Google to post quarterly results

Is the search giant worth $88 per share? A federal filing is expected to reveal Google's latest thinking on its upcoming IPO.

Reuters

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Aug. 19, 2004 9:00 a.m. PT

2 min read

Google is expected to give an indication of how much it expects bidders to pay for its shares in an updated initial public offering filing as soon as this week, according to potential investors.

The Web's No. 1 search engine is widely expected to post quarterly results this week for its latest quarter, which ended June 30, in accordance with Securities and Exchange Commission rules.

Mountain View, Calif.-based Google is aiming to raise $2.7 billion in a "Dutch auction," which would set a share price based on bids submitted by potential investors.

In a June filing with the SEC, Google estimated its expected share value at $88.13, but some potential bidders are already worrying whether overzealous investors might bid up the stock's value to a point where the share price no longer provides a meaningful reflection of the company's value.

"Even at $88, it's awfully expensive," said one potential Silicon Valley investor.

A Google representative declined to comment.

Google announced last week that it plans to list on the Nasdaq stock exchange. It gave no indication of the trading symbol it intends to use.

The IPO is expected to value Google at upward of $30 billion, sources said, although other analysts are valuing Google as high as $50 billion.

The Wall Street Journal reported on Monday that the IPO could take place in August or September and that any price indication provided in advance would be for "informational purposes" only.

Indeed, Google itself has even warned of a "winner's curse," in which victorious bidders feel they overpaid for shares and prompt a sell-off.

If so, potential investors, eager to participate in the hottest IPO of 2004, may end up pricing the shares beyond the appetite of more experienced fund and portfolio managers.

With the "Dutch auction" bidding process, investors submit bids that include the price they are willing to pay and the number of shares they want to buy.

Based on that, Google would set a "clearing price" at which there is demand for all shares being offered, but unlike in some Dutch auctions, investors will not be able see other bids, potentially leading to inflated bids.

It's expected that bidders will have to reconfirm the submitted bids if more than 15 business days elapses since they are submitted or if there is a material change in the prospectus that requires it to be recirculated.

Unconfirmed bids would be disregarded and "deemed to have been withdrawn," the company's recent filing said.