Thursday, January 29, 2015
FAIRFIELD-SUISUN, CALIFORNIA
99 CENTS

Google’s pivotal IPO launched a decade of big bets

By
August 20, 2014 |

SAN FRANCISCO — Google’s IPO, a decade ago this week, launched the company on a trajectory that continues to reshape its business and much of the world in its orbit.

And CEO Larry Page is determined to push even further.

Page’s vision is that Google’s products and services will become the control center of people’s lives: The company’s driverless cars will chauffeur people around safer roads and deliver goods within hours of an online order. People won’t even have to bother leaving their homes, which will be made more comfortable and enjoyable through the use of smart appliances. Robots will handle tedious chores and other jobs, freeing up time for people to enjoy lives prolonged by health-management tools and disease-fighting breakthroughs engineered by Google. Internet-connected eyewear and watches will supplement the smartphones that ensure Google is a constant companion capable of anticipating questions and desires.

Google’s big bets are fueled by Page’s belief that “… incrementalism leads to irrelevance over time, especially in technology, because change tends to be revolutionary, not evolutionary,” he wrote in May in Google’s annual letter to shareholders.

Although Page has been taking risks since he co-founded Google with Sergey Brin 1998, the stakes probably wouldn’t be as high if not for the company’s pivotal IPO on Aug. 19, 2004.

Besides raising about $1.2 billion in cash, the IPO empowered Google Inc. with a stock that the company used to attract more brainy engineers and buy promising companies such as YouTube. Google now employs 52,000 workers, some 20 times more than at the time of the IPO and has snapped up more than 250 companies in the past 10 years.

The ambitious expansion has extended Google’s empire far beyond the influential search engine that processes more than 100 billion queries each month and still brings in most of the company’s projected $67 billion in revenue this year. Google is also a leader in email, Web browsers, Internet video and mobile computing now.

The company already has amassed so much power that it has been the subject of broad antitrust investigations in the U.S. and Europe amid allegations that it uses its size and stature to stifle competition. The Federal Trade Commission absolved Google of wrongdoing last year while the European Commission is still examining the issue.

ROCKY ROAD TO WALL STREET

When Google filed its IPO paperwork in April 2004, the iconoclasm of Page and Brin shone through the legalese and standard boilerplate language. The duo included an “owner’s manual” that declared Google’s intent to remain an unconventional company that pampered its employees, made risky gambles on long-term projects at the expense of short-term earnings growth and paid little heed to the unwritten Wall Street rules that prod executives to offer financial forecasts each quarter.

In another break from tradition, Page and Brin set up a bidding process known as a “Dutch auction” designed to give a larger pool of investors an opportunity to determine the IPO price and buy the stock before it began trading on Nasdaq. This differed from the usual system that depends on bankers to set the IPO price and distribute the pre-trading shares to their preferred clients, who often expected to get them at a slight discount.

Page and Brin didn’t help Google’s cause. They showed up to investor presentations in casual attire and then answered questions with off-the-cuff remarks that provided little information. Things got even more complicated when a Playboy interview done with Page and Brin in April came out in early August as the IPO was heading into the stretch. The piece revealed that Google hadn’t properly registered millions of its shares with California regulators. Officials initially viewed the interview as breach of rules that forbid companies from sharing key information outside of IPO documents, but eventually the agency backed down when Google included the entire Playboy interview in an amended filing.

Google’s IPO ended up being priced at $85, well below the company’s earlier target range of $108 to $135.

BOON FOR BARGAIN SHOPPERS

Investors who bought Google’s stock on the first day of trading have been richly rewarded. The shares rose 18 percent to close at slightly above $100 on in their Wall Street debut and have never fallen below the IPO price. Adjusted for a split completed earlier this year, Google’s stock has risen roughly 14-fold, leaving the company with a market value of nearly $400 billion. Only Exxon Mobil Corp. and Apple Inc. are worth more.

Apple didn’t fare quite as well as Google in the first decade after its December 1980 IPO. Apple’s stock merely tripled in value during its first 10 years of trading. By comparison, Microsoft Corp.’s stock had soared 90-fold a decade after its March 1986 IPO and Amazon.com Inc.’s stock had climbed 40-fold a decade after its May 1997 IPO.

Google’s performance helped stoke demand for the IPOs of other rapidly growing Internet companies. Facebook Inc. would never have been able to command a market value of $104 billion when it went public in May 2012, nor would Chinese e-commerce conglomerate Alibaba Group’s expected IPO value be at $150 billion if Google’s IPO hadn’t performed as well as it had, said longtime IPO expert and University of Florida finance professor Jay Ritter.

