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To print article, click Print on your browser's File menu. Go back Posted 4/30/2004 |
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Extra A different kind of tech, a different kind of IPO Public ownership won't change the kinder, gentler face of Google, its founders promise potential stockholders. Wall Street may have other ideas. By MSN Money staff Warren Buffett was considered out of touch when he passed on Internet stocks during the dot-com bubble. But his presence looms large over what's likely to be one of the hottest-ever technology IPOs. Google paid homage to Buffett, fearless leader of Berkshire Hathaway "If opportunities arise that might cause us to sacrifice short-term results but are in the best long-term interest of our shareholders, we will take those opportunities," the two write. "We will have the fortitude to do this. We would request that our shareholders take the long-term view."
Daring to be different But the Buffett-fest is not the only thing that sets Google's filing apart from other S-1s -- the documents that companies are required to file before they go public. Page and Brin themselves note that Google is "not a conventional company. We do not intend to become one. Throughout Googles evolution as a privately held company, we have managed Google differently. We have also emphasized an atmosphere of creativity and challenge, which has helped us provide unbiased, accurate and free access to information for those who rely on us around the world." Google also plans to sell shares to the public through an auction, something that only a few small companies have tried. An auction promises that any windfall from speculation and hype will go to the company and its original investors instead of investment houses, which get shares at fixed price and sell for what the market will bear. Of course, for anyone who knows much about Google, the fact that the filing is different comes as no surprise. Google is different, a place where, as the company's filing says, workers are challenged to change the world. It once banned investment bankers from its Mountain View, Calif., campus even as company executives were considering an IPO, The Wall Street Journal reported. Related news and commentary The IPO filing even contains a segment entitled "Don't be Evil," which discusses Google's efforts to keep its search results unbiased, and another called "Making the World a Better Place," which talks about connecting people and information around the world for free. No earnings guidance from Googlers But Google's focus on the long term may be tough for Wall Street to take. For instance, Google will shun earnings projections, another nod to Buffett. "Although we may discuss long term trends in our business, we do not plan to give earnings guidance in the traditional sense," Page and Brin write. "A management team distracted by a series of short term targets is as pointless as a dieter stepping on a scale every half hour." The long-term focus also may lead to earnings fluctuations. For example, Google said it won't back away from promising projects just because they may be costly. "We will not shy away from high-risk, high-reward projects because of short term earnings pressure," Page and Brin write. And Google's share structure will be designed to insulate management from short-term pressures, freeing managers to focus on weightier issues. Class A shares, with one vote each, will be sold to the public. Class B shares, with 10 votes each, will go to management and founders. That set-up also mirrors The Washington Post, where Buffett sits on the board. Secrecy is still the watchword Page and Brin say they'll run Google as a triumvirate with CEO Eric Schmidt. In fact, the founders make clear that the company depends heavily on them. "By investing in Google, you are placing an unusual long-term bet on the team, especially Sergey and me, and on our innovative approach," the two wrote in the open letter that accompanied the filing. Meanwhile, expect Google's legendary secrecy to continue. "As a public company, we will of course provide you with all information required by law, and we will also do our best to explain our actions," Page and Brin write. "But we will not unnecessarily disclose all of our strengths, strategies and intentions." Still, the filing let spill some of the juicy financial details that Wall Street has been speculating about. Google had nearly $1 billion in revenues last year with the vast majority, more than 95%, coming from advertising. Revenues have increased tenfold since 2001. For the three months ended March 31, 2004, the company saw revenues of more than $389 million, up 118% from more than $178 million in the year-ago period. Google is also comfortably in the black and profit is growing. Google earned more than $105 million last year. For the first quarter of 2004 it earned nearly $64 million, or 24 cents per share, up from a profit of $25.8 million, or 10 cents per diluted share in the same quarter a year ago. And just what does that name mean? Google is a play on the word googol. That's a very large number. It's represented by the numeral 1 followed by 100 zeros. "Googol" was coined by Milton Sirotta, nephew of American mathematician Edward Kasner. The number is so big that there isn't a googol of anything in the universe. Not stars, not dust particles, not atoms, the company says on its Web site. That reflects its mission to organize the immense, seemingly infinite amount of information available on the Web, it says. |
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