Google offers 25 million shares

SAN JOSE, Calif. -- Google announced plans Monday to sell about 25 million shares at up to $135 each when it goes public as early as next month -- giving the Internet search engine a total market value of as much as $36 billion, on par with the likes of McDonald's and Sony.

It would be the eighth-largest initial public offering in history, bigger than most of the IPOs that took place during the dot-com craze of the 1990s.

The details of one of the most highly anticipated stock offerings in years were spelled out in a filing with the Securities and Exchange Commission.

An exact date for the IPO has not been set yet. But when it happens, "you should fasten your seat belt and have oxygen nearby," said Barry Randall, portfolio manager of the First American Technology Fund at US Bancorp Asset Management in Minneapolis.

Google stock, once issued, could rise -- or fall -- with frightening speed.

Unlike some of the hot stocks of the '90s, Google -- a search engine so widely used that its very name has become a verb meaning to "conduct an Internet background check on someone or something" -- is a moneymaker. In the first six months of 2004, Google earned $143 million, up from $58 million during the same period last year.

Google plans to offer just 9 percent of its stock at a price range of $108 to $135 per share. At those prices, the company would have a market capitalization of between $29 billion and $36 billion.

The average in the S&P 500 is $21.25 billion. Google rival Yahoo! has a market capitalization of nearly $38 billion.

The company's plan calls for selling between $2.66 billion and $3.32 billion in stock in the initial public offering. However, the amount the company itself expects to raise is $1.66 billion, because some of shares being offered are being sold by existing stockholders.

Once trading of the shares begins on the Nasdaq Stock Market, Google expects to have the ticker symbol GOOG.

Google shares will be distributed in an auction designed to give the general public a better chance to buy stock before shares begin trading.

In the past, companies' IPO shares have been restricted to an elite group picked by the investment bankers handling the deal.

Google founders Larry Page and Sergey Brin, who dreamed up the idea in a Stanford University dorm room and formed the company in 1998, also stand to profit handsomely along with its stock-holding employees and venture capital investors.

In the filing, Google said Page and Brin will each sell 1 million of their shares, generating about $117 million for each based on the midpoint of the company's range, $121.50 per share.

They will still own more than $4.5 billion worth of stock each, and their preferred shares will carry more voting power than the stock traded publicly.

Analysts expressed some surprise that the company, given its desire to democratize the IPO process, is not going to split its stock to bring the price range down to levels more appealing to ordinary investors.

"I think that's a little bit ridiculous," said Paul Bard, an analyst at Renaissance Capital in Greenwich, Conn. If individuals have $100 they want to invest, "they're not even going to get a single share."

Google executives appear to be following in the footsteps of star businessman Warren Buffett; Class A stock of his Berkshire Hathaway Inc. has never split and it now trades at about $88,000 per share.