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Last Updated: Friday, 30 April, 2004, 10:30 GMT 11:30 UK
Q&A: Google goes public
Google has finally revealed the terms of its widely anticipated flotation.

The sign outside the Googleplex
The company said it will sell as much as $2.7bn (1.62bn) of stock in the company.

BBC News Online takes a look at what the float will mean for Google, the technology sector and its prospective shareholders.


Why has Google decided to go public?

Despite several denials from Google's founders and executives, the decision to take the firm public comes as little surprise.

It has always preferred to keep its finances under wraps till now, but its size means it has a legal duty to file financial reports with the US Securities and Exchange Commission.

That duty - a costly one, in time and money as well as in giving away detailed information to its competitors for the first time - probably gave its founders the impetus finally to go ahead with the sell-off.

A management team distracted by a series of short-term targets is as pointless as a dieter stepping on a scale every half-hour
Google 'Owner's Manual'
Going public will enable Google to raise more cash, which it can then invest in new innovations, research and development and even expansion.

Why are people saying the decision is unusual?

The founders are taking great care to make sure they can still keep running the company as they wish.

They make it clear that they have no intention of being dominated by the traditional Wall Street focus on quarterly results.

"A management team distracted by a series of short-term targets is as pointless as a dieter stepping on a scale every half-hour," they wrote in an "Owner's Manual" attached to the SEC filing.

To make sure they keep their hands on the tiller, they are giving the company two classes of share.

The ones they and many existing shareholders will retain - Class B - have ten times the voting power of the Class A ones to be floated.

With 33% of the Class B stock, which cannot be sold to public investors, the founders will be able to retain significant control over the company's strategy.

GOOGLESTATS
Flotation size: $2.7bn
Possible value after flotation: $20bn
Staff: 1,907
Revenue (2003): $961.9m
Profit (2003): $105.6m
Revenue (Q1 2004): $389.6m
Profit (Q1 2004): $64m
They are also planning to auction the shares online in a complex system which, they say, will allow smaller shareholders to get a fairer price.

The process contrasts with the more usual one of leaving the allocation to investment banks - a policy which has been criticised in the past for awarding shares on the cheap to favoured bank clients.

You keep mentioning these founders. Who are they?

Larry Page, aged 31, and Sergey Brin, aged 30, are the ones who started the firm in the traditional Silicon Valley way: out of a garage.

Both have been fascinated by maths, computers and programming from an early age.

(The maths shows up in an inside joke in the flotation: the offering is in fact $2,718,281,828, a figure derived from a key part of calculus.)

They met while graduate students at Stanford University, where they first sketched out their plans to make internet searches work better.

Their idea was to use a page's popularity - how many other pages link to it - as the basis for ranking search results.

The outcome: 200 million search requests a day in almost 100 languages, half of which come from outside the US.

Needless to say, both are now extremely rich - at least on paper.

So they're corporate hotshots now, then?

Not quite. Neither does their company fit the template of the go-ahead tech behemoth.

Google founders Sergey Brin and Larry Page
Brin (left) and Page want to keep Google's ethos intact
Certainly it is growing fast, with almost 2,000 staff and nearly a billion dollars in revenue in 2003.

(Incidentally, it made a profit of more than $100m that year, setting it far apart from the heavy losses usual among the hot internet stocks of the 1990s.)

Both founders and firm do their best to retain a laid-back iconography.

The corporate HQ is called the "Googleplex", and plays host to pick-up roller-hockey matches, on-site pianos and masseurs, and a chef who allegedly used to work for uber-hippy band The Grateful Dead.

That atmosphere, the company hopes, will survive the flotation.

So in amongst the bean-bag chairs and the rest, how do they actually make the money?

About 95% of the firm's revenues comes from advertising - most of which amounts to selling companies the right to show ads down the right-hand side of a search page when a user searches for a particular keyword.

That market is expected to be worth as much as $3.2bn overall in the US alone in 2004.

But the practice is not without its detractors.

Several companies have sued, charging that their trademarks are being violated when Google sells advertising space associated with searches for their name to competitors.

Some people in internet advertising see even more problems ahead when the company's e-mail service, Gmail, goes live.

Google plans to use the same technology to scan e-mails and post adverts.

But critics charge that people sending e-mail to Gmail users will not have agreed to having their e-mails read.

And the effect could be to allow a company to advertise directly to everyone on its rival's mailing list.


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