snubbed by Google's middle finger of an S-1. As I wrote in April when the S-1 was first filed:
They've set themselves a very high long-term bar, claiming they will best the system, in essence. I think it will be very interesting to see how Wall Street responds. There is a chance, in the end, that the Street will feel slighted, and turn its back on the company.”
I've heard that the buzz on Wall St. is that there are not enough orders yet from institutional investors. I think this is hard to validate - sure, anyone can get two or three or four traders to tell you they do not plan to bid, but on the other hand, most who do plan to bid have no intention of telling anyone about it - by nature these traders are a secretive lot, and they don't want anyone asking the price they plan to bid. I asked a roomful of them the same question back in March, and not one hand went up. But I think that was because they don't want to tip thier hand...
However, if there were to be a draught of orders from big investors, who tend to buy and hold for a while, that would be a problem - Google could probably make it up with smaller investors, but the retail investors tend to be skittish and bolt at the first sign of trouble. Were that to happen, the stock would not be supported and could fall dramactically after its opening. That would be quite damaging to the company.
And if I recall correctly, all this hullabaloo about registering securities was reported by Google in the first S-1 way back in April. (I'm not saying it's not an issue, it certainly is.) Indeed, here is the text from the first version of the filing:
Shares issued, and option grants made, under our stock plans exceeded limitations in the federal and state securities laws.
Shares issued and options granted under our 1998 Stock Plan and our 2003 Stock Plan were not exempt from registration or qualification under federal and state securities laws and we did not obtain the required registrations or qualifications. Shares issued and options granted under our 2003 Stock Plan (No. 2) and our 2003 Stock Plan (No. 3) were not exempt from registration or qualification under federal securities laws and we did not obtain the required registrations or qualifications. As a result, we intend to make a rescission offer to the holders of these shares and options beginning approximately 30 days after the effective date of this registration statement. If this rescission is accepted, we could be required to make aggregate payments to the holders of these shares and options of up to $34 million plus statutory interest. Federal securities laws do not expressly provide that a rescission offer will terminate a purchaser’s right to rescind a sale of stock that was not registered as required. If any or all of the offerees reject the rescission offer, we may continue to be liable under federal and state securities laws for up to an aggregate amount of approximately $34 million plus statutory interest. See “Rescission Offer.”
I am not sure why this became a story late last week - though they did add another filing about the issue then, but it was not a new snag by then. Screwups like this are fairly common, from my limited experience. But there you have it.
Not to mention, it's a terrible time to be coming out, both seasonally - in the dog days of August - and given the state of the world: oil spikes, net stocks getting hammered, terrorism fears.
So the question now hangs in the air: might this thing be delayed, or even cancelled? Given the factors lined up against it, from the ones of their own creation to those external to the company, I certainly could see a delay in the cards. But a cancellation? Not likely in the long run.
UPDATE: Today the company filed the full rescission offer. In this document Google also notes that it mentioned this issue in its first filing, in April, and that this is not a new development.
Comments
It looks more and more like the n o n traditional IPO is becoming a problem for Google.
I tried n o n w/out the spaces, but got "Your comment could not be submitted due to questionable content: n o n"
Thanks for the heads up on "non" I removed it from my MT Blacklist.
Why is Google opting for an IPO? Their revenues and ability to get debt would be a far less dangerous way to get needed capital, and they could continue to stay secretive and private. The IPO seems completely contrary to Google's business model. I believe it will hurt them in the long run.
I don't think they will delay the offering. This is made up by smart money bidders... Think about it - if you suspect the IPO will be suspended, would you rush to place your bid?
When there are fewer bids, this means smaller demand and hopefully lower clearing price for the bidders and a pop when it opens.
All this negative talk is a clever plot to discourage potential bidders. I remember back in April (when YHOO traded at a price close to today's price) bold calculations of the valuation of 40B or even 50B... Now even 30B seems too much.
And I love to see when everyone is complaining about the price range as if this is the price Google wants for its shares. The price is so high because those same investors are trying to outbid each other to get a piece of Google. Nobody is forcing them to bid within the range. In a Dutch auction you bid what you think the item is worth. In the case of Google, if you think a share is worth $99 you bid $99...
I don't know any other company (except perhaps EBAY) that has reached such huge revenue and profits in such a short period of time. It took Microsoft twice as long.
I also don't know any company which is more creative and is run more effectively than Google. Or that hires more talented people.
Google is simply the smartest, company that ever existed and no matter what happens they will continue to innovate and compete as they have done so far.
The press is feeding us with stories how Microsoft or Yahoo are competing with Google for piece of the action... As if Google is just sitting on the same place and doing nothing.
Where the revenue will come from, the investors are asking? Well, Google will definitely not tell that. They were secretive about their business model from the very beginning but they still found a way to make money with a terrific profit margin.
They are getting the press and the lack of confidence that they deserved all along, with many in the industry press afraid to speak the truth about Google.
They do NOT have as much power as many in the press have given them without even bringing objective questions forth such as why Google finds it necessary to data mine through spyware software like the toolbar, the Puffin hard drive software, Gmail, Orkut and the deskbar, not to mention cookies in Google search.
When the industry press is willing to discuss these important industry issues they will gain more respect.
Can some of you explain why Federal lawmakers and even state lawmakers are moving against ADWARE and SPYWARE but members of the industry press will not address these issues as they really should.
Are thay AFRAID of Google?
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