WIDENING THE WEALTH GAP

Google’s IPO turned most of the company’s roughly 2,500 employees at the time of the IPO into millionaires, including its head chef and masseuse. Even more wealth has been created as Google helped turn the Internet and mobile devices into gold mines for workers with programming skills and ingenuity.

But the high-tech boom has also created an ever-widening gap in the San Francisco Bay area between people employed in the industry and a sizable population of locals who increasingly have trouble making ends meet as the region’s cost of living steadily escalates.

“If you already own a home here, you are golden,” says Michael Kasperzak, a city councilman in Google’s hometown of Mountain View, California. “If you don’t, you are in a world of hurt.”

The median price of Mountain View houses stood a $1.33 million in June, a 72 percent increase from $775,000 a decade ago, according to research firm CoreLogic Dataquick. In nearby Palo Alto, the median price has nearly tripled during that time to $2.4 million and the median price has nearly doubled in other neighboring communities, such as Cupertino ($1.7 million) and Sunnyvale ($1.2 million).

It’s getting tougher to pay the rent, too. Apartment rents have nearly doubled during the past decade in the three counties where many Google and other high-tech workers live: In San Francisco the average is $3,229 per month; in San Mateo it’s $2,470; and in Santa Clara $2,321.

Google won’t give geographic breakdowns where its workers, but a substantial number of its nearly 50,000 employees are based in Mountain View. Even though Google deploys a fleet of shuttle buses in San Francisco and other parts of the Bay area to transport its workers to Mountain View, the traffic is so bad in the mornings and evenings that Kasperzak says the city may have to consider imposing tolls during the most heavily congested hours.

Despite the headaches, “it’s still pretty cool having one of the most recognizable brands in the world in your town,” says Kasperzak. He just wishes he wasn’t forced to sell his four shares of Google stock at a split-adjusted $150 a few years ago to avoid potential conflicts of interest.

The Associated Press

The Associated Press

LEAVE A COMMENT

Discussion | No comments

The Daily Republic does not necessarily condone the comments here, nor does it review every post. Read our full policy

  • Recent Articles

  • Enter your email address to subscribe and receive notifications of new posts by email.

  • .

    Solano News

     
    1st release for birds with mysterious goo a success

    By Amy Maginnis-Honey | From Page: A1, 1 Comment | Gallery

     
    Council backs beer, wine sales for Vacaville store

    By Ryan McCarthy | From Page: A3

     
    Vacaville police seek help to find sex offender

    By Kevin W. Green | From Page: A3, 5 Comments | Gallery

     
    Sweep by sheriff’s team nets 4 arrests

    By Kevin W. Green | From Page: A3, 6 Comments

     
    Travis starts work on Functional Fitness Center

    By Ian Thompson | From Page: A3

     
    Boy Scouts to screen award-winning film

    By Ian Thompson | From Page: A3

     
    Church makes ready for health, wellness fair

    By Susan Hiland | From Page: A3

     
    4-H Annual Presentation Day returns in February

    By Susan Hiland | From Page: A3

    Vacaville SWAT team serves search warrant

    By Kevin W. Green | From Page: A3

     
    Real estate occupancy continues to climb

    By Kevin W. Green | From Page: A3, 1 Comment

    Fairfield police log: Jan. 27, 2015

    By Susan Hiland | From Page: A10, 1 Comment

     
    Suisun City police log: Jan. 27, 2015

    By Susan Hiland | From Page: A10, 2 Comments

    .

    US / World

     
    Air Force probing alleged ‘treason’ remark by general

    By The Associated Press | From Page: A1, 1 Comment | Gallery

    Expect tiny tuxes but no real puppy love at doggy weddings

    By The Associated Press | From Page: A2 | Gallery

     
    Large salmon release planned

    By The Associated Press | From Page: A4

    Violations mount for toxic recycler

    By The Associated Press | From Page: A4

     
    Quake rattles N. California coast

    By The Associated Press | From Page: A4

    Second arrest in student stabbing

    By The Associated Press | From Page: A4, 1 Comment

     
    Marshals track down missing treasure hunter

    By The Associated Press | From Page: A5

    ‘Drunk’ excuse falls flat in Vandy rape trial

    By The Associated Press | From Page: A5

     
    Attorney General nominee defends Obama immigration changes

    By The Associated Press | From Page: A5, 1 Comment | Gallery

    Police seek law to alter Google app

    By The Associated Press | From Page: A5, 1 Comment

     
    ISIS extends hostage deadline

    By The Associated Press | From Page: A6

    Euro coast guards scramble to locate Syrian ghost ship

    By The Associated Press | From Page: A6

     
    Chinese regulators go after online sale of fake goods

    By The Associated Press | From Page: A6

    Investigation stems from police-involved shooting outbreak

    By The Associated Press | From Page: A6

     
    Hezbollah missiles kill soldiers

    By New York Times | From Page: A6

    Tape: Scientist offers to build nuke bomb targeting New York

    By The Associated Press | From Page: A10 | Gallery

     
    .

