Google to IPO

From the Financial Times comes the news that Google is considering an IPO that could value the company at anywhere between 15 and 25 billion US dollars.

This is an interesting development considering the fact that Sergey Brin has downplayed rumors of such an IPO for months. First inklings of the potential came in August when Brin talked at the Search Engine Strategies Conference about the potential (full disclosure: the Search Engine Strategies Conference is run by JupiterMedia, which is the company that now runs internet.com and developer.com, two sites I co-founded).

What is interesting here is the fact that Google saw an IPO as a way to generate cash for acquisitions. So if Google goes public, the question then becomes who they plan to acquire. At a market cap of $25 billion, Google would essentially match Yahoo! so such acquisition would probably not happen, unless Google would look to a merger of equals between the two companies, consolidating both companies’ position in the search space before the upcoming onslaught by Microsoft. On the simpler side, it might want to pick up Looksmart, Findwhat.com, and Ask Jeeves, continuing to solidify its market share in the search space.

Alternatively, Google could be looking into the advertising space, leveraging off its success in that arena and picking up Doubleclick as a way to solidify its relationship with larger advertisers, providing them with a one stop shop for all your marketing needs. Considering its recent announcement regarding the acquisition of Sprinks from Primedia, such an evolution seems to make sense.

Or it could go the route of acquiring more privately held companies, as it did with Pyra Labs, makers of Blogger, and more recently Kaltix, which specializes in context-sensitive search.

Of course, those are just wild predictions and I may be off the mark but it is interesting that Google would consider an IPO when it’s been saying all along that it would be more of a distraction. Considering that Google is rumored to be profitable (since it’s privately held, it’s impossible to tell beyond rumors), the IPO is not about pumping cash into the existing stuff. It’s clearly about expanding. The question that remains is in which direction is that expansion going to happen.

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