Feeds

Google files Coca Cola jingle with SEC

Wants to teach the world to sing, in perfect harmony

  • alert
  • submit to reddit

Beginner's guide to SSL certificates

Google Inc. has filed an application to issue stock to the public with the US Securities and Exchange Commission, today. In a typically idiosyncratic break with tradition, the S1 application starts with a plea from the company fathers to make the world a better place.

"We'd like to build the world a home," write co-founders Sergey Brin and Larry Page. "And furnish it with love. Grow apple trees and honey bees, and snow-white turtle doves." The unconventional sentiments will puzzle Wall Street analysts, but delight Google's teenage fans - and children of all ages who make up its most ardent users.

"We'd like to teach the world to sing," they plead. "In perfect harmony."

We made that up, of course. But the real "Letter from the Founders" that introduces today's 26-page filing borrows as much from The New Seekers as it does from Warren Buffet.

"Google is not a conventional company. We do not intend to become one," the Letter From The Founders begins. Under the title "MAKING THE WORLD A BETTER PLACE" the founders write: "With our products, Google connects people and information all around the world for free. We are adding other powerful services such as Gmail that provides an efficient one gigabyte Gmail account for free. By releasing services for free, we hope to help bridge the digital divide."

Spyware as liberation? Yes, this can only mean the Return of the Hippy Capitalists, so wake up, please Richard Branson - you may be owed a royalty. We'll spare you very much more, because the remainder of the filing is much more interesting. Although such sappy sentiments have been enough to please webloggers and other cybernetic utopians, Google's IPO requires at least nominal scrutiny from grown-ups, and the S1 contains the world's first look at the company's financials.

We're in the money

The filing states that Google will make $2.7bn worth of stock available to the public. The disclosure paints the picture of a profitable company on a dramatic growth ramp. Google doesn't expect to grow at quite the phenomenal rate it has in recent months, however, and expects that expenses may grow faster than income in 2004, with downward pressure on its operating margin.

In the quarter that ended in March, Google grossed $389.6m and reported a profit of $63.9m. In 2003, Google had a net income of $105.6m on earnings of $962m. Google has close to two thousand employees, of which half, or 961, are in sales. And it's recruiting at a clip: Google added 284 staff in the last quarter alone.

Ninety-six per cent of income is generated from advertising, and of this, 78 per cent comes from advertisements on Google's own properties and 22 per cent from its role as a brokerage, placing advertisements on third-party sites through the company's Adwords and Adsense programs. The trend reflects the increasing importance of the latter, while the split last year was 91 to 9. Three years ago licensing deals accounted for 22 per cent of income. Now, they're almost an afterthought; the company confidently explains that the Yahoo! deal netted less than three per cent of Google's revenues. International revenues make up a healthy 30 per cent of the company's revenue, and are increasing steadily.

Ironically, the company which did more than any other to end Portalitis - Google's fast, focused and ad-spare design contrasted with sprawling, slow and unfocussed portal rivals at the time - now finds itself explaining its approach as a liability:

"Microsoft and Yahoo also may have a greater ability to attract and retain users than we do because they operate Internet portals with a broad range of products and services. If Microsoft or Yahoo are successful in providing similar or better web search results compared to ours or leverage their platforms to make their web search services easier to access than ours, we could experience a significant decline in user traffic."

In other points to note, Google says that it has a perpetual license to the PageRank™ patent from Stanford University although this becomes non-exclusive in 2011. That's already largely moot, as the algorithm has been so heavily augmented by other techniques to foil gamers that it's largely a marketing tool.

And not that experts think it ever was. Former Infoseek technologist Matt Wells, who now runs Gigablast, calls PageRank™ "marketing hype" and attributes Google's success to its "cached Web pages, index size, and search speed" - areas in which is still maintains a lead.

Bubble redux?

Google will as expected follow the auction route to market. "New investors will fully share in Google’s long term growth but will have less influence over its strategic decisions than they would at most public companies," Google explains.

We've warned against making too many dotcom comparisons between the Google flotation and earlier dotcom IPOs. The rhetoric surrounding Google owes much more to the cybernetic visions promised by Artifical Intelligence - the technology industry's longest and most unsuccessful program - than to the Internet bubble.

Put simply, Google finally joins eBay, Yahoo! and Amazon.com as a publicly traded company that's a world-renowned Internet business with a sound balance sheet. Very few companies that went public during the Internet gold-rush could make such a claim, of course. Those three are capitalized at $82bn, $57bn and $49bn, respectively, with eBay and Yahoo! trading at price-to-book ratios of 15 and 16 times respectively. If Google's valuation sends it higher, for a prolonged period, you'll know that irrational exuberance has returned. What Google's own turtle doves make of it is anyone's guess. ®

Related stories

Google back in court over Adwords
SEC rules drag reluctant Google to market
Feds slap cuffs on Google stock scammer
Yahoo! and MSN to dilute Google supremacy
Google swallows another competitor

The next step in data security

More from The Register

next story
Phones 4u slips into administration after EE cuts ties with Brit mobe retailer
More than 5,500 jobs could be axed if rescue mission fails
JINGS! Microsoft Bing called Scots indyref RIGHT!
Redmond sporran metrics get one in the ten ring
Driving with an Apple Watch could land you with a £100 FINE
Bad news for tech-addicted fanbois behind the wheel
Murdoch to Europe: Inflict MORE PAIN on Google, please
'Platform for piracy' must be punished, or it'll kill us in FIVE YEARS
Bono: Apple will sort out monetising music where the labels failed
Remastered so hard it would be difficult or impossible to master it again
Phones 4u website DIES as wounded mobe retailer struggles to stay above water
Founder blames 'ruthless network partners' for implosion
Sony says year's losses will be FOUR TIMES DEEPER than thought
Losses of more than $2 BILLION loom over troubled Japanese corp
Radio hams can encrypt, in emergencies, says Ofcom
Consultation promises new spectrum and hints at relaxed licence conditions
prev story

Whitepapers

Secure remote control for conventional and virtual desktops
Balancing user privacy and privileged access, in accordance with compliance frameworks and legislation. Evaluating any potential remote control choice.
WIN a very cool portable ZX Spectrum
Win a one-off portable Spectrum built by legendary hardware hacker Ben Heck
Intelligent flash storage arrays
Tegile Intelligent Storage Arrays with IntelliFlash helps IT boost storage utilization and effciency while delivering unmatched storage savings and performance.
High Performance for All
While HPC is not new, it has traditionally been seen as a specialist area – is it now geared up to meet more mainstream requirements?
Beginner's guide to SSL certificates
De-mystify the technology involved and give you the information you need to make the best decision when considering your online security options.