Google's IPO: Grate Expectations
Thursday, August 19, 2004; 9:43 AM
The reason the air's out of the balloon? According to the Wall Street Journal, it's payback for all that sassy behavior on Google's part. "A combination of Google's own hubris, stubborn investors and a deteriorated technology market transformed what was billed as the hottest IPO of this short century into a rather messy affair," the Journal wrote.
The Associated Press via washingtonpost.com: Google's IPO Price Set At $85 Before Debut (Registration required)
The New York Times: Google Lowers Its Sights As Demand Proves Weak (Registration required)
The Wall Street Journal: Engine Trouble: How Miscalculations and Hubris Hobbled Celebrated Google IPO (Subscription required)
Bob Clarkson, a securities attorney at the law firm Jones Day, told the AP: "With all the negative publicity in the last few weeks," Clarkson said, "it's still a phenomenal success story and that's still a phenomenal valuation for a company as young as Google." Matthew Fordahl wrote in another AP story that despite the lowe pricing, "the offering remains one of the biggest and most highly anticipated for an Internet business, surpassing most of the hot tech issues of the 1990s. It will make billionaires -- at least on paper -- of founders Sergey Brin and Larry Page, who started Google six years ago." The San Jose Mercury News offered some more perspective: "'This still gives them the third-biggest market cap in the Internet space,' behind eBay and Yahoo, said Mark Mahaney, Internet analyst with American Technology Research."
The Associated Press via San Francisco Chronicle: Google Price Set At $85, At Low End of Company's Expectations
San Jose Mercury News: Google Shares Start At $85 (Registration required)
Google insiders are not the only ones getting rich. Stanford University, where Brin and Page started the company in 1998 as graduate students, is going to make a mint in the deal. USA Today reported Stanford is selling nearly $16 million of its stock in the IPO. "Stanford's stake in Google -- a total of about 1.8 million shares -- is worth about $156 million at $85 a share, the price set by the search engine giant Wednesday," the paper said.
USA Today: Founders Alma Mater To Rake In Nearly $16M
Take it Back to 85
Because that's all you're worth! That's the message Google's getting without a whole lot of sugar-coating. "This is kind of like what happens when you list your house for too much, and no one shows up for the open house," Kevin Landis, portfolio manager of Firsthand Funds, told USA Today. "The buyers step back and watch you mark it down." And this caustic assessment from a technology analyst: "Google is damaged goods," David M. Garrity of New York's Caris & Co. told the Boston Globe. "For all intents and purposes, this is a failed IPO. In the process of mismanaging the IPO, the company will raise less money than it would have otherwise." Garrity also told the paper: "They wanted to manage it themselves, but their process was so cumbersome that they ended up alienating the very investors they were trying to attract. I don't think you'll see anyone try this experiment again until the next century." Garrity also spoke to the New York Post, saying, "Google has been doing a very successful job on their own of doing a face plant on every step of Wall Street." Tom Wyman, portfolio manager of Husic Capital Management, told the Los Angeles Times that Google "broke all 10 commandments of a successful IPO."
USA Today: Whiz Kids' Blunders Blacken IPO's Eye
The Boston Globe: Small Investors Scared Off By Exercise In Stock Democracy
New York Post: A Frugal Google
Los Angeles Times: At $1.7 Billion, Google's IPO Comes Up Short (Registration required)
"The thing that hurt them the most was the spurning of Wall Street," Danny Sullivan, editor of online publication Search Engine Watch, told the Post. "If this had been a traditionally run IPO where investment banks were going to cash in, they would have been supportive of the higher price, and you would have seen less criticism. They felt locked out of the process, so there was no incentive for them to move things along."
The Washington Post: Google Ends Auction of IPO Shares (Registration required)
Another article in the Journal said that Google followed an untraditional path to get to its IPO and essentially got egg on its face along the way. "The Internet search-engine company's offering prospectus eschewed the usual dull tones in favor of flowery language about Google executives' outlook on life. At its pre-IPO road show, investors complained Google didn't have much to tell them about what the company would do with the billions of dollars from the IPO. And then there was the Playboy interview. Given the size and profile of Google's IPO, banks quietly put up with the company's eccentricities. But when it became clear Google no longer was as hot as it once had been, bankers involved in the IPO were happy, according to people familiar with the matter, even though a reduced price means smaller fees."
The Wall Street Journal: Engine Trouble: How Miscalculations and Hubris Hobbled Celebrated Google IPO (Same Link As Above) (Subscription required)
The Wall Street Journal: Wall Street Vindicated By Google (Subscription required)