Google files S-1

Unless you’ve been liv­ing under a rock, you are prob­a­bly aware that Google was plan­ning to file for an IPO. Well, today they filed the S-1 form and made it offi­cial. Based on a cur­sory read­ing of the S-1, here are some inter­est­ing findings:

• The com­pany plans to raise 2.7 bil­lion dol­lars (yes, that’s bil­lion with a b) through this offer­ing. As I men­tioned ear­lier, the ques­tion is what will they do with this money ?
• The founders announced that they will con­tinue to focus on long-term strat­egy instead of deliv­er­ing guar­an­teed quar­terly gains. They said that “If oppor­tu­ni­ties arise that might cause us to sac­ri­fice short term results but are in the long term inter­est of our share­hold­ers, we will take those oppor­tu­ni­ties.” This is nice in that it shows that they are in for the long run. Also sur­pris­ing in that fil­ing is that they do not intend to give earn­ings guid­ance. This is unusual but, once again, shows a long-term out­look that is gen­er­ally unusual for pub­licly traded companies.
• The com­pany encour­ages employ­ees to spend 20 per­cent of their time work­ing on projects they think will ben­e­fit Google. Exam­ples of such projects (per the S-1 fil­ing) include AdSense and Google News.
• The com­pany plans to offer shares via an auction-based IPO. This is an inter­est­ing con­cept as it will prob­a­bly limit the first-day jump in the IPO price.
• Pub­lic Trust: Google wants to do good and con­sid­ers “mak­ing the world a bet­ter place” and “doing good things for the world” to be part of their core val­ues, even if it impacts short term gains. This places Google among a few com­pa­nies that look at them­selves as hav­ing a mis­sion beyond return on investment.
• Revenue-wise, Google made almost a bil­lion dol­lars in rev­enues in 2003, and earned about $100 mil­lion on those rev­enues. It looks like the tech­nol­ogy is yield­ing sig­nif­i­cant returns on invest­ments that have got­ten them to the point where they are sit­ting on almost half a bil­lion dol­lars in cash. Once again, this could have a sig­nif­i­cant impact in terms of acqui­si­tion strategies.
• Yahoo, Microsoft, oth­ers con­sid­ered com­peti­tors: Once again, Google men­tions that search is its core prod­uct and that their future relies on their tech­nol­ogy being bet­ter than oth­ers but warns that they could be out­shone if they stand still
• IPO not hap­pen­ing for another 6 months: The prospec­tus says that the offer­ing will not hap­pen for at least 180 days after the date of the prospec­tus. That would be the IPO date some­times around early Octo­ber at the earliest.
• About one third of adver­tis­ing rev­enues ($82 mil­lion out of $293 mil­lion in what looks like Q1 2004) comes from the Google Net­work of sites, not from Google sites themselves.
• Orkut is con­sid­ered a Google ser­vice. It is described as “an invitation-based online meet­ing place where peo­ple can social­ize, make new acquain­tances and find oth­ers who share interests”
• Google has almost 2000 employ­ees, which breaks down as about half in sales and mar­ket­ing (961 peo­ple), a bit over a quar­ter in R&D (596 peo­ple) and 350 peo­ple in “gen­eral and administrative”
• The com­pany has set up a struc­ture that would make it dif­fi­cult for any­one to try to take it over
• Google lists about $250 mil­lion in equip­ment. This fig­ure could help in assess­ing exactly how many machines they are run­ning (since esti­mates have ranged between 10,000 and 100,000 servers)

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