    Opinion

    Don’t brush off bullying

    By Kelvin Wade | From Page: A7, 3 Comments

     
    Editorial Cartoon: Jan. 29, 2015

    By Daily Republic Syndicated Content | From Page: A7

    Just be honest and come forward

    By Letter to the Editor | From Page: A7, 1 Comment

     
    A truly misinformed writer

    By Letter to the Editor | From Page: A7, 37 Comments

     
    India now has 322 billion reasons to fix economy

    By William Pesek | From Page: A7

    .

    Living

    Today in History: Jan. 29, 2015

    By The Associated Press | From Page: A2

     
    Community Calendar: Jan. 29, 2015

    By Susan Hiland | From Page: A2

    Deadbeat boyfriend ruined my relationship with my granddaughter

    By Kathy Mitchell and Marcy Sugar | From Page: A9

     
    Horoscope Jan. 29, 2015

    By Holiday Mathis | From Page: A9

    .

    Entertainment

    TVGrid

    By Daily Republic Syndicated Content | From Page: B5

     
    Theater legend Joel Grey reveals that he is gay

    By The Associated Press | From Page: B5, 2 Comments

    Super Bowl advertisers aim not to offend

    By The Associated Press | From Page: B5

     
    .

    Sports

    Kings center DeMarcus Cousins hoping to make All-Star team

    By The Associated Press | From Page: B1

     
    Rodriguez wrestlers pull out 34-24 win over Wood

    By Brian Arnold | From Page: B1 | Gallery

     
    Solano men cruise past LMC for biggest win of season

    By Daily Republic staff | From Page: B2

    NFL players who started young show more thinking problems

    By The Associated Press | From Page: B2

     
    GM John Schneider has been architect of Seahawks’ success

    By The Associated Press | From Page: B2

    Patriots not dwelling on last Super Bowl loss in Arizona

    By The Associated Press | From Page: B2

     
    Woods returns to Phoenix with plenty of memories

    By The Associated Press | From Page: B2

    Tony Stewart acquires national sprint car series tour

    By The Associated Press | From Page: B2

     
    Head of NCAA enforcement: Academic misconduct on rise

    By The Associated Press | From Page: B3

    Chicago Cubs’ Ernie Banks statue moved downtown for tribute

    By The Associated Press | From Page: B3

     
    Kobe Bryant has surgery, expected to be out for 9 months

    By The Associated Press | From Page: B3

    Korda, Lewis, Munoz tied for lead at LPGA season opener

    By The Associated Press | From Page: B3

     
    This date in sports history for Jan. 29, 2015

    By The Associated Press | From Page: B4

     
    .

    Business

    .

    Obituaries

    .

    Comics

    Wizard of Id

    By Daily Republic Syndicated Content | From Page: A8

     
    Peanuts

    By Daily Republic Syndicated Content | From Page: A8

    For Better or Worse

    By Daily Republic Syndicated Content | From Page: A8

     
    Blondie

    By Daily Republic Syndicated Content | From Page: A8

    Zits

    By Daily Republic Syndicated Content | From Page: A8

     
    Rose is Rose

    By Daily Republic Syndicated Content | From Page: A8

    Baby Blues

    By Daily Republic Syndicated Content | From Page: A8

     
    Baldo

    By Daily Republic Syndicated Content | From Page: A8

    Get Fuzzy

    By Daily Republic Syndicated Content | From Page: A8

     
    Sally Forth

    By Daily Republic Syndicated Content | From Page: A8

    B.C.

    By Daily Republic Syndicated Content | From Page: A8

     
    Beetle Bailey

    By Daily Republic Syndicated Content | From Page: A8

    Frank and Ernest

    By Daily Republic Syndicated Content | From Page: A8

     
    Garfield

    By Daily Republic Syndicated Content | From Page: A8

    Dilbert

    By Daily Republic Syndicated Content | From Page: A8

     
    Pickles

    By Daily Republic Syndicated Content | From Page: A8

    Cryptoquote

    By Daily Republic Syndicated Content | From Page: A9

     
    Sudoku

    By Daily Republic Syndicated Content | From Page: A9

    Crossword

    By Daily Republic Syndicated Content | From Page: A9

     
    Bridge

    By Daily Republic Syndicated Content | From Page: A9

    Word Sleuth

    By Daily Republic Syndicated Content | From Page: A9