Content area
Full Text
Google Inc. (Google) is a California based internet search engine company that was formed in 1998 by Stanford University PhD students Larry Page and Sergey Brin. On April 19, 2004 Google filed Form S-1 Registration Statement (S-1) with the U.S. Securities and Exchange Commission indicating its intent to go public by an Initial Public Offering (IPO) of its shares.
In a July 27, 2004 regulatory filing with the SEC, Google announced that it planned to sell the shares using the Dutch auction method. Prior to the IPO, valuations from industry experts and Google itself suggested that the IPO would place a value on Google in a range of $8.3 billion - $57 billion.
The purpose of this paper is to address the Dutch auction versus Book-building IPO methodologies, the results of the Google IPO, and the effect of the Dutch IPO process on the Google IPO.
I. INTRODUCTION - THE GOOGLE IPO - BACK TO THE FUTURE?
Google Inc. (Google) is a California based internet search engine company that was formed in 1998 by Stanford University PhD students Larry Page and Sergey Brin. The Google web page (www.google.com) claims that a search initiated using its engine searches 8.168,684,336 web pages. The Google name came from the term "Googol" which is the mathematical term for a 1 followed by 100 zeros. The term was coined by Milton Sirotta, nephew of American mathematician Edward Kasner, and was popularized in the book, "Mathematics and the Imagination" by Kasner and James Newman (Kasner, 2001). According to Google's web site, Google's play on the term reflects the company's mission to organize the immense amount of information available on the web. Of all web searches in the United States, 95% are handled by two companies, Google and Yahoo, either directly or through other sites that use their technology. In the case of Google, the company holds the world's largest index of web content and handles more than 200 million searches a day. Exhibit 1 contains a listing of key dates and events in the history of Google.
The bulk of Google's revenue is earned from advertising sales. For the three month period ending June 30, 2004, Google earned $79.1 million compared with $32.2 million for the same period in...