Google faces challenge as public offering draws near

MOUNTAIN VIEW, CA: Google's highly anticipated and much salivated over IPO has hit a couple of rough patches along the path to market.

MOUNTAIN VIEW, CA: Google's highly anticipated and much salivated over IPO has hit a couple of rough patches along the path to market.

First was the somewhat cool reaction to the company's announcement that it expected its stock to sell as high as $135 a share. Many media outlets wondered whether Google was worth such a high price. A couple of days later, The Wall Street Journal reported that investor road shows have shed little light on the company's strategy to keep growth going. All this could give investors a sense of d?ja vu, harkening back to those dot-com days when buzz- and hype-heavy companies told investors not to worry. Google declined to comment for this story. "Clearly Google has no problem with PR," said Tom Taulli, who lecturers on finance at the University of Southern California. "They are very good on that front, but they have to play to Wall Street, which operates on certain rules. Google needs to provide some transparency. "I know lots of companies going public are deathly afraid of saying anything," Taulli added. "If you look at Google's prospectus, they are sticking with the information in the prospectus. But it doesn't have a lot of granularity for investors to sink their teeth into." Taulli pointed to two highly touted recent IPOs - Salesforce.com and Blue Nile. After initially doing well after going public, both companies have seen their stock prices fall. A group of Salesforce.com shareholders has sued, accusing the company of misleading investors to inflate its IPO price. Some of the cool reaction to Google could be from institutional investors who are upset that the company is making its IPO available to a broader group of investors than usual, added Taulli. "There are two things to look for," said Gregory Pettit, SVP and director of financial communications at Hill & Knowlton. "How much participation are you going to get from institutional investors? And second, if those institutions don't invest, how much will that affect the stock price?" Any grumbling is certainly subjective, added Michael Claes, MD of Burson-Marsteller's corporate practice. While a certain level of disclosure is required, Google seems to have met that level, at least in the eyes of the Securities and Exchange Commission, said Claes. But if anyone is getting a whiff of the dot-com era, it's from a combination of tremendous anticipation, coupled with road shows that are "long on theater, short on detail," said Andrew Merrill, global managing director of Edelman's financial communications and IR practice.

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