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Wed, Jul 21, 2004 - Page 12 News List

Analysts await Google valuation

IPO PLAN The Internet search engine is expected to provide its self-appraisal sometime this week when it updates its prospectus with its second-quarter results


How much is Google Inc really worth? The online search engine leader appears poised to weigh in with its opinion, helping bring clarity to a question that has been puzzling Silicon Valley and Wall Street since the company filed its initial public offering (IPO) plans two-and-a-half months ago.

Industry analysts expect Google to provide a self-appraisal when the Mountain View-based company updates the prospectus for its IPO with its second quarter results. Google's second quarter ended June 30, meaning the update could come as early as this week.

Based on the numbers filed so far, industry experts have pegged Google's market value at between US$20 billion and US$30 billion -- an extraordinary figure for a company that is just five years old.

The estimates are likely to become more precise once Google sets a price range, said Kathleen Smith, an IPO analyst for Renaissance Capital in Connecticut.

"That's when the analysis will really begin because we will finally have something to work with," she said.

Google officials didn't respond to a request for comment on Monday. Companies pursuing IPOs generally are forbidden to make public comments about the process or their finances.

Setting a price range for an IPO is a seminal step taken by all companies preparing to sell their stock for the first time. After a company sets a price range, its executives and investment bankers typically meet with analysts and institutional investors for several weeks before finally selling the shares.

Barring complications, Google's IPO could be completed next month, although industry observers say it wouldn't be surprising if the company decided to wait until after Labor Day.

Google hinted at what it might be worth last month in a filing that valued employee stock options. In that assessment, the company estimated its stock was worth US$88.13 per share as of March 31, a price that assigned Google a market value of about US$23 billion.

Analysts expect Google to split its stock before going public so its shares aren't so expensive.

Executing a stock split wouldn't affect Google's market value because the technique also increases the number of shares outstanding in proportion to the reduction in per-share price.

Google's IPO price could still change even after the company establishes a target. The company hopes to determine the final price in an auction that will be open to all qualified investors who set up an account at one of 30 brokerages.

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