Google unveils £1.5bn float

TRUE to its quirky identity, internet search engine Google, which has finally announced its long-awaited flotation, is making few concessions to Wall Street, breaking rules usually sacrosanct when a company comes to the stock market.

About $2.7bn (£1.5bn) of stock will be sold, and Google's founders are ensuring the public will have little effect on the way the company operates by instigating a two-tier shareholding structure in which B shares will have 10 times the voting power of the A shares that are being sold to private investors.

The founders, Larry Page and Sergey Brin, and chief executive Eric Schmidt, who together own about 40% of the company, will hold B shares, enabling them to retain effective control of Google.

'We understand some investors do not favour dual-class structures,' the company said. 'We believe a dual-class voting structure will enable us to retain many of the positive aspects of being private.'

Google also said it would not 'smooth' its quarterly results, as is done by many large US companies, merely to meet Wall Street's expectations.

That rejection of Wall Street's focus on short-term results is matched by a decision to hold an online Dutch auction to sell the shares.

That move is designed to give private investors more chance of participating at the expense of institutions. Anyone will be able to put in a bid, with the price and allocations then made by Google's bankers, Morgan Stanley and Credit Suisse First Boston, who stand to reap fees of up to $100m.

Analysts said Google was taking advantage of this year's rise in technology shares but warned that the float was unlikely to trigger a wave of other issues.

'I don't think this is like 1999 or 2000 where you can bring any company public,' said Walter Price, a tech fund manager at Dresdner RCM Global in San Francisco.

The money Google will raise from the float will give it a valuable weapon as competition intensifies with other search-engine companies such as Yahoo! and MSN.

Google is one of the few dotcom issues to make a market debut as a profitable concern.

Of the other big, listed internet firms, only eBay, which joined Nasdaq in September 1998, has been consistently in the black. The online auctioneer's share price has also performed, rising from $3.95 to a peak of about $83 now.

Most of the sector, however, is well off its tech-boom highs. Amazon.com traded at $1.95 on its first day, peaked at $110.62 in April 1999 and is now little more than $48, while Yahoo! began at $2.75 in 1996 and rose to $250.06 on 4 January 2000, before falling to about $56 now.

But at least those stocks are above water. More typical is TheGlobe.com which soared by 605% from $9 to $63.50 on its first day but now trades at less than a dollar.