SEC rule may push Google to pursue IPO
By Michael Liedtke
Associated Press
SAN FRANCISCO — Online search engine leader Google Inc. appears to be on the verge of pursuing its initial public offering of stock, ending months of breathless anticipation in Silicon Valley.
The Mountain View-based company may be forced to file the IPO papers within the next week because of an obscure Securities and Exchange Commission rule requiring privately held companies to open up their books after reaching a certain size.
The mandate applies to companies with more than 500 security holders of record and $10 million in assets — thresholds that Google is believed to have passed. After clearing those bars, a company must file an annual report within 120 days after the close of its fiscal year.
Google operates on a calendar year ending in December, giving the company until late April to reveal its 2003 results if it must comply with the SEC's disclosure rules.
Having awarded stock options to most of its roughly 1,000 employees, Google almost certainly has more than 500 shareholders.
What's unclear is whether all the shareholders are listed as security holders of record — a pivotal distinction.
Sometimes, hundreds of shareholders are listed under a single brokerage, which would qualify as one security holder, said SEC spokesman John Heine.
Google declined yesterday to discuss how many shareholders the company has or comment on the timing of its IPO.
Guessing when Google might go public has been a hot topic in the high-tech community for months.
The fixation reflects Google's immense popularity — its search engine processes more 200 million queries per day — as well as rampant hopes that the company's IPO will whet the market's appetite for the stock of other promising high-tech startups.
When Google files its IPO papers, it will also end months of speculation about how profitable the company has become and how much the business might be worth.
Industry observers have guessed the company's annual profit might be anywhere from $150 million to $350 million, with revenue ranging anywhere from $500 million to $1 billion.
The company's estimated market value has been pegged between $12 billion and $20 billion.
The IPO almost certainly will make billionaires of Google's co-founders, former Stanford University graduate students Larry Page and Sergey Brin. Two venture capital firms, Sequoia Capital and Kleiner, Perkins, Caufield & Byers, with a combined Google investment of $25 million, also are in line for huge windfalls.
Even after Google files the IPO papers, it could be months before the company's stock becomes available on the stock market.
As an example, San Francisco-based Salesforce.com — another closely followed tech startup — filed its IPO documents in mid-December, but isn't expected to make its stock-market debut until next month.
