For Google, Going Public Is Far From a No-Brainer

Google Inc., the world's biggest Internet search provider, is widely expected to file papers this week that would declare its intention to raise billions of dollars in an initial public offering.

But should it?

An IPO can bring riches for employees and currency to make acquisitions.

It can also cause big headaches for management, prompt worker defections and put the company at the mercy of investors focused heavily on quarterly profit targets. And for a company as well-known and profitable as Google, analysts and industry executives said, the costs may outweigh the benefits.

"In many ways, going public is going to be one of the worst things that could happen to Google," said Danny Sullivan, editor of the Search Engine Watch newsletter.

Executives of the Mountain View, Calif., company are expected to make a decision soon because a provision of a 70-year-old federal law requires them to file papers detailing their business operations by Friday.

Under the Securities Exchange Act of 1934, companies with more than $10 million in assets and 500 shareholders must disclose financial results, business risks and other information about their operations. Google probably triggered that regulation during its 2003 fiscal year by distributing stock options -- a staple of Silicon Valley compensation -- to most of its more than 1,000 employees.

That means the tight-lipped company has until Friday to submit a so-called Form 10, which requires as much disclosure as the S-1 that must be filed when a company registers for an IPO.

As long as Google is giving up that many secrets, many people figure, it might as well use the stock market to reward its employees and venture capital investors.

"VCs don't invest in something just to sit and watch it grow in the shadows," said John Fitzgibbon, analyst with IPO Desktop, an investment news website. "They want to cash out."

Google, which didn't respond to requests for comment, also could use the IPO proceeds to take on costly projects. That could come in handy as competition ratchets up from Yahoo Inc. and Microsoft Corp., two deep-pocketed rivals that are developing search technologies to gun for Google's users and advertisers.

Most tech start-ups have no choice but to go public -- they need the cash to fund their expansions. But Google has been profitable for years, making money by licensing its search technology to other websites and raking in revenue from targeted ads placed beside search results. Analysts peg Google's annual profit at $150 million to $350 million on sales as high as $1 billion.