Google Seeks $2.7 Bil. in Public Offering

NEW YORK Ending months of anticipation, Google has filed a registration with the Securities and Exchange Commission for an initial public offering that could fetch the company as much as $2.7 billion.

The Mountain View, Calif.-based Internet search company intends to conduct an auction-style IPO, led by Morgan Stanley and Credit Suisse First Boston. An unusual process in the United States, Google’s auction-based IPO is meant to minimize “unreasonable speculation, small initial share float and boom-bust cycles that hurt companies and their investors,” according to the document.

The S-1 filing discloses revenue and profit figures, which reveal the company’s rapid ascent and principal reliance on advertising. In 2003, Google’s net revenue totaled $962 million, up from $348 million in 2002. Despite, the 176 percent revenue rise, net income increased a mere 6 percent to $106 million last year from $100 million the year before.

Advertising revenue represented a whopping 96 percent and 95 percent of Google’s overall revenue in 2003 and 2002, respectively. Businesses use Google’s AdWords program to promote their products and services through keyword ad buys, while the company’s publisher and search-site partners use AdSense to deliver relevant ads.

The filing proposes a dual-class voting structure, which will leave founders Sergey Brin and Larry Page significant control over the company’s decisions and fate. While new investors will share in Google’s long-term growth, they will have less influence on its strategic decisions.

For the first three months of 2003, Google said that revenue more than doubled to $390 million from $179 million in the year-ago quarter, though year-over-year expenses for the quarter increased 149 percent to $234 million. Net income was $64 million versus $26 million in the period a year earlier.

Throughout Google’s 6-year existence as a private company, it has operated differently, and the founders do not want that to change once it goes public. In a letter to prospective shareholders, the founders write, “Google is not a conventional company. We do not intend to become one.”