In the movie Star Trek V: The Final Frontier, Captain Kirk asks the “entity” hijacking the Enterprise “What does God need with a spaceship?” Likewise, I ask myself “What does Google need with an IPO?”
An amended form S-1 was filed with the SEC today (here’s a handy guide to reading such filings), and still two key questions are unanswered: What does Google plan to do with the $2.7 Billion they are expected to extract from the deal compared (with approximately $455 Million cash-on-hand, and growing since they are profitable); and exactly how many shares are they planning on offering? Between these two variables, experts think it’s very hard to figure out what Google shares should be worth. In the absence of such estimates, “investing” in Google is based on nothing more than It’s the next hot IPO! You’ve got to get a piece of this action! You don’t want to miss out on the next EBAY or Microsoft or Critical Path, do you??
Even CNN has posted the opinion that more information is needed before anyone sane should consider this an “investment.” The LA Times tells us there are “many reasons” to not get involved with the Google IPO. The Motley Fool just says “no thanks.” They at least speculate about what Google might do with the money: buy stuff. Maybe they are being pressured by their venture capitalist investors to “cash out” — an aim which could be accomplished better through paying dividends and retaining close control. There is also the theory that stock options (and therefore stock shares) are needed for employee retention — although these days treating employees well has the same effect, particularly among computer professionals. Or maybe they have simply turned to the Dark Side.
Today’s interesting reading: can you prove you are a United States citizen; are the Saudis doing everything they can to catch terrorists; who’s reading your website; and the effect of Government regulation on the economy (I particularly like what is said about health insurance and rent controls).