Posted on 08/13/2004 12:00:11 PM PDT by GulliverSwift
Google share auction starts, Playboy exposure a worry
Google Inc's delayed share auction finally kicked off, but the debut is already in doubt after its co-founders laid bare corporate details in an interview with Playboy magazine.
Google said it believed the splash, entitled "Playboy Interview: Google Guys," abided by securities regulations, which restrict information released ahead of an initial public offering (IPO).
"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," Google said in a new prospectus to incorporate the Playboy risk.
Google, one of the world's most consulted Internet portals and search engines, went ahead with the auction, which precedes a planned IPO next week in which shares are distributed to the public.
Google's shares will trade based on the highest price garnered from the auction which opened at 9:00 am (1300 GMT).
The Mountain View, California-based company expects to sell 25.7 million shares for between 108 and 135 dollars per share, depending on the outcome of Friday's bidding, which began a week late.
At the upper price estimate, the stock market value would be more than 36 billion dollars, on a par with Internet rival Yahoo.
However, the Securities and Exchange Commission (SEC) could cast a shadow over Google's planned Nasdaq listing if it determines the Playboy interview broke securities laws.
In the September issue of Playboy, Google co-founders Larry Page and Sergey Brin discuss the company's post-IPO culture and Google's fledgling e-mail service.
An SEC spokesman declined to comment on the Playboy story.
People familiar with the matter, however, said SEC staff had begun a review of just how much Page and Brin revealed on Playboy's pages.
The new Google prospectus included a copy of the Playboy article, in text only.
During a so-called "quiet period" executives are barred from promoting a company just ahead of a planned IPO when shares will be offered to the public for the first time.
The "quiet period" is not defined under federal securities laws, but the regulations "limit what information a company and related parties can release to the public," according to SEC guidelines.
The SEC can fine companies or even force them to buy back shares sold to the public in an IPO at the original purchase price if it determines the rules have been broken.
Google's 30-year-old founders said they would fight any claim the article violated securities laws.
"We do not believe that our involvement in the Playboy Magazine article constitutes a violation of Section 5 of the Securities Act of 1933. We would contest vigorously any claim that a violation of the Securities Act occurred," Google said.
The company also corrected several statements that appeared in the article, and clarified that competitors have closed the gap with its 'Gmail' service over memory storage.
The IPO, which represents about nine percent of Google's capital, is being supported by Morgan Stanley and Credit Suisse First Boston.
Larry Page and Sergey Brin discuss the company's post-IPO culture and Google's fledgling e-mail service.
I don't know why I stay on with crappy Hotmail (since 97, before Microsot), but they are feeling the Google e-mail pressure and just made a huge expansion in number of megabytes you're allowed to have for free. Before it was 1 megabyte, and now it's 250 megabytes, just a few weeks ago.
I guess I'm a bit gun shy of buying stock in a company that produces ... ??? What? They provide a service ... that they don't charge for. I'm gonna take a pass, thankyouverymuch.
Oh, they make money. If you search for something, then ads about that topic will appear. Companies pay big money for that.
Not that I'm gung ho on Google, but...
The service they provide is advertising. And, they do charge for it. The advertising is appealing due to the fact that they provide something else (web searches) for free to large numbers of people.
Another industry in which businesses succeed on this type of model: television (you might have heard of this).
P.S. Again, though, I do think Google is overrated and mostly living on a bubble.
It would be fascinating if Google actually was charged with a violation of the "quiet period" rule over the Playboy article. Imagine -- a lawsuit that could be defended by arguing that nobody reads Playboy for the articles!
My sentiments exactly
My "throwaway" account at Yahoo did the same - from 6mb to 100mb a couple months back.
Competition is good.
I love how google acts like they did this dutch auction for the average investor...I wouldn't know the first thing about doing it.(Thursday was the last to to be able to register)..IF they had done it like a regular stock, I could have bought a chuck of stock today...but they were afraid people like me would make a buck selling it later for a profit! I hope this stupid auction fails big time....
As usual, I won't believe this happened until I see pictures (of the article).
Good. The spam mailers were calling me to complain that my junk mail was bouncing due to my storage limits, and could I please delete some mail so they could send me more.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.