Google files for $2.7 billion IPO

Google files for $2.7 billion IPO

Popular search engine company files for its eagerly anticipated initial public offering.
April 29, 2004: 2:28 PM EDT
By Paul R. La Monica, CNN/Money senior writer

NEW YORK (CNN/Money) - Google, the popular search engine company, registered for a $2.7 billion initial public offering with the Securities and Exchange Commission Thursday.

Morgan Stanley and Credit Suisse First Boston were named as the underwriters for the deal.

The company's IPO filing has been rumored for the better part of a year and recent speculation has created a buzz about Internet stocks not seen since online auctioneer eBay went public in September 1998.

Wall Street has been eagerly anticipating a filing from Google so investors could finally get a glimpse into the company's finances.

The company said in its filing that it intends to raise as much as $2.7 billion from the offering.

In the filing, Google said that it generated revenues of $961.9 million in 2003 and reported a net profit of $106.5 million. Sales rose 177 percent from a year ago although earnings increased by just 6 percent.

For the first quarter of 2004, Google reported sales of $389.6 million, an increase of 118 percent from a year ago. Net income was $64 million, up 148 percent from the first quarter of 2003.

Mark Mahaney, an Internet analyst with American Technology Research, said Google's numbers were incredibly strong, noting that its sales grew in the first quarter at a higher rate than Yahoo! and eBay.

Google's core business of selling search-based advertising, which allows companies to purchase ads tied to specific keyword searches, is one of the most lucrative and rapidly growing markets in the tech sector.

Google, founded in 1998 by former Stanford University students Sergey Brin and Larry Page, has quickly become one of the most successful Internet companies, thanks to search technology that many experts say is superior to offerings from rivals.

The company has become not just a tech juggernaut but a popular culture phenomenon as well, with people using the verb "Googled" to describe searching for information on the site.

And during the past few months, Google has stepped up its efforts to compete against large Internet companies such as Yahoo!, Microsoft's MSN, Time Warner's AOL and Amazon.com.

Google recently launched a comparison shopping Web site called Froogle and a test version of a local search engine.

The company also is testing a controversial free e-mail service called Gmail, which provides far more storage space than most other Web-based e-mail offerings. Google has said it intends to sell ads that will be tied to keywords in e-mails, which has raised some privacy concerns.

Eric Schmidt, the former CEO of Novell and chief technology officer at Sun Microsystems, joined Google as its chairman in March 2001 and was named CEO later that year.

Many tech investors have been hoping that an IPO filing from Google will lead to another tech boom period. But one hedge fund manager said he does not think Google's filing will cause a flood of new Internet and technology companies.

"There's always a tremendous amount of buzz with Internet IPOs but I don't think we'll go back to people getting excited about all Internet stocks like in the late '90s," said Peter Thiel, managing member with hedge fund firm Clarium Capital. "Google is going public because it's profitable. This is not a publicity stunt."

Thiel was the co-founder of PayPal, which went public in 2001 and was sold to eBay a year later.