Google files for long-awaited $2.7bn flotation

Google, the internet's leading search engine, filed its much-anticipated plans for a initial public offering last night, igniting widespread excitement about a possible recovery in the technology sector four years after the bursting of the dot.com bubble.

Google, the internet's leading search engine, filed its much-anticipated plans for a initial public offering last night, igniting widespread excitement about a possible recovery in the technology sector four years after the bursting of the dot.com bubble.

The Silicon Valley company, which has gone from garage start-up to household word in just five years, said it hoped to raise up to $2.7bn (£1.5bn) using an auction system designed to make more shares available to individual investors, who often lose out to institutions in popular IPOs. Morgan Stanley and Credit Suisse First Boston have been picked to manage the flotation.

The filing also revealed that Google will issue two classes of shares, which will allow the co-founders Larry Page and Sergey Brin to retain control through Class B shares with 10 times the voting rights of the Class A common stock being sold.

Google said it would list on the New York Stock Exchange or Nasdaq, but the filing did not specify a share price, and no date was given, although it is likely to be several more months before the stock goes on sale. Analysts believe the company is worth between $20bn and $25bn, though the auction sale may push the price much higher.

The filing revealed that Mssrs Page, 31, and Brin, 30, own 77.1 million Class B shares ­ about one-third of Google. The Silicon Valley venture capitalists Sequoia Capital and Kleiner Perkins Caufield & Byers, which together invested £25m in Google in 1999, each have almost 24 million Class B shares.

Last night's announcement was widely anticipated because it coincided with a deadline obliging Google to divulge basic financial data for the first time. A little-invoked law dating back to 1934 requires any US company with 500 shareholders and $10m in assets ­ a threshold Google reached last year ­ to disclose its assets to the Securities and Exchange Commission. According to the SEC filing, Google earned $105.6m on revenues of $962m in 2003. In the first quarter of 2004, it posted a profit of $64m, more than doubling its performance in the same period last year.

Google has added several new products as speculation of a flotation has mounted in recent months. They include an e-mail service, Gmail, and an online shopping arm called Froogle.

The tech sector has been starved of major IPOs since 2000, when AT&T floated its wireless phone subsidiary. Since then, Silicon Valley has seen the loss of 200,000 jobs and a tenfold increase in office vacancies.

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