Google share price set at $85
By Matthew Fordahl
Associated Press
SAN JOSE, Calif. — Initial shares of Google Inc. were priced yesterday at $85, the low end of a range revised downward just hours earlier, somewhat dampening expectations for the most ballyhooed Internet company public stock offering since the dot-com boom went bust.
Still, the offering remains one of the biggest and most highly anticipated for an Internet company, surpassing most of the hot issues of the dot-com boom.
The final initial public offering price, set through an unusual auction involving would-be investors, means the stock could debut on the Nasdaq Stock Market as early as today.
Earlier yesterday, Google dramatically lowered its estimated per-share price range to between $85 and $95, down from the previous range of $108 to $135. In a move that should buoy prices, it reduced the number of shares to be sold to 19.6 million from 25.7 million.
At the final price, the offering will raise $1.67 billion and give the world's most popular search engine a market capitalization of $23.1 billion. If the stock had debuted at the high end of the original estimate, it would have raised as much as $3.6 billion and given Google a market cap as high as $36 billion.
In an e-mail to investors who bid an unusual auction that set the price, Google said individual brokerages will notify investors of how many shares they will be obligated to purchase at settlement, which is expected to be Tuesday.
Still, analysts expected the stock to start trading today.
"Typically, most deals start trading the morning after the SEC gives the green light," said Bob Clarkson, a securities attorney at the Jones Day law firm in Menlo Park, Calif.
The bumpy IPO process has created several clouds over the company that has been criticized for being too idealistic, arrogant and reckless since it began the IPO process four months ago.
Its prospectus indicates that Google still faces regulatory questions. In one case, it said the SEC "has requested additional information concerning the publication" of an interview of Google founders Sergey Brin and Larry Page that appeared in September's issue of Playboy magazine.
That was a potential violation of the SEC's rules against talking publicly before an IPO about information that is not included in the prospectus.
Google also has admitted that the agency has launched an informal inquiry into its issuance of millions of pre-IPO shares and options without registering them.
The auction — another source of controversy — was supposed to democratize the IPO process, which is usually limited to investors connected to investment banks.
Still, many analysts questioned whether Google's projected price was affordable to average investors.
Google eschewed Wall Street tradition and decided that the final IPO price would be set by an auction.
Its founders wrote an idealistic letter in its prospectus, outlining the company's "Don't Be Evil" mantra and plan to avoid the trappings of traditional companies. John Tinker, an analyst at ThinkEquity Partners, said the initial price range was overvalued and he wasn't surprised about the lowered price range, citing how the auction process has been sloppy and complicated, and further exasperated by the Playboy interview.
