The Google IPO

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Case Details:

Case Code : FINC037
Case Length : 14 Pages
Period : 1985 - 2004
Pub. Date : 2004
Teaching Note : Available
Organization : Google
Industry : Internet Search
Countries : Global

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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"Dutch Auction": An Unconventional Mode of IPO Launch

The Google IPO was one of the most awaited IPOs in 2004. As soon as the company made its announcement that it would go public in 2004, investors, competitors, consumers and bankers, all began waiting eagerly for the IPO to materialize.

However, Google's announcement came at a time when most technology firms' IPOs were not performing well. In fact, IPOs in general did not perform well in the year 2004. (Refer to Exhibit II for performance of some Technology IPOs in the year 2004).

According to Dealogic, a research firm, IPOs in America in 2004 fell by nearly 4%. Many companies that had initially planned to go public in 2004 withdrew their registration when they saw the poor performance of NASDAQ, which fell by 16% between April 2004 and August 2004.

On the other hand, 2004 had been a very profitable year for Google...

Finance | Case Study in Management, Operations, Strategies, Finance, Case Studies

All's Well That Ends Well

On August 19, just a few hours of going public, Google's share climbed to more than $100, an increase of almost 20% on the initial offer. A day later, the shares fetched nearly $108.31.

The IPO managed to raise nearly $1.4 billion for Google, a remarkable feat, considering the poor performance of other technology shares. Of the 1.4 billion earned, Google earned nearly 1.1 billion while its founders and the initial investors earned the rest.

Despite all the speculation, the Google IPO had performed extremely well. In fact, many experts felt that had the Google founders not succumbed to market pressure and had not lowered the share price drastically, the company would have earned an extra $23 per share or an additional $30 million. However, even after the IPO's successful performance, many investment bankers insisted that the IPO had not been managed well...


Exhibit I: The Dutch Auction IPO Vs The Traditional IPO
Exhibit II: Performance of Some Technology IPOs in 2004
Exhibit III: Income Statement
Exhibit IV: Initial Public Offering Details

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