Google IPO Unlikely to Produce Spending Sprees
REDWOOD CITY, Calif. — When the millionaires-to-be at Google Inc. decide to go luxury-car shopping, the Carlsen Porsche sign beside Silicon Valley's Highway 101 may catch their eye.
Salesmen on the showroom floor here have been buzzing about Google's recently announced plan to hold the biggest initial public offering of stock for a high-tech company since the Nasdaq meltdown four years ago. The dealership already counts Google employees among its customers, and a few have said they planned to upgrade from their entry-level Boxster convertibles after the IPO.
But this wave of Internet mania won't be like the last one, sales manager Tom Yamamoto figures, and he's keeping his expectations in check. The Google IPO "will start things rolling," he said last week, "but it's going to be a slow start."
From the headlines in the media and the chatter around water coolers, you might think Google was Silicon Valley's savior: an Internet search company that will single-handedly restore the world's high-tech mecca to glory.
Economists and analysts, however, are skeptical that Google's IPO, which could raise as much as $2.7 billion, will rejuvenate the local economy. Few people who follow the Mountain View, Calif., company expect gaudy displays of wealth. After all, its young founders live in rented apartments and drive sensible Toyota Prius hybrid cars, despite paper wealth in the 10-figure range.
Even as sales and profits rise at many technology companies, high unemployment, outsourcing of work overseas and fear of a return to the excesses of the late 1990s may be too much for Google alone to overcome.
"The notion that it heralds a triumphant return of the valley is just shy of completely silly," said Jim Koch, director of the Center for Science, Technology and Society at Santa Clara University.
Of course, if the region were to pin its hopes on a single company, Google would be a good bet. The closely held concern that has turned its brand name into a verb has been profitable since 2001, building a cash hoard of $455 million. It reported nearly $1 billion in sales of search-related advertisements in 2003, and its revenue is on pace to soar 50% this year.
When Google does go public this summer or fall, some analysts expect that the stock market will value it at $25 billion to $50 billion, roughly on par with Internet heavyweights EBay Inc. and Yahoo Inc.
