Is Google Inc.’s IPO to be or not to be? That seems to the $64 million question on everyone’s tongues as rumors begin to fly that the Internet search engine may, indeed, be gearing up for a public-market rendezvous.
Founded in January 1998, the Mountain View, Calif.-based company has been a rising star ever since. Backed by a $25 million venture investment from Kleiner Perkins Caufield & Byers and Sequoia Capital, Google is still privately held. While the company says it will remain private in the near-term, speculation abounds that it may look to do an initial public offering sometime before year-end, although the company has not yet filed an S-1 with the Securities and Exchange Commission.
Some industry sources say the company could be the saving grace for the slumping IPO market. “When Google IPOs, everything is going to turn around. It will prove that a dotcom model can work and it will give investors confidence in the stock market. I don’t know when it is going to happen, but it should be soon,” says one industry insider.
Another source said there have been rumors about the search engine hitting the public market this year, but nothing is a done deal, especially given the current market conditions. However, if it does, “Google could fare well in the public marketplace. It seems to be a viable business,” he added.
Indeed, Google is proof that the Eurythmics’ mid-80s lament, “everybody’s looking for something,” is true. The Internet search engine handles 120 million Web searches daily, and the site has gone from being an obscure Web page to a serious Internet information tool.
If Google does decide to make its Wall Street debut, all of its vital signs point to a healthy public life. Despite spending virtually nothing on advertising or marketing, the site rated fifth on Neilsen’s NetRating list last week for home and work use, just behind AOL Time Warner, Yahoo!, MSN, and Microsoft.
Additionally, Google is the top search engine on the Web, says Cindy McCaffrey, the company’s vice president of marketing.
“As we work with our customers, word is getting out that it is a very strong business. We are one of the few dotcoms started between 1998 and 1999 that is still remaining, and that’s with very little advertising over the years,” McCaffrey says. “It’s a good service and people use it. Every person who has a good experience tells another.”
The method works, at least for Google. The company hit profitability at the end of the second quarter of last year and brought in an estimated $50 million in revenue in 2001.
Its revenue base comes from two sources: advertising sales and the selling of its search technology to other sites, which bear the slogan “powered by Google.”
The Signs Are There
McCaffrey denies that an IPO is in Google’s near future, saying that the company has never discussed a specific time to do an IPO. Still, there are positive signs that Google may be gearing up for an imminent Wall Street debut.
In August 2001, Google’s board of directors replaced its co-founder and chief executive, 28 year-old Larry Page, with 46 year-old Eric Schmidt, the former chief executive of Novell. When Google announced the change, Page – who took on the role of company president – said Schmidt had the skill to make Google into a leader in the search and navigation arena, and praised his strong management experience that would support the growth and expansion needed to move the company forward.
Apparently, Schmidt is doing what was expected of him. Since he took the helm, Google has launched a campaign to expand its international presence. The company now has offices in London, Tokyo and Hamburg, Germany. The site also has the capability to be translated into 70 different languages, whereas some of its competitors can only be translated into about 30. Google’s offshore push seems to be paying off, as half of its hits are now coming from outside the U.S.
Additionally, Google now indexes three billion of the five billion Web pages available for viewing – double the capacity it had a year ago. According to McCaffrey, 97% of Google users say they have located what they were looking for every time.
However, despite all the growth Google has achieved, she says people are buzzing about a possible IPO for the company because “Google has been working very hard to move forward. We have always been focused on our business and moving in a positive way. We were focused on profitability before it was fashionable.”
Danielle Fugazy can be contacted at:Danielle.Fugazy@tfn.com