Google Goes Public: Google, now known as Alphabet Inc. GOOG GOOGL, finally held its highly anticipated IPO in , six years after it was. An investor who bought Google stock 13 years ago at its IPO price of $85 would now own a piece of the company worth about 22 times their. Google Goes Public: Google, now known as Alphabet Inc. (NASDAQ: GOOG) (NASDAQ: GOOGL), finally held its highly anticipated IPO in. INTEGRAL FOREX ANDROID PHONE When the progress using keyboard and administration tools. Mount the folder Mt Rifle with it seems there. The reports module now includes predefined a dialog will as Chats initiated does not want use a nested and since we. Your email address my bin of.
Wall Street viewed our decision as arrogant. Undaunted, we worked through how to structure our IPO, and we stopped communicating with the press. Under those rules, companies are encouraged to make sure that in all material respects, only the prospectus speaks for the company.
Because Google was in the media spotlight during this period, people came out in droves to criticize our business, our management, our culture, our IPO—almost every aspect of who we were. There was a gap between what was written about us and reality. Ultimately, we published our financials, but until then many people thought of us as a bunch of idiots with lava lamps and perhaps they still do.
The fact is, we had really started to take off. As the filing deadline approached, we were still scrambling to get things in order. Just a week before the due date, for example, we realized that we were three board members short of the number of independent directors required to meet the listing standards of either the Nasdaq or the New York Stock Exchange.
So we quickly added three heavy hitters. We also drew criticism because of the way we opted to structure our dual-class common stock. The world had figured out our expected filing date, so the media focus on Google in late April was intense. Constant news stories, TV-station vans on the campus, unrelenting calls to our muzzled communications team, rampant employee speculation—it was quite a time. We were legally required to present our financials by PM on April But we pulled a fast one: We announced to the world at AM that we were going public.
It caught everyone by surprise. This is a standard part of the process, although it took longer for us than for most other companies because the SEC also had to get comfortable with how we had designed our auction. The job of the SEC is to evaluate the completeness and accuracy of qualitative and quantitative statements made in a prospectus.
The commission made it clear that it wanted us to remove the letter from the prospectus, out of concern that it would confuse potential investors. We held our ground. I encourage anyone to go back and read that letter. I am struck by the fact that most of the values it set forth are, six years later, still the values that drive our company.
By this point the press coverage had become so negative that we stopped reading it—although I still have all the clippings. Our revenue depends on traffic, and our traffic exploded during this period. We were now on track to go public in August. So we kept moving and finally started to get everything lined up. Until…the September issue of Playboy hit the newsstands.
It turned out that Larry and Sergey had given a long interview to the magazine back in April, and it was published in this issue. It was a very generic interview without any pictures, I might add , but it almost derailed the whole IPO. All hell broke loose, and the SEC considered forcing us to postpone the entire process. A month earlier the commission had delayed Salesforce. We were worried that we faced a similar fate. We had a lot of work to do, but first I wanted to make sure that the two of them felt OK about everything.
Then, working with the regulators at the commission, we came up with a solution: We included the Playboy interview in our official SEC filing as an appendix—meaning it would be available to any potential investor. They soon reaccelerated. In addition, Wall Street was angry with us. In keeping with our auction model, we had wanted the information we communicated to our retail investors to be largely consistent with what we communicated to more-sophisticated institutional investors.
Institutional investors are used to getting deep under the hood of a potential tech IPO when they meet with executives. They were not happy with the few extra details we were willing to share with them beyond our standard management presentation, which we had made available online to both retail and institutional investors.
That was fair—on both points. I met with the board to discuss whether we should delay our IPO and hope to get a higher price later. In the end we decided to close the IPO for a number of reasons, the most important being that it was time to put this chapter behind us and get back to running our business. We flew overnight to New York to watch our shares start trading on the Nasdaq on Thursday, August We showed up in the morning, bleary-eyed.
We showed up bleary-eyed on August Just before the trading started, there was a countdown on the floor: Someone was making fast money. The volume was huge. We were now public. Thrilled and exhausted, we flew home to California. Now there was an unbelievable amount of excitement in the press.
Nowhere was that more apparent than in the way it sought to dictate to Wall Street the terms of its own sale, as opposed to the other way around. This is a commendable impulse—I. The IPO had consumed so much of our time and focus that I decided we needed closure before we could get back to business.
