INTERNET Google plans to make history with stock share price



The founders would have a stake of at least $9 billion.
WASHINGTON POST
Google Inc., the most highly anticipated stock offering of the year, said Monday it plans to go public at a price that would make the Internet search company worth more than General Motors Corp. in the stock market and make its young co-founders the nation's newest billionaires, at least on paper.
In a filing with the Securities and Exchange Commission, Google estimated a price range of $108 to $135 per share and said it would trade under the ticker symbol GOOG.
At that per-share price, the stock would be the most expensive in history for an initial public offering and would be about 150 times Google's annual per-share profit. Some analysts, pointing out that the stock market's historical price-to-earnings ratio is closer to 20, took Google's announcement as a sign that the Internet bubble was returning.
If the deal goes as planned, Google would have a stock market value of $32 billion, some $10 billion higher than General Motors Corp., the nation's biggest automaker; double that of Amazon.com Inc., the online bookseller; and in the range of Google's chief competitor in search, Yahoo Inc., which is larger and has a more diverse business.
Co-founders Sergey Brin and Larry Page would have a combined stake in the company worth between $9 billion and $10 billion after the offering, vaulting them into the ranks of the nation's richest men only a handful of years after they founded the company after meeting in a Ph.D program at Stanford University.
Ad revenue
While computer users access Google to search the Internet for information free of charge, the company derives virtually all of its sales and profit from ads that accompany the search results.
Google disclosed Monday that its profit soared in the first six months of 2004 to $143 million, compared with nearly $58 million in the same period last year. Sales reached $1.4 billion, up from about $560 million in the first half of 2003.
According to the SEC filing, Google's public offering would be a big payday for insiders. Google co-founders Brin and Page each plan to sell just under 1 million shares, worth about $100 million, while keeping nearly all of their stock.
David Cheriton, the Stanford University computer professor who was a mentor to Brin and Page, is planning to sell 340,436 shares, worth an estimated $41.4 million, about 10 percent of his holdings. Stanford University is also planning to sell some of its stock -- 184,207 shares, worth about $22.4 million.
Competition
Yahoo, Google's primary competitor, also was an early investor in the company. It plans to sell 549,888 shares, worth about $66.8 million. America Online Inc., a division of Time Warner Inc., filed to sell 743,745 shares, or about 10 percent of its stake, worth about $90 million at the proposed offering price.
It was clear from fresh disclosures Monday about its strong financial performance that Google does not immediately need the $1.7 billion the company would raise from the stock sale. About $1.3 billion more would be raised by the other selling shareholders, bringing the total size of the offering to roughly $3 billion.
In all, 24.6 million -- or about 9 percent -- of Google shares will be available for public trading, the company said. Taulli said that when such a small piece of a company is public, its share price can swing wildly and be more easily manipulated.
"I think this will be a volatile stock," Taulli said. "Individual investors should be wary."
Google's actual offering price will be set in an auction, which the company plans to conduct with the help of Wall Street firms as early as next month.

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