Google Watch

One year after raising a truckload of money in their IPO, Google is going back for more. The company just filed to sell 14.1 million shares of stock. At today’s price, that’s over $4 billion.

This time, the Google Dolls are going the conventional route. Instead of a Dutch auction, the offering is going to be headed by Morgan Stanley and Credit Suisse First Boston, with Allen & Co. along for the ride. The companies will probably rake in about $150 million from the deal. The underwriters also have the option of buying up 600,000 shares to cover over-allotments.

I was impressed by this quote:

“It’s something I wasn’t anticipating,” said Jeffrey Matthews, a partner at Ram Partners LP in Greenwich, Connecticut. The firm owns the shares. “They don’t need the money. Apparently they want more. Fourteen million shares will depress the price.”

That’s right—they don’t need the money. It’s simply a money grab. At a certain level, I’m a bit impressed. But what will they do with the money? Are they planning a major buyout? Google already has $3 billion in cash. Who knows what they’ll do. Google already owns a nice chunk of Baidu. They could buy the rest without dipping into cash flow. Maybe they’ll bid for Unocal!

What bothers me is that I never have any idea what they’re doing. The company treats its shareholders horribly. Instead of the being vanguards of the new economy, Google is weird and overly secretive which hints at paranoia.

Institutional Shareholder Services has a corporate governance rating system. Google got one of the lowest scores ever, just 4.2 on a scale of 1 to 100. Google has a two-tiered share structure, no outside directors and offers no guidance. I’m sure after the stock plunges, some retiree will tearfully tell a Senate subcommittee that they had no idea how Google treated its owners.

Posted by on August 18th, 2005 at 9:49 am


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