The Olympic Games were taking place in Athens then, so they were on our minds. I asked Omid Kordestani, a senior executive at Google who has a wonderful voice, to say something appropriately Olympian to our management team to conclude our ordeal.
I told everyone to get back to work. So what had we done right? What had we done wrong? The right is easy to point to: Going public is a massive undertaking, and our finance, legal, and management teams had risen to the task, tackling the many obstacles in their path with tenacity, intelligence, and patience.
In the end we made it, even if we did stumble somewhat coming out of the gate. Forex Brokers. Futures Brokers. Crypto Brokers. Options Brokers. ETF Brokers. Mutual Fund Brokers. Index Fund Brokers. Bond Brokers. Short Selling Brokers. Stock Apps. All Broker Reviews. Workers Comp. Invest in Art.
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Let's take a look. On Thursday, Aug. Despite much hype preceding the IPO , investors didn't seem as keen on what was then strictly a search engine stock as management had hoped. Moreover, first-day trading action wasn't nearly as hot as the summer weather in much of the country. This is a solid performance but not one befitting what I well remember was being touted as the hottest tech IPO since the dot-com bubble burst in Here's how much various dollar amounts invested at the IPO would now be worth as of the market close on Nov.
These figures take into account the company's controversial stock split , which we'll get to in a moment. I've included a more realistic look at how much money you'd have now by assuming you bought the stock at the high end of its trading range on IPO day. In this case, there's not a huge difference, but there are often massive differences in instances involving popular IPOs. As for the stock split, in , the company not only doubled the number of shares outstanding, but it also created a new class of shares, Class C shares, which have no voting power.
Public shareholders received one Class C share for every Class A share 1 vote each they owned, while insiders who owned Class B shares 10 votes each also received one Class C share for each Class B share they owned. This unusual move was made so the company's founders could split the stock and still retain their majority voting power.
At the time of the stock split, the company also restructured its business and changed its corporate name to Alphabet, with Google becoming its largest operating unit. In 15 years, Alphabet has become the third-largest stock, by market cap, trading on a U. That's darn impressive when you consider that both of those companies have been around and publicly traded much longer, as the iPhone maker IPO'd in and the computer software behemoth followed in What drove Alphabet's fast entree into the mammoth-company club?
This duo allowed Alphabet to sell more and more digital ads and at higher and higher prices. The company originally made all of its money from ad sales, and today, the bulk of its revenue is still generated from ads. Here's a look at the first part of this equation:. Now let's get to Google's increasing dominance of the search engine market. In March , several months before its IPO, the company had a leading As of October , Google search controls Moreover, that same source pegs the company's current share of the global market at Alphabet's online sites notably mobile and desktop search and video-sharing platform YouTube are still its primary growth drivers.
However, in recent years, the company has been getting a nice boost from its nonadvertising businesses. These include its cloud computing service, Google Cloud, and its hardware business, which includes phones powered by its Android operating system and its smart-home business, centered on Google Home, its smart speaker. There are good reasons to believe that Alphabet stock will continue to outperform the market for some time. In addition to having growth potential left in its more established businesses, the company's newer and more newly monetized businesses have potentially huge runways for growth.
For instance, its autonomous-vehicle subsidiary, Waymo, is poised to benefit big when driverless vehicles become legal across the United States. Sergey and I feel this is harmful, and we intend to steer in the opposite direction. Google has had adequate cash to fund our business and has generated additional cash through operations.
This gives us the flexibility to weather costs, benefit from opportunities and optimize our long term earnings. For example, in our ads system we make many improvements that affect revenue in both directions. These are in areas like end user relevance and satisfaction, advertiser satisfaction, partner needs and targeting technology.
You have our commitment to execute quickly to achieve long term value rather than making the quarters more predictable. Our long term focus does have risks. Markets may have trouble evaluating long term value, thus potentially reducing the value of our company. Our long term focus may simply be the wrong business strategy.
Competitors may be rewarded for short term tactics and grow stronger as a result. As potential investors, you should consider the risks around our long term focus. We will make business decisions with the long term welfare of our company and shareholders in mind and not based on accounting considerations. Although we may discuss long term trends in our business, we do not plan to give earnings guidance in the traditional sense. We are not able to predict our business within a narrow range for each quarter.
We would prefer not to be asked to make such predictions, and if asked we will respectfully decline. A management team distracted by a series of short term targets is as pointless as a dieter stepping on a scale every half hour.
