As the former author of a stock-market pick-'em column (along with my colleague Jim Peltz), I've been getting a lot of inquiries from people lately about whether they should bid on the white-hot initial public offering for the Web search company Google Inc.
In truth, I'm a bit mystified that people are even asking this question. After all, this is the highest-profile IPO in years, for a company that has been relentlessly scrutinized by the experts and pronounced an earnings prodigy. The bidding, furthermore, will be conducted on terms designed to let the little guy in on the action. Therefore, if the issue is, "Should I invest?" the answer is crystal clear: of course not.
Now, before this judgment provokes the Google faithful to march on my office with torches blazing, allow me to say that it has nothing to do with the sterling qualities of the company's service. I myself access Google dozens of times a day because I've found it the quickest and most reliable search page ever. I particularly admire the way the company is always rolling out new search functions without fanfare, as though not to deprive users of the thrill of discovery.
Did you know, for instance, that if you type a mathematical formula into the Google box, it will give you the solution? (This function works in octal, hexadecimal, binary and even Roman numerals.) Google also will return an area code's geographical location; the make and model of a car based on its vehicle identification number; the phone number of a business you identify by name, city and state; and an airliner's arrival and departure info or in-route progress based on the flight number.
I appreciate, too, the company's stated determination to keep its search algorithm unpolluted by pay-for-placement deals or other revenue-enhancing ideas.
It's equally hard not to be impressed by the company's financial results. These were made public April 29, when Google filed a preliminary disclosure with the Securities and Exchange Commission in anticipation of an IPO within the next few months. In this filing, Google reported 2003 sales of nearly $1 billion (mostly from advertising placed discreetly in its search pages), yielding a profit of $106 million, and hinted that revenue and net income were on track to more than double this year.
The company reported about $455 million in cash on hand even before the IPO, which is designed to bring in $2.4 billion or so -- reinforcing the market's perception that the IPO is driven not by the company's need for capital but by a quirk of the securities laws.
