Google bidding set to open Google bidding set to open (August 13, 2004)

IPO was delayed by snafus

By Jon Wiener

The eyes of the world's investors once again turned to Mountain View this week when Google announced it would open bidding in its auction-style Initial Public Offering (IPO), bringing the most-hyped public offering in years one step closer to reality.

An announcement on Google's IPO Web site, ipo.google.com, said that registration for bidder ID numbers would close Aug. 12 at 2:00 p.m. The announcement said that bidding would commence "soon thereafter."

Only those with bidder IDs will be able to submit bids. Google's most recently amended IPO prospectus valued the price of 25.7 million shares between $108 and $135. Investors can submit bids at any price that they want through the unique "dutch auction" process, which is designed to come up with the final share price.

Originally, most brokerages expected the registration period to last only a week, but two obstacles arose last week that threatened to derail the IPO.

Google announced in an SEC filing that it might have broken the law in 18 states by issuing unregistered stock to employees. The California Department of Corporations launched an investigation into the practice last Thursday, and Google instituted a buyback program in order to solve the problem.

On Monday, Google agreed to issue 2.7 million shares to rival Yahoo! to settle a patent infringement dispute. The settlement will cost Google between $260 and $290 million dollars and result in a net loss for the current fiscal quarter.

Google could still call off the IPO if the clearing price set by the auction is too low to justify it. The Associated Press reported Tuesday that Google's bidder registration Web site was attracting fewer than 50,000 visitors per day.

But despite widespread grumbling that Google's growth prospects do not support such high expectations, some high-profile analysts have said the share price is reasonable. Most recently, Standard & Poor's Equity Research Services wrote in the Aug. 10 issue of Business Week that Google's value was comparable to Yahoo!'s, and that their valuation was basically sound.

E-mail Jon Wiener at jwiener@mv-voice.com

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