Who Wouldn’t Want Google Stock?

With America suffering one of the biggest economic recessions since 1975, it is no confusion why companies choose to do whatever it takes to dig them out of the hole. The weakening economy has been forced to cut more jobs, sell off assets, and even private companies choose to go public. “This is also known as IPO, referred to simply as an "offering" or "flotation", is when a company (called the issuer) issues common stock or shares to the public for the first time. They are often issued by smaller, younger companies seeking capital to expand, but can also be done by large privately owned companies looking to become publicly traded.” (Initial Public Offering, 2011)

IPO’s are largely known for companies that have finally decided to sell their shares to the public after being established. They transition from privately held to publicly held firms. The main reasons companies choose to go public is to raise capital without issuing debt. That is the safest way to raise a significant amount of capital without it being so risky and to promote business growth and expansion. The most popular term known is “Go Public or Go Broke”.

Google, a highly known internet search engine first began with a struggle. Two computer science graduate students from Stanford University named Larry Page and Sergery Brin maxed out all their credit cards to purchase network servers using cheap and used PCs to write a program for a search engine. Since no one really wanted to invest in this product so early in its beginning stages they kept on building Google. Sun Microsystems viewed a quick demo of Google and decided to write them a check for 100,000. It first launched on September of 1998 where it was answering 10,000 search queries a day.

There is no doubt every advantage of a company is to grow and expand it. With Google growing and expanding, they were believed to be profiting over 100 million or more. However 2004, they reached at least 500 shareholders in which they have to report all the same numbers as a public held company required by Securities and Exchange Commission. Google could have willingly made a choice to report its numbers but do not publicly sell their stock.

Companies that grow big enough to hit the filing requirement typically opt to become a publicly traded company first, attorney said. That's because public stock offerings can enrich employees and investors, and they give the company access to cash that it can use to innovate or acquire other companies. (Google Going Public for April 30?, 2004) Another disadvantage is companies typically like to control when and how their shares are traded however employees and shareholdlders cand sell their shares through an over the counter bulletin.

“The executives admit that, with total assets of $1.08 billion, the main reason to go public was that, under SEC rules, Google's size had forced it to open its books today, today public or not.” (Kuchinskas, 2004) The initial public offering took place on August 19, 2004 where Google offered 19,605,052 shares. They sold intially at $85 a share. They went for a “Dutch” auction or uniform price auction in which all bidders only pay the price of the lowest accepted bid. By the end of the next business date stock was priced at $100 a share. The remaining 271 million shares were in control of Google and the employees themselves earned quite a bit.

Even though Google had a shaky start, it now ranks to one of the most highest and biggest ranking technology offerings. Google was already profitable being private held however the IPO gave them a 23 billion market capitalization. “According to Internet audience tracking firm comScore, in February, Google controlled approximately 35 percent of searches conducted at major search engines by U.S. Internet users, with Yahoo! handling 30 percent. Internationally, Google provided 43 percent of all searches.” (Kuchinskas, 2004) Google has became much more than a search engine with introducing new products such as GoogleMaps, Gmail, and Gnews even expanding their businesses into YouTube and Doubleclick.

In my opinon, going public for Google was not a necessity. They was not in dying need of the money because they were already at a profit marging of 60% before taxes. They chose to go Public to become more profitable than its competitors. A message from the founders Page and Brin states "Our goal is to have a share price that reflects a fair market valuation of Google and that moves rationally based on changes in our business and the stock market." It may have been better to let the stock climb and get sold in a private market at an appraised value. They are on a fast track to stay at the top of success. Their ability to adapt to the changing internet environment, aggressiveness to acquire and develop new products, and to look out for the well being of consumers are reasons why Google is successful today.

Works Cited

Google going public for April 30? (2004, April 19). Retrieved June 11, 2011, from Rank for Sales:

http://www.rankforsales.com/n-aq/518-seo-apr-19-04.html

Initial Public Offering. (2011, June 4). Retrieved June 9, 2011, from Wikipedia:

http://en.wikipedia.org/wiki/Initial_public_offering

Kuchinskas, S. (2004, April 29). Internet News. Retrieved June 11, 2011, from Google Files For $2.7B

Public Offering:

http://webcache.googleusercontent.com/search?q=cache:v1knCBpOXYkJ:www.internetnews.com/fina-news/article.php/3347391/Google-Files-For-27B-Public-Offering.htm+google+going+public&cd=6&hl=en&ct=clnk&gl=us&source=www.google.com