Long-awaited Google auction begins Friday

Company could end up valued at $36 billion--unless various controversies alienate potential investors.

NEW YORK--Google brushed aside a series of missteps and concerns over tough market conditions on Thursday, declaring it would push ahead with a highly anticipated auction for its $3.3 billion IPO beginning Friday.

The auction, which will serve as a prelude to perhaps the largest U.S. IPO of the year, will commence at 9 a.m. EDT Friday, the Mountain View, Calif., search engine company said in a statement on its Web site.

The company also said it expects to announce next week the initial public offering price--which it estimates will be between $108 and $135 per share--of the available 25.7 million shares. That could value the company at more than $36 billion.

The auction lands during a rough patch for IPOs, with the list of withdrawn or delayed deals growing longer by the day. As of Wednesday, 33 IPOs had been postponed or withdrawn, according to Thomson Financial, with more than half the deals this quarter pricing below the low end of their estimated range.

Google, the Web's most popular search engine and former media darling, has also developed an image problem just days ahead of its .

A complex IPO auction process, concerns over growth, a bare-bones roadshow--trips to pitch the stock to institutional investors--and a spate of regulatory filings have put the company in the doghouse, alienating some investors and generating a barrage of negative media coverage.

It may also have caught the attention of securities regulators, with the Wall Street Journal reporting Thursday that the U.S. Securities and Exchange Commission is looking into whether an interview between the founders of Google and Playboy magazine might have violated the so-called "quiet period" that limits communication by company executives ahead of their IPO.

"By trying to be unique and be cute, they've essentially alienated people," said Ben Holmes, managing member of Protege Funds LLC, an investment firm in Boulder, Colorado.

Google could not immediately be reached for comment.

Google had earlier alerted investors that its bidder registration process would close at 5 p.m. EDT on Thursday and then it would quickly gear up to begin accepting bids for the 25.7 million shares it plans to sell to the public.

Google did not disclose how many potential investors had registered for a bidder ID.

The company is using a modified version of a "Dutch auction" to sell its shares to prospective investors, saying it chose that method to give everyday investors better access to its stock.

In the auction, Google will take bids from hopeful investors, who will need to outline how many shares they want to buy and at what price.

In a typical auction, the offering is launched at the highest price at which all of the shares offered can be sold to potential investors. But Google has left itself some wiggle room, saying it could price the IPO lower to get a wider distribution of its shares.

Investors must have a "bidder ID" obtained through registration to participate in the auction and an account with one of the 28 securities firms underwriting the sale.

Story Copyright  © 2004 Reuters Limited.  All rights reserved.

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