By David A. Vise Washington Post Staff Writer
Friday, April 30, 2004; Page A01
Google, the storied Internet search site founded in a garage just six years ago, yesterday filed its official plan to sell shares to the public, a deal eagerly anticipated by Silicon Valley to mark the re-emergence of tech from its post-bubble malaise.
The California company is different from the hyped Internet IPOs of the late-1990s: Google Inc. makes money -- more than $100 million in profit last year. It has also, until now, shunned publicity.
Its filing with the Securities and Exchange Commission was the first time the secretive company had revealed its financial results. The documents show its returns exploded along with the popularity of its site, going from sales of $220,000 in 1999 to nearly $1 billion last year.
"Google is not a conventional company. We do not intend to become one," co-founders Larry Page and Sergey Brin wrote in a letter, patterned after the essays written annually by Berkshire Hathaway Chairman Warren Buffett, that preceded its financial documents. Both in their early thirties, Page and Brin will likely become billionaires, on paper, when the deal is done.
Google plans an unusual offering to sell an estimated $2.7 billion of stock later this spring, using an online auction for investors large and small that is designed to avoid the unfairness and wrongdoing that accompanied the allocation of many hot initial public offerings in recent years.
The offering, analysts said, is likely to value the company at upwards of $20 billion. Page and Brin, who took identical base salaries of $150,000 last year, each own about 15.5 percent of the company.
Many of its nearly 2,000 employees, who refer to themselves as "Googlers" and who enjoy company-provided meals, doctors and washing machines, will become paper millionaires after the share offering is complete.
Google has transformed the way people use the Internet since it was launched in 1998 by Brin, a University of Maryland graduate, and Page, who had worked as a software developer at American Management Systems Inc. in Washington. They met as graduate students at Stanford University. In contrast to early search engines that provided hundreds of results for computer users without useful priority, Google uses secret, complex mathematical formulas and computer databases to provide a simple outcome: fast access to relevant information.
Google provides Internet users with a free way to search for information in nearly 100 languages. It makes money by selling ads, both for its own site and for others, that are relevant to the searches it conducts, making them more useful than many of the pop-up and banner ads that appear elsewhere on Web sites. It's now expanding into other areas including a free e-mail service, through a controversial program called Gmail.
The company faces stiff competition in the search sector from Yahoo, which earned $101.2 million on sales of $757.8 million in this year's first quarter. Google's profit was only about $64 million on $389.6 million in revenue in the first three months of the year, but it's growing fast. In the first three months of 2003, Google had a profit of $25.8 million on $178.9 million in sales.