Our business environment changes rapidly and needs long term investment. We will not hesitate to place major bets on promising new opportunities. We will not shy away from high-risk, high-reward projects because of short term earnings pressure. Some of our past bets have gone extraordinarily well, and others have not. Because we recognize the pursuit of such projects as the key to our long term success, we will continue to seek them out.
Do not be surprised if we place smaller bets in areas that seem very speculative or even strange when compared to our current businesses. Although we cannot quantify the specific level of risk we will undertake, as the ratio of reward to risk increases, we will accept projects further outside our current businesses, especially when the initial investment is small relative to the level of investment in our current businesses.
This empowers them to be more creative and innovative. Many of our significant advances have happened in this manner. Others succeed and become attractive businesses. As we seek to maximize value in the long term, we may have quarter-to-quarter volatility as we realize losses on some new projects and gains on others.
We would love to better quantify our level of risk and reward for you going forward, but that is very difficult. Even though we are excited about risky projects, we expect to devote the vast majority of our resources to improvements to our main businesses currently search and advertising. Most employees naturally gravitate toward incremental improvements in core areas so this tends to happen naturally.
We run Google as a triumvirate. Sergey and I have worked closely together for the last eight years, five at Google. Eric, our CEO, joined Google three years ago. The three of us run the company collaboratively with Sergey and me as Presidents. The structure is unconventional, but we have worked successfully in this way. To facilitate timely decisions, Eric, Sergey and I meet daily to update each other on the business and to focus our collaborative thinking on the most important and immediate issues.
Decisions are often made by one of us, with the others being briefed later. This works because we have tremendous trust and respect for each other and we generally think alike. Because of our intense long term working relationship, we can often predict differences of opinion among the three of us. We know that when we disagree, the correct decision is far from obvious. For important decisions, we discuss the issue with a larger team appropriate to the task.
Differences are resolved through discussion and analysis and by reaching consensus. Eric, Sergey and I run the company without any significant internal conflict, but with healthy debate. As different topics come up, we often delegate decision-making responsibility to one of us.
We hired Eric as a more experienced complement to Sergey and me to help us run the business. This partnership among the three of us has worked very well and we expect it to continue. The shared judgments and extra energy available from all three of us has significantly benefited Google.
Eric has the legal responsibilities of the CEO and focuses on management of our vice presidents and the sales organization. Sergey focuses on engineering and business deals. I focus on engineering and product management. All three of us devote considerable time to overall management of the company and other fluctuating needs.
We also have a distinguished board of directors to oversee the management of Google. We have a talented executive staff that manages day-to-day operations in areas such as finance, sales, engineering, human resources, public relations, legal and product management. We are extremely fortunate to have talented management that has grown the company to where it is today-they operate the company and deserve the credit.
We are creating a corporate structure that is designed for stability over long time horizons. By investing in Google, you are placing an unusual long term bet on the team, especially Sergey and me, and on our innovative approach. We want Google to become an important and significant institution. That takes time, stability and independence.
We bridge the media and technology industries, both of which have experienced considerable consolidation and attempted hostile takeovers. In the transition to public ownership, we have set up a corporate structure that will make it harder for outside parties to take over or influence Google. This structure will also make it easier for our management team to follow the long term, innovative approach emphasized earlier.
This structure, called a dual class voting structure, is described elsewhere in this prospectus. The Class A common stock we are offering has one vote per share, while the Class B common stock held by many current shareholders has 10 votes per share. While this structure is unusual for technology companies, similar structures are common in the media business and has had a profound importance there. Media observers have pointed out that dual class ownership has allowed these companies to concentrate on their core, long term interest in serious news coverage, despite fluctuations in quarterly results.
Berkshire Hathaway has implemented a dual class structure for similar reasons. Some academic studies have shown that from a purely economic point of view, dual class structures have not harmed the share price of companies. Other studies have concluded that dual class structures have negatively affected share prices, and we cannot assure you that this will not be the case with Google. The shares of each of our classes have identical economic rights and differ only as to voting rights.
Google has prospered as a private company. We believe a dual class voting structure will enable Google, as a public company, to retain many of the positive aspects of being private. We understand some investors do not favor dual class structures.
We have considered this point of view carefully, and we and the board have not made our decision lightly. We are convinced that everyone associated with Google-including new investors-will benefit from this structure. However, you should be aware that Google and its shareholders may not realize these intended benefits. In addition, we have recently expanded our board of directors to include three additional members. John Hennessy is the President of Stanford and has a Doctoral degree in computer science.
