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Silicon Valley, Stock Traders Await Google IPO

Posted on: Thursday, 29 April 2004, 06:00 CDT

By RACHEL KONRAD

SAN JOSE, Calif. (AP) -- Silicon Valley entrepreneurs and Wall Street investors are breathlessly awaiting an initial public stock offering by Google, but pessimists say a single search engine couldn't possibly reverse the technology industry's flagging fortunes.

Mountain View, Calif.-based Google - a rare dot-com survivor of the four-year economic downturn - will likely announce plans for an IPO Thursday. The company, which competes against Microsoft and Yahoo!, is expected to go public later this year.

Notoriously optimistic entrepreneurs in the epicenter of the world's tech industry say Google's IPO could become a potent psychological symbol of a broad rebound. They're comparing iconoclastic co-founders Larry Page and Sergey Brin to other Silicon Valley teams: Steve Wozniak and Steve Jobs of Apple Computer (AAPL); Bill Hewlett and Dave Packard of Hewlett-Packard; and Gordon Moore, Andy Grove and Robert Noyce of Intel.

But skeptics - including economists and investors burned in the dot-com collapse of 2000 - aren't betting that Google can spark a rebound. Silicon Valley has lost 200,000 jobs and has suffered a 10-fold increase in corporate office vacancy rates in four years.

"Google will have the effect of rekindling or reinforcing that Silicon Valley spirit of optimism and techno-utopianism," said Jim Koch, director of the Center for Science, Technology and Society at Santa Clara University. "What it won't rekindle is the sense of broad-scale opportunity and instant riches of the late 1990s. The late '90s were a perturbation, and they're not going to be repeated."

Cynics insist that Google's IPO would transform founders and venture capitalists into billionaires - but wouldn't boost fortunes of struggling tech workers in the region. Thousands of high-paying jobs have disappeared due to offshore outsourcing, automation and corporate consolidation.

"The big distinction in the next economic cycle will be between the stock market and the job market," said Stephen Levy, director and senior economist at the Palo Alto-based Center for Continuing Study of the California Economy. "In the late '90s, the craziness in the market induced people to start a lot of companies that in retrospect had no business plan - they started, grew and then went bankrupt. That won't happen this time."

Longtime Silicon Valley executives were more measured in their reactions to news that Google could soon become a public company.

Gordon Eubanks, president and chief executive of security startup Oblix Inc., said he hopes Google's IPO inspires a new generation of entrepreneurs who get their start in a proverbial garage in Palo Alto - the way computer maker HP was founded.

But Eubanks, former president and chief executive of Symantec Corp. (SYMC), says he's even more bullish about expected IPOs by lesser known Silicon Valley companies. Salesforce.com, which helps companies manage customers, and anti-spam company Brightmail, are expected to have IPOs later this year.

"Of course Google can go public - we're fascinated with it because it's got these young, good-looking kids as founders," said Eubanks, who took Symantec public in the late '80s. "But the valley is not all about the king-of-the-hills, the Googles. It's about companies like Brightmail that are built from startups into successful businesses without the fanfare."

Other entrepreneurs are hopeful that Wall Street's giddy anticipation over Google - which could raise $2 billion in an IPO - could extend to other innovative startups.

Toni Schneider, 34, is chief executive of Oddpost Inc., which specializes in Web-based e-mail. The San Francisco-based startup recently upgraded its offices from a dilapidated Chinatown storefront to a horse stable converted into a funky loft.

"There's been a lot of people talking about search and social networking software for a few years, but the Google frenzy is generating a renewed attention on Web mail," said Schneider, a Stanford University alum, like Page and Brin. "Google is making people think about the next generation of technology in our specific area - it's great."

Paul Koontz, general partner of Menlo Park-based Foundation Capital, said Google's IPO is more promising than the 1995 debut of Netscape Communications. The Web browser's IPO ignited Wall Street's interest in Internet companies - and ushered a wave of venture capital, overexpansion and collapse.

"Netscape had extraordinary growth and potential but it didn't come close to the scale of Google in terms of revenue," said Koontz, Netscape's first vice president of marketing. "The Google guys are well established, and it would only take a massive sea change in technology to compromise their footing."

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