Tuesday, January 06, 2004

Morgan Stanley, Goldman to Manage Google IPO

The usual suspects got the underwriting business, which is only to be expected, particularly after the fall of Frank Quattrone. In any case, this is obviously very, very big news. I remember all too well how difficult things were in 2001 when I was pitching for venture capital, insisting that search was not a dead business, and getting doors slammed in my face; as such, even though the Google IPO is likely to vindicate my beliefs, vindication in this case will have a bittersweet flavor to it.

Jan. 5 (Bloomberg) -- Google Inc. hired Morgan Stanley and Goldman Sachs Group Inc. to arrange its initial public offering, a sale that may raise as much as $4 billion, a banker involved in the transaction said.

Morgan Stanley and Goldman Sachs will lead a group of underwriters that includes Citigroup Inc., Credit Suisse First Boston, J.P. Morgan Chase & Co., Thomas Weisel Partners LLC and WR Hambrecht + Co., two bankers in the sale said. They spoke on condition they not be named.

The sale by Google, the world's most used Internet search engine, would be the biggest IPO since CIT Group Inc.'s $4.87 billion deal in July 2002. It ``will certainly be the deal of the year,'' said Sanford Robertson, who founded San Francisco-based investment bank Robertson, Stephens & Co. before starting private- equity firm Francisco Partners LP.

About a third of Mountain View, California-based Google may be sold in the IPO, giving the company a market value of about $12 billion, the bankers said. The company will probably register the shares for sale with the Securities and Exchange Commission this month and sell them by April, they said. (emphasis added)

$12 billion dollars! I remember prophesying at the time to the sceptics that this business was going to be worth billions of dollars, and that the downturn in the stock markets would be a temporary one. What better time to build a presence in this field, I suggested, than when everyone else was giving up the chase? Unfortunately, the grip of irrational pessimism was too strong for my words to be heeded at the time, which is a shame, as it is possible, and even easy, to build a search engine that makes Google look like an obsolete ENIAC alongside a Sun E10000. How do I know this? Because I already did it*, over three years ago!

*I was already doing the sort of automatic result classification being touted by Vivismo, as well as having created a better visualization tool than Grokker's. There was a lot more to it besides these two items, but I'm not about to give away ideas that haven't been implemented by others.

PS: By the way, whenever I hear people suggest that social security privatization would make no difference as the world is already awash in savings, the memory of my own capital-raising adventures renders me immune to such specious albeit plausible-sounding argumentation.