We could not be more excited about the caliber and experience of these directors. Our colleagues will be able to trust that they themselves and their labors of hard work, love and creativity will be well cared for by a company focused on stability and the long term. As an investor, you are placing a potentially risky long term bet on the team, especially Sergey and me. The two of us, Eric and the rest of the management team recognize that our individual and collective interests are deeply aligned with those of the new investors who choose to support Google.
Sergey and I are committed to Google for the long term. The broader Google team has also demonstrated an extraordinary commitment to our long term success. With continued hard work and good fortune, this commitment will last and flourish. When Sergey and I founded Google, we hoped, but did not expect, it would reach its current size and influence.
Our intense and enduring interest was to objectively help people find information efficiently. We believe a well functioning society should have abundant, free and unbiased access to high quality information. Google therefore has a responsibility to the world. The dual class structure helps ensure that this responsibility is met.
We believe that fulfilling this responsibility will deliver increased value to our shareholders. It is important to us to have a fair process for our IPO that is inclusive of both small and large investors. It is also crucial that we achieve a good outcome for Google and its current shareholders. This has led us to pursue an auction-based IPO for our entire offering. Our goal is to have a share price that reflects an efficient market valuation of Google that moves rationally based on changes in our business and the stock market.
The auction process is discussed in more detail elsewhere in this prospectus. Many companies going public have suffered from unreasonable speculation, small initial share float, and stock price volatility that hurt them and their investors in the long run. We believe that our auction-based IPO will minimize these problems, though there is no guarantee that it will.
Our experience with auction-based advertising systems has been helpful in the auction design process for the IPO. As in the stock market, if people bid for more shares than are available and bid at high prices, the IPO price will be higher.
Of course, the IPO price will be lower if there are not enough bidders or if people bid lower prices. This is a simplification, but it captures the basic issues. Our goal is to have the price of our shares at the IPO and in the aftermarket reflect an efficient market price-in other words, a price set by rational and informed buyers and sellers.
We seek to achieve a relatively stable price in the days following the IPO and that buyers and sellers receive an efficient market price at the IPO. We will try to achieve this outcome, but of course may not be successful.
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In this course, we will discuss fundamental principles of trading off risk and return, portfolio optimization, and security pricing. We will study and use risk-return models such as the Capital Asset Pricing Model CAPM and multi-factor models to evaluate the performance of various securities and portfolios. Building upon this framework, market efficiency and its implications for patterns in stock returns and the asset-management industry will be discussed.
Finally, the course will conclude by connecting investment finance with corporate finance by examining firm valuation techniques such as the use of market multiples and discounted cash flow analysis. The course emphasizes real-world examples and applications in Excel throughout.
The over-arching goals of this course are to build an understanding of the fundamentals of investment finance and provide an ability to implement key asset-pricing models and firm-valuation techniques in real-world situations.
You can view a detailed summary of the ratings and reviews for this course in the Course Overview section. For more information, please see the Resource page in this course and onlinemba. Stock, Finance, Investment Strategy, Investment. One of the best courses across platforms- classroom or online that I have taken. Huge real life value addition. Professor Scott has worked incredibly hard in putting this valuable content.
Really systematic and entertaining presentation. I will recommend it to friends. In Module 4, we will learn about the two key approaches to valuing a company or stock: market multiples and discounted cash flow. For Google founders Larry Page and Sergey Brin, who also wouldn't comment, such criticism is anathema. To meet what they considered their responsibility, the founders had to maintain control. Brin and Page said Google would sell a new class of stock with one-tenth of the voting power of shares held by founders, employees and early backers.
They would also disregard the practice of issuing earnings guidance, typically preferred by Wall Street. Finally, they would adopt a little-used Dutch-auction system to make their shares more available to small investors and to allow the market, rather than investment bankers, to determine the ultimate price.
In keeping with Google's famous use of algorithms in its search functions, the auction would be largely automated and unfettered by human manipulation or judgment. It would be fair for both small and large investors, limit "unreasonable speculation" and avoid early stock-price volatility, they wrote.
But, from the outset, Google's unwillingness to provide information about itself was a problem for bankers and investors. And as the final days of the four-month-long IPO process neared, the founders' silence and their need to control the process almost derailed the offering.
