Back The `Google Guys' dodge the bullet
Pratap Ravindran
Pune , Aug. 16
The bidding in the company's Dutch auction of its stock will end sometime in the week beginning August 16; the search service has chosen not to pre-announce a close date to ensure that the bids reflect real-world demand and to stymie investors trying to game the system
An accurate reflection of the demand for and value of its stock has been the theme of the IPO, with Google scrupulously sticking to the Securities and Exchange Commission (SEC) rules relating to the quiet period framed to prevent companies going public from engaging in stock touting and market conditioning. The Google.com site where investors could register to bid for shares had not been linked to its home page nor the corporate site links running off it. In fact, its adherence to the letter of the law had been so strong that the old controversy on Wall Street over whether the quiet period has any relevance in the Internet Age has been revived.
It is relevant to note here that the SEC, in 1998, had proposed that the quiet period rules be scrapped but no action had been taken, much to the chagrin of firms without any significant name recall.
For all that, Google had some uncomfortable moments when rumours gained traction shortly prior to its IPO that the SEC may delay the exercise because of the publication of an interview with Google's co-founders, Messrs Sergey Brin and Larry Page, by Playboy
The quiet period rules ban a company from making "written offers" of its shares in any form other than the official prospectus — and the SEC has ruled that some news articles constitute written offers. The search major dodged that particular bullet by revising its filing with the SEC as follows:
Risks related to our offering: "If our involvement in a September 2004 magazine article about Google were held to be in violation of the Securities Act of 1933, we could be required to repurchase securities sold in this offering. You should rely only on statements made in this prospectus in determining whether to purchase our shares.
"Information about Google has been published in an article appearing in the September 2004 issue of Playboy Magazine and entitled `Playboy Interview: Google Guys.' The text of the article, which is included in this prospectus as Appendix B, contains information derived from an interview of Mr Larry and Mr Sergey conducted in April 2004, prior to the filing of our registration statement of which this prospectus is a part.
"The article presented certain statements about our company in isolation and did not disclose many of the related risks and uncertainties described in this prospectus. As a result, the article should not be considered in isolation and you should make your investment decision only after reading this entire prospectus carefully.
"You should carefully evaluate all the information in this prospectus, including the risks described in this section and throughout the prospectus. We have in the past received, and may continue to receive, a high degree of media coverage, including coverage that is not directly attributable to statements made by our officers and employees. You should rely only on the information contained in this prospectus in making your investment decision.
"We do not believe that our involvement in the Playboy Magazine article constitutes a violation of Section 5 of the Securities Act of 1933. However, if our involvement were held by a court to be in violation of the Securities Act of 1933, we could be required to repurchase the shares sold to purchasers in this offering at the original purchase price for a period of one year following the date of the violation. We would contest vigorously any claim that a violation of the Securities Act occurred.
Investors should be aware of the following modifications and updates to the article's content:
Founderspeak
On how Google will be used in the future: "Probably in many new ways. We're already experimenting with some. You can call a phone number and say what you want to search for, and it will be pulled up. At this stage, it's obviously just a toy, but it helps us understand how to develop future products." - Mr Brin.
On whether Google may commercialise its "objective" search results after the IPO: "It doesn't make sense. Why don't you, as a magazine, accept payments for your articles? Why are advertisements clearly separate?" - Mr Brin.
On the dotcom bust: "A lot of those companies were around for less than a year or two before they went public. We've been around for five. We're at a pretty significant scale, too. We have more than 150,000 advertisers and a lot of salespeople. Millions of people use Google. It's completely different." - Mr Page.
On a possible sellout by Google: "No. We think we're an important company, and we're dedicated to doing this over the long term. We like being independent." - Mr Page
On Gmail, Google's free Web-based e-mail service that scans messages to display related ads: "All we're doing is showing ads. It's automated. No one is looking, so I don't think it's a privacy issue. To me, if it's a choice between big, intrusive ads and our smaller ones, it's a pretty obvious choice. I've used Gmail for a while, and I like having the ads." - Mr Brin
On Google as a portal: "We built a business on the opposite message. We want you to come to Google and quickly find what you want. Then we're happy to send you to other sites. In fact, that's the point. The portal strategy tries to own all the information."
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