Capital Markets

Google This: IPO Market Is Wilting

Facing a state regulatory probe, the Web-search company is leading a pack of troubled public offerings.
Stephen TaubAugust 9, 2004

Google continues to gain attention – this time from regulators. Last Thursday, the California Department of Corporations said that it is investigating possible securities law violations the company said it might have committed in issuing unregistered shares, according to Bloomberg.

Google was hoping to raise as much as $3.3 billion in its IPO as early as Wednesday. But the issue may be postponed by as much as a few weeks in light of the new probe.

What’s more, there are apparently several other planned offerings for August that have been pulled from the calendar, thanks to the suddenly sour stock market environment. Just three of 10 companies that planned to issue new shares last Thursday alone went ahead with their offerings, according to Dow Jones.

Further, those offerings were made at prices below what the companies were hoping to receive. For example, Commercial Vehicle Group Inc. sold 9.25 million shares at $13 a pop. It was hoping to receive between $15 and $17 per share.

RightNow Technologies Inc. fetched $7 apiece for its 6.3 million shares instead of $9 to $11. And New River Pharmaceuticals, which had hoped to sell 4.2 million shares at a range of $10 to $14 per share, wound up pricing its offering at $8. The shares, which were offered in a similar auction to the one Google plans to use, traded as low as $7.25 in its first day of trading.

Not all companies had to scale back their plans, however, according to a story in Navteq Corp., a Chicago-based unit of Royal Philips Electronics NV, raised a greater-than-expected $880 million after shares were priced near the upper end of the range late last week,

CNL Hotels & Resorts Inc., looking to raise $600 million, and Capital Lodging Inc., looking to raise $225 million, were among those companies that postponed IPOs, noted.

Google is expecting that its shares will be valued at $108 to $135 at the IPO.