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Google Plans to Raise $4 Billion By Selling Another 14.2 Million Shares

Posted on: Sunday, 21 August 2005, 09:00 CDT

A year after its blockbuster debut as a public company, Google Inc. said Thursday it plans to offer another 14.2 million shares, currently worth about $4 billion, as competition heats up with rivals Yahoo Inc. and Microsoft Corp.

The Internet search leader said it will use the proceeds for "general corporate purposes," including possible acquisitions. Google added that it currently has no agreements or commitments to make a material purchase.

Google's stock price has more than tripled since the August 2004 initial public offering at $85. It fell $5.11, or 1.8 percent, to close at $279.99 Thursday on the Nasdaq Stock Market.

The secondary offering would raise nearly 2.5 times the $1.67 billion generated by the first IPO.

"The stock is at a nice price and they should be taking some money as a result," said Mark Stahlman, an analyst at the investment bank Caris & Co.

Google spokesman David Krane declined to comment further on the company's filing with the Securities and Exchange Commission. "Literally, the document speaks for itself," he said in an e-mail.

The company's financial results have mirrored the impressive gains in the stock price.

In its most recently reported quarter, Google's earnings more than quadrupled to $342.8 million. Revenue doubled to $1.38 billion.

In all of 2004, Google earned $399 million, or $1.46 per share, and had revenue of $3.19 billion. As of June 30, the company held $2.95 billion in cash.

Analysts have questioned whether that growth can continue at such a high clip, given the aggressive competition of Yahoo and Microsoft for space on personal computer desktops and advertising dollars. In the past year, Google's rivals have launched improved search engines, better e-mail systems and a spattering of applications aimed at capturing eyeballs.

In its filing Thursday, Google said it expects its revenue growth rate to decline over time and anticipates "there will be downward pressure on our operating margin."

But Google has not stood still.

It has branched out from Internet search to desktop search, increased storage space in its free e-mail service to more than 2.5 gigabytes and beafed up its local search and map-based services. It also provides a video search tool, a Web browsing accelerator and a shopping comparison site.

Google recently increased its 2005 capital expenditure forecast to more than $700 million from more than $600 million.

Source: Buffalo News

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