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Monday, May 03, 2004 - Page updated at 10:50 A.M.
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Northwest stock contest 2004 | Consumer affairs

Google files its long-awaited IPO plans

By Michael Liedtke
The Associated Press

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SAN FRANCISCO — Internet search engine leader Google Inc. filed its long-awaited IPO plans today, setting the stage for the company to make its stock market debut — a move that could still be months away.

Without specifying a price per share, Google said it hopes to raise $2.7 billion with an initial public offering that's created the biggest high-tech buzz since the dot-com bubble burst four years ago.

As expected, Google said the price of its IPO will be determined through an auction designed to give the general public a better chance to buy its stock before the shares begin trading, most likely in late summer or early autumn. IPO shares traditionally have been restricted to an elite group picked by the investment bankers handling the deal.

Google picked two long-established investment bankers — Morgan Stanley and Credit Suisse First Boston — to manage its unconventional IPO approach.

Although Google's stock won't be sold for several more months, the filing represents a significant milestone in the 5 1/2-year-old company's evolution from a fun-loving startup to a corporate adolescent that will be held more accountable for how it manages its money.

The documents filed with the Securities and Exchange Commission gave the public its first peek at the privately held company's finances.

The Mountain View-based company earned $105.6 million, or 41 cents per share, on revenue of $962 million last year. Google got off to a fast start this year, with a first-quarter profit of $64 million, or 24 cents per share — more than doubling its earnings of $25.8 million, or 10 cents per share, at the same time last year.

By going public, Google will be under greater pressure to produce steady earnings growth — an expectation that some executives say leads to short-sighted management decisions.

But Google vowed to be different, staying true to the iconoclastic values that it has fostered since former Stanford University graduate students Larry Page and Sergey Brin founded the company in 1998. In one of its first rebellious steps, Google will refuse to project its earnings from quarter to quarter, according to an open letter that Page and Brin attached to the IPO filing.

"A management team distracted by a series of short-term targets is as pointless as a dieter stepping on a scale every half hour," they wrote.

Following in the footsteps of stock market sage Warren Buffet, Page and Brin intend to take turns writing annual shareholder letters to provide their view of the world.

The letter also emphasized that both Page, 31, and Brin, 30, intend to remain Google's hands-on leaders, making all key decisions with CEO Eric Schmidt, a former top executive at Sun Microsystems Inc. and Novell Inc. who joined the company in 2001.

"We run Google as a triumvirate," Page wrote. "The structure is unconventional, but we have worked successfully in this way."

Copyright © 2004 The Seattle Times Company

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