WASHINGTON, Oct. 28 (UPI) -- Like a number of famous Internet search engines, Google had its start in a dorm room. It opted, however, not to take itself public earlier in life like some of the other noted engines.
Also, there's been the small matter of the tech recession of the past three years kicked off by the March 2,000 dot.com crash.
Now, however, with the crash perhaps sufficiently receded from memory, the supreme member of the search engine club may take itself public at last, with the well-known Google engine possibly hitting the $15 billion mark in market capitalization.
According to media reports, the Mountain View, Calif-based search engine has begun courting investment bankers to handle the company's initial public offering. Reports have appeared in the Financial Times and elsewhere in the media.
In keeping with Google's online business model, the company is expected to run its IPO as a electronic auction, which would reduce the underwriting fees paid to any respective investment bank handling the IPO and make for a level playing field for any potential issue buyers who could bid on shares directly. While such an online auction of shares would not be a first, this would be the largest.
The FT reported that any such massive online share offer would take place in March.
Google spokesman David Krane declined to comment on news of the company's reported plans for an IPO.
Professor Nirmal Pal, the Executive Director of the eBusiness Research Center at Penn State's Smeal College of Business is optimistic about the prospects for the IPO.
"Will it fly? As we all know, next to emailing, searching the Web is the most prolific activity of the digital age. It is rumored that Microsoft tried to acquire Google but could not agree to a price point. They are reportedly developing their own search tools. Google has demonstrated a viable business and profit model, therefore I most definitely think their IPO will fly," Pal told United Press International.
"Is the company worth $15 billion of estimated value? I believe that their revenue this year will be close to a billion dollars. Whatever revenue multiplier you would use
to come to a market valuation, it does not come close to $15 billion in my estimate," Pal said of how much the Google IPO might price for.
"I estimate the valuation to be much lower than that," he added.
Currently a privately held company, Google's major funding partners include the investment firms of Kleiner Perkins Caufield & Byers and Sequoia Capital. Other investors include Stanford University; Andy Bechtolsheim, co-founder of Sun Microsystems and current vice president at Cisco Systems; and Ram Shriram, who has held the positions of president of Junglee and vice president of Business Development at Amazon.com.
Estimates of Google's current revenues range from $500 million to $1 billion a year, according to various analysts. The majority of the company's revenue is advertising driven.
Started five years ago by two enterprising Stanford students -- the same school which brought the world Yahoo - Google quickly gained in the search ranks by virtue of its "page ranking" system which often made for more successful and accurate searches. Founders Ph.D computer science candidates Sergey Brin and Larry Page formulated the page ranking algorithm while still in school, surmising, among other factors, that pages which linked to more often (more popular) were greater sources of information.
Danny Sullivan, the editor and publisher of the well-regarded searchenginewatch.com Web site noted how Google quickly advanced over fellow search engines.
"Google was fortunate to come along with a better system of producing search results at a time when its competitors were getting lost in the morass of being portals. They forgot that quality search was something visitors wanted. It gave Google an opportunity, and searchers have since flocked to it," Sullivan told UPI. "Today, now that its competitors have learned how much revenue search can produce, they've greatly improved. Google is still the market leader, but it's competition is much closer."
According to company history, Page's Stanford dorm room becomes Google's data center while Brin's room served as the business office. The two students put their studies on hold, raised $1 million in funding from family, friends, and angel investors to start the company.
On Sept. 7, 1998 Google was incorporated and moved to its first office in a friend's Menlo Park, Calif. garage with four employees. Initially, Google answered an average of 10,000 search queries per day. Also in 1998, PC Magazine included Google, which was still in its "beta," testing phase in the list of Top 100 Web Sites and Search Engines for that year. At the time of its launch, Google faced such large-scale competitors as Alta-Vista and Yahoo (also started at Stanford by Brin and Page friend David Filos,) both of which already had millions of users.
Since its launching, Google has grown to host an estimated 250 million searches daily, the company reported to the searchenginewatch.com Web site.
Google is a play on the word googol, which was coined by Milton Sirotta, nephew of American mathematician Edward Kasner, to refer to the number represented by 1 followed by 100 zeros, of which company promotional material says: "A googol is a very large number. There isn't a googol of anything in the universe. Not stars, not dust particles, not atoms. Google's use of the term reflects the company's mission to organize the immense, seemingly infinite amount of information available on the Web."
The engine maintains a "Zietgiest" category, with the most recent top 10 word or categories being: Texas Chainsaw Massacre, Steve Bartman, Aero Lloyd, Max Payne 2, Yankees, David Blaine, California Lottery, Halloween Costume Ideas, Pumpkin Carving, Bosses Day.
The search engine has worked its way into popular vernacular with the verb "to Google" someone, meaning to look up their background information. Particularly on the dating scene, "to Google" has proved a popular facet of the dating ritual.
With fellow dot.coms Amazon, eBay and Yahoo having a marked jump in share prices over the past 12 months -- after a long malaise and precipitous drop post March 2000 -- the time might be right at last for a Google IPO to help capitalize further growth of its lead position.
