Internet search-engine giant Google slashed billions of dollars from the target launch valuation of its stock on Wednesday in a major upset for the biggest technology flotation since the dot.com bubble burst four years ago.
Google said it has reduced the price range of its flotation shares to between $85 and $95 from $108 to $135, amounting to about a 26% cut in the previous range, which had valued the company at up to R36-billion.
The company had said it might cut the price to enable more investors to get the stock and to help offset the risk of a first-day plunge on the stock market.
World stock markets have been weak recently, owing mainly to global political uncertainties and the high price of oil.
The company, which operates the leading internet search engine, said it hopes it will win approval on Wednesday from United States regulators for its initial public offering (IPO).
Google and its underwriters have requested that the Securities and Exchange Commission (SEC) declare the registration statement effective on Wednesday at 4pm in New York (8pm GMT). It is only after the SEC decision that the share flotation price will be known.
If approved on Wednesday, trading in Google shares could begin on Thursday on the technology-heavy Nasdaq stock exchange in New York, under the stock symbol GOOG.
The company also scaled back the number of shares offered by 6,1-million to about 19,6-million shares, a reduction of about 24%.
Google shares may start trading at a ”clearing price” arrived through a complicated and unorthodox auction.
Investors who pre-registered for the auction have been placing bids since Friday.
The planned IPO of Google, founded by computer whizz kids Sergey Brin (30) and Larry Page (31), has been rocky.
It hit headlines last week when the co-founders laid bare corporate details in an interview with Playboy magazine.
The group said on Friday it believes the splash, entitled ”Playboy interview: Google guys”, abided by securities regulations, which restrict information released ahead of an IPO.
”If our involvement in a September 2004 magazine article about Google were held to be in violation of the Securities Act of 1933, we could be required to repurchase securities sold in this offering,” Google said.
A source close to the SEC said the market regulator would not stop the offering but could not, however, rule out future action against Google.
In the September issue of Playboy, Page and Brin discuss the company’s post-IPO culture and Google’s fledgling e-mail service.
In six quick years, Google transformed internet use worldwide and provided a lifeline to millions of surfers who created a new verb from its name.
The huge offering mirrors some of the enthusiasm of the late 1990s dot-com boom.
But it is also bringing the privately held company out of the shadows by requiring it to publish key financial data it has guarded closely.
Google’s search engine is the world’s most important with about 200-million searches a day. Google also licenses its technology to scores of companies, including America Online.
Its information base includes about four billion webpages. It can search in 97 languages and has a bigger audience outside the US than inside the country.
For Wall Street, however, Google’s innovation has come in what is known as paid search listings — or keyword advertising — allowing an advertiser to direct an advert to a web user based on the type of search conducted. — Sapa-AFP