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Google files S-1
April 29, 2004
Unless you’ve been living under a rock, you are probably aware that Google was planning to file for an IPO. Well, today they filed the S-1 form and made it official. Based on a cursory reading of the S-1, here are some interesting findings:
- The company plans to raise 2.7 billion dollars (yes, that’s billion with a b) through this offering. As I mentioned earlier, the question is what will they do with this money ?
- The founders announced that they will continue to focus on long-term strategy instead of delivering guaranteed quarterly gains. They said that “If opportunities arise that might cause us to sacrifice short term results but are in the long term interest of our shareholders, we will take those opportunities.” This is nice in that it shows that they are in for the long run. Also surprising in that filing is that they do not intend to give earnings guidance. This is unusual but, once again, shows a long-term outlook that is generally unusual for publicly traded companies.
- The company encourages employees to spend 20 percent of their time working on projects they think will benefit Google. Examples of such projects (per the S-1 filing) include AdSense and Google News.
- The company plans to offer shares via an auction-based IPO. This is an interesting concept as it will probably limit the first-day jump in the IPO price.
- Public Trust: Google wants to do good and considers “making the world a better place” and “doing good things for the world” to be part of their core values, even if it impacts short term gains. This places Google among a few companies that look at themselves as having a mission beyond return on investment.
- Revenue-wise, Google made almost a billion dollars in revenues in 2003, and earned about $100 million on those revenues. It looks like the technology is yielding significant returns on investments that have gotten them to the point where they are sitting on almost half a billion dollars in cash. Once again, this could have a significant impact in terms of acquisition strategies.
- Yahoo, Microsoft, others considered competitors: Once again, Google mentions that search is its core product and that their future relies on their technology being better than others but warns that they could be outshone if they stand still
- IPO not happening for another 6 months: The prospectus says that the offering will not happen for at least 180 days after the date of the prospectus. That would be the IPO date sometimes around early October at the earliest.
- About one third of advertising revenues ($82 million out of $293 million in what looks like Q1 2004) comes from the Google Network of sites, not from Google sites themselves.
- Orkut is considered a Google service. It is described as “an invitation-based online meeting place where people can socialize, make new acquaintances and find others who share interests”
- Google has almost 2000 employees, which breaks down as about half in sales and marketing (961 people), a bit over a quarter in R&D (596 people) and 350 people in “general and administrative”
- The company has set up a structure that would make it difficult for anyone to try to take it over
- Google lists about $250 million in equipment. This figure could help in assessing exactly how many machines they are running (since estimates have ranged between 10,000 and 100,000 servers)
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