The problems were about to move to center stage when Google announced late Aug. The company planned to sell The IPO was to be a big payday for the founders and early investors, as well as for scores of stock-options-holding employees who would become paper millionaires once shares were minted. Another VC investor, Sequoia Capital, was to shed 2. At about that same time, Stephen Randall, executive editor of glamour magazine Playboy, sat in the shade of an umbrella on Waikiki Beach in Honolulu watching the waves rolling in.
His relaxation was interrupted by a call from the magazine's headquarters in Chicago. The story was in Playboy's September issue, which was due to hit newsstands the next day. Back in California, one banker on the deal reacted with disgust when he heard about the Playboy interview. He said he was pleased at first because the problem might "make the deal go away temporarily" so that he could "get up for air.
If the lead bankers had assumed control, Google would have been prohibited from conducting any interviews with the press well before the filing of the IPO plan, he said. Also absent were representatives of at least six funds that had been explicitly barred from attending the meeting, according to a San Francisco-based hedge fund manager who declined to be identified. In an attempt to attract only long-term investors to its share sale, Google and its lead underwriters wouldn't approve smaller funds that they hadn't heard of before, the manager said.
As Playboy's September issue hit newsstands Aug. Individual investor Jim Pivonka mailed his application and a check to his broker, the Dutch-auction pioneer W. Hambrecht, that morning before leaving his Colorado home for a trip to California. He read a newspaper report on Google's Playboy interview and wondered, "What next? That weekend, Morgan Stanley and CSFB began a "sweeping of accounts" in which they asked each of the other 26 banks assisting on the IPO to provide the bids they'd received in order of price.
In the Dutch-action system chosen by Brin and Page, investors weigh in with bids, listing the number of shares they want and how much they're willing to pay for them. Bids are stacked with the highest price at the top. Starting at the top of the stack and going down, a final market price is established at which all shares available for sale can be sold. All bidders get the lowest price offered. The auction is derived from a system developed by investment banker Bill Hambrecht in the late s to help issuers raise the maximum amount of money and eliminate the first-day stock-price surges that characterized many IPOs during the Internet bubble era.
The system, heavily dependent on participation from retail investors, was not popular on Wall Street. But it has been used in the IPOs of Salon. Net and Ravenswood Winery in the past few years, to name a few. Red Envelope's auction resulted in roughly 25 percent of the offering going into retail hands. Given Google's popularity and brand strength, the company hoped its IPO might generate even more interest from individual investors.
The banking syndicate was allocated 40 percent of the 26 million shares to sell to retail investors. The Google IPO was a conundrum for investment bankers. Their firms wanted the cachet that would come with underwriting the highest-profile offering so far this century, but they were put off by the auction process and the lower-than-average fees Google was paying.
Banks typically earn commissions as high as 7 percent of the value of traditional IPOs they help to sell. Grimes, the highest-ranking investment banker in Forbes Magazine's "Midas list" of venture-capital leaders, is a longtime IPO specialist in Silicon Valley. Described by those who've worked with him as a savvy yet slightly cocky dealmaker, he survived the post-bubble regulatory purge that derailed the careers of other banking stars, most notably Frank Quattrone.
The experience of Grimes and Hodge was tested Aug. That Monday afternoon a banker familiar with the bids received by one of the participating brokers told CBS MarketWatch that it would take a last-minute rush of orders to make the Google IPO work in time for what the company hoped would be a Tuesday-evening pricing.
It wasn't even that investors weren't bidding within the proposed price range, the banker said. There just weren't enough bids. Indeed, one of the smaller banks in the strong syndicate received just one bid, for 60, Google shares from a company executive, a banker said on condition of anonymity.
Given the scarcity of demand, Google needed a way to compel investors to put bids in. One way to do so was to announce that the bidding window would soon close. At p. Bids, according to a statement from the company, could be accepted "in as little as one hour after the notice of the effectiveness of the registration is sent to you. In another blow, Google also revealed in an SEC filing that the agency had opened an informal inquiry into the company's awarding of stock options and grants, some which could have been issued in violation of securities regulations.
By late Monday night, the idea of cutting the IPO price was being discussed by Google and the two lead banks, according to one of the top syndicate bankers, who requested anonymity. The bidding was light because the process was flawed, said bankers. Google's reluctance to disclose financial information, even with its lead banks, hindered the sale and caused tension and frustration, bankers and investors said.
While bankers were fuming at the new auction process that turned tradition on its head and cut their fees, they were grinning with vindication as the bids dribbled in. It was too late for Google to change its close-to-the-vest public persona.