Google price sets the ball rolling

Initial shares of Google were priced late yesterday at $85 (€68.88), the low end of a range revised downward just hours earlier, humbling expectations for the most-trumpeted 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 business, surpassing most of the hot tech issues of the 1990s.

It will make billionaires – at least on paper – of founders Sergey Brin and Larry Page, who started Google six years ago.

The final initial public offering price, set through an unorthodox auction that alienated many on Wall Street, means the stock will likely debut on the Nasdaq Stock Market tomorrow.

The $85 (€68.88) price values the world’s most popular search engine at $23.1bn (€18.7bn), more valuable than companies such as Amazon.com and Lucent Technologies.

The IPO will raise $1.67bn (€1.4bn).

Earlier Wednesday, Google significantly lowered its estimated per-share price range. In a move that should buoy prices, it reduced the number of shares to be sold to 19.6 million from 25.7 million.

In an e-mail to investors who successfully bid in the auction, Google said individual brokerages would notify them of how many shares they would be obligated to purchase at settlement, which is expected to be on August 24.

Though there was no confirmation of when public trading might commence, some analysts expected the stock to start 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, California.

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 with Brin and 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.

Despite the mis-steps, few deny that Google is both very popular and prosperous.

Since it was founded in 1998 by Stanford University students Page and Brin, it has always been something of an oddball. Its design has no flashy ads but a simple, quick-loading layout. Its search algorithm out-powers rivals. Its name became synonymous with internet search.

The Mountain View-based company, which makes money by selling unintrusive text advertising, managed to prosper as a private company even while other dot-coms were collapsing. Now, as the technology industry is just recovering, Google stands to prosper even more.

In the second quarter of this year, for instance, Google earned $79.1m (€64m), or 30 cents per share, compared with $32.2m (€26.1m), or 12 cents per share, in the same period last year. Sales more than doubled, to $700m (€567.4m) in the latest period from $311m (€252m) last year.