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4/29/2004
02:21 PM
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Google Files Long-Awaited IPO

The Internet search-engine leader aims to raise $2.7 billion with an initial offering.

The Internet's leading search company, Google Inc., on Thursday filed for a $2.7 billion initial public offering, underwritten by Credit Suisse First Boston and Morgan Stanley.

The company's S-1 filing reveals that Google has been profitable for the past three years, showing a profit of $105.6 million in 2003 on revenues of $961.8 million. That's more than 10 times its 2001 revenue.

The filing was widely anticipated, owing to SEC regulations that would have forced the private company to disclose its finances even if it hadn't chosen to go public. The stock won't actually be sold for several months.

For Chris Sherman, editor of SearchDay, a newsletter offered by SearchEngineWatch.com, Google's financial information represents the most significant aspect of the filing, because the closely-held numbers confirm what Yahoo! shareholders have recently seen: There's money in the search business.

In a letter that opens the document, co-founder Larry Page lays out the company's management philosophy, striking an earnest, socially conscious tone that recalls Apple's rainbow-hued image up through its "Think Different" era. "Don't be evil," he writes. "We believe strongly that in the long term, we will be better served--as shareholders and in all other ways--by a company that does good things for the world even if we forgo some short-term gains."

Page concludes by saying that the company will live up to its "don't be evil" principle by keeping user trust and not accepting payment for search results.

As befits this egalitarian stance, Google will offer its shares in a so-called "Dutch auction," in which public bidding determines share price and anyone can bid for shares. The underwriters thus cannot reserve blocks of stock for friends, family, and clients, as often happens with other IPOs.

"I don't know how Morgan Stanley went for that," says Chris Winfield, president of search-engine marketing firm 10E20 and a member of the Search Engine Marketing Professionals Organization. "In my eyes, that's Google's way to still maintain its credibility with individual users.

"It's going to be a very good thing for the tech sector," Winfield adds, noting that other search-related stocks will probably see their valuations rise as a result.

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