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Is Google Fumbling Its IPO?

By Robert MacMillan
washingtonpost.com Staff Writer
Friday, August 6, 2004; 10:06 AM

Google certainly has a lot of explaining to do. Too bad it's in a government-mandated "quiet period."

Not that this uber-hyped initial public offering is getting any closer to reality today. The biggest tech IPO in five years, the one that was supposed to mark the technology sector's return to good graces, looks like it might have hit what one could optimistically call a "snag" -- and several headlines today do just that.

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Google's stock offering was widely reported to be on tap for as early as this coming Tuesday, but to be fair, there was never any on-the-record guarantee that it would really happen. So why are today's headlines telling us the IPO has been delayed?

There are several reasons floating around the dailies today, but no matter how you slice and dice, mince and chop, the answer seems to be this: Google isn't ripe yet. So eager to be the maverick Wall Street darling, the company's idiosyncratic approach to going public is making it look more amateur than hipster.

First, the, uh, technical problem, as reported by the Financial Times: "The timetable for Google's initial public offering may be extended by at least a few days due to administrative delays, people familiar with the situation said. Getting approval for certain elements of its unusual auction system, including a series of websites set up by the syndicate banks, is taking a little longer than was originally expected, the people said."
Financial Times: Delays Could Extend Google's IPO Schedule

And via the Wall Street Journal we get the "pardon our dust" notice: "People involved in the deal stressed that the logistical problems don't stem from a lack of bidders or from a technical glitch. Participants in the Wall Street underwriting syndicate said they remain sanguine about the IPO's prospects."
The Wall Street Journal: Google IPO Hits Logistical Hurdles, Likely Altering Plans (Subscription required)

The New York Times reported that getting investors on board is exactly what the problem is. "Some people involved in the Google offering have pushed to begin the auction as soon as possible because late August, a prime vacation season, is a difficult time to conduct business. Google's offering, which a few months ago was generating excitement for its potential to reinvigorate the market for technology stocks, is now facing increasing skepticism from investors big and small who see the company's price targets as too expensive and the auction as too cumbersome. Some investors are beginning to predict that Google will have to push the offer into September or even reduce the number of shares it plans to sell. Google and its underwriters declined to comment on the offering."
The New York Times: Google Is Said to Delay I.P.O. Because of Snag in Signing Up Big Investors (Registration required)

Then there's this from CBSMarketWatch.com: "Three hedge fund investors told CBS MarketWatch that institutional traders have not yet been able to place their bids, suggesting the offering still is a number of days away."
CBS MarketWatch.com: Google IPO Remains Uncertain (Registration required)

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And if generating interest from the deep pockets wasn't enough of a challenge, turns out Google is mismanaging the whole pre-IPO process -- You know, that little detail about the 23.2 million shares that Google failed to properly register with the Securities and Exchange Commission? The one that prompted the state of California to investigate?

As The Washington Post reported, "In its latest filing with the SEC late Wednesday, Google disclosed that it may have violated numerous laws by illegally issuing 23.2 million shares of its stock, and nearly 6 million stock options, to hundreds of consultants and company employees without first registering the shares properly with state and federal authorities. The company said it may have violated the laws of more than a dozen states in the process of distributing those shares." Also from the Post: "In a bid to address the problem, Google immediately offered $25.9 million to the owners of those shares to entice them to sell their holdings back to the company. However, a senior company executive and a major shareholder have indicated they do not intend to sell their shares back to Google under the proposal, and the company said consultants and other employees also could reject its offer as too cheap and file lawsuits against the company instead, according to SEC filings."
The Washington Post: Google Offers Post-IPO Scenario (Registration required)

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