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Google to raise US$4bn for war chest

Google Inc said in a surprise move on Thursday that it would raise a US$4 billion war chest with a new stock offering. The announcement stirred widespread speculation and anxiety in Silicon Valley that Google, the premier online search site, would move aggressively into businesses well beyond search and search-based advertising.

Google, which raised US$1.67 billion in its initial public offering last August, expects to raise US$4.04 billion by selling 14,159,265 million Class A shares, based on Wednesday's share price of US$285.10. In Google's whimsical fashion, the number of shares offered is the same as the first eight digits after the decimal point in pi, the ratio of the circumference of a circle to its diameter, which is 3.14159265.

The company, which had nearly US$3 billion in cash as of the end of June, said little about how it would spend the proceeds from the new sale and it did not say how it would conduct the sale.

Google's filing with the Securities and Exchange Commission stated only that "we may use proceeds of this offering for acquisitions of complementary businesses, technologies or other assets."

That phrasing touched off speculation both in Silicon Valley and on Wall Street about where the company might drive its business.

Some analysts said Google, based in Mountain View, California, may be poised to match Yahoo's recent US$1 billion investment in Alibaba, a Chinese online search site. Others said Google could reach into telecommunications with an acquisition of a company like Skype, a provider of Internet-based phone service.

With US$7 billion in cash, Google could also be eyeing a media or digital content company, analysts said.

Many analysts also read Google's new stock offering as preparation to take on its main competitors Microsoft and Yahoo, both of which are involved in a far broader range of business and investments.

While Google's SEC filing stated, "We have no current agreements or commitments with respect to any material acquisitions," many Google watchers believe it is preparing to shift its business growth strategy.

There has, for example, long been speculation that the company was considering a "Google phone," to allow the company's search service to be accessible to mobile Internet users.

To date, Google has preferred to invest in internal growth and has made only a handful of small acquisitions, frequently to acquire technologies and talent.

Earlier this week, Google quietly acquired Android, Inc, a mobile computing firm based in Palo Alto, California, and founded by Andy Rubin, a former Apple Computer engineer who had previously co-founded Danger, Inc, a maker of a portable wireless data handset. As part of the deal, Rubin has joined Google.

Google also recently acquired Dodgeball, a social-networking site. In the past year, it also purchased Keyhole, which developed a digital satellite imagery program; Picasa, which developed software for editing and sharing digital photos; as well as Applied Semantics, Blogger and Urchin.

"The stakes have gone up," said Andrew Kessler, an independent Silicon Valley investor and analyst. "When you have to throw a billion dollars like Yahoo did to buy a minority position in a Chinese company, that is sort of telling you that their organic growth isn't what it used to be."
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