Salocin

Google IPO

Google is going to IPO in what is probably the most highly anticipated share issue since Netscape fired the starting gun on the tech roller-coaster ride of doom. This IPO is quite cool because the Google boys and girls don't trust the banks to deal with things, and so want to take control away from these institutions and put it in the hands of the little guy.

Investment banks are still recovering from the taint and stench they daubed themselves with when it was discovered that certain clients received significant proportions of cut-price IPO shares in return for being "good customers". The justification for this gravy-train was that these customers would not seek to flip the stock for a quick profit at the earliest possible moment. Unfortunately, it was basically a mispricing that transferred value from the company performing the IPO to the institutional shareholders that ended up with the majority of the shares.

Google is considering ways of avoiding this problem by getting the price set at least partially through an auction process, which would make sure that the shares were sold at the right price. Of course there are flaws with such an approach - a huge number of inexperienced amateur investors could push the stock price to levels that are simply unrealistic, only to watch it collapse in the immediate aftermath.

Either way, the fun bit is Google's "intense and immense disdain" for the banks (quoted from the Financial Times). Anything that reminds the banks that their reputations can be affected by their actions is a good thing as far as I am concerned. I expect that the bankers working on the deal are having to put up with some not insignificant blows to their not insignificant egos!