Google Inc. could execute its initial public offering as soon as this morning, but the company will be about half as big, and its employees much less rich, than previously expected, after the company cut its initial share price yesterday.
The most hotly anticipated internet IPO of the last couple of years will be priced at $85 to $95 per share, down from the $108 to $135 that Google initially estimated. Because of the lower price, company insiders will not sell as many of their shares.
Google itself will still sell about 14.1 million shares, but other shareholders will sell less than half as many as they had planned to under the earlier higher price range. A total of 19.6 million shares will be floated, down from 25.7 million.
The rub of this is that Google’s market capitalization at the moment of its IPO will be between $1.6 billion and $1.9 billion, down from earlier expectations of up to $3.6 billion. CEO Eric Schmidt will make about $35 million, a third of what was expected.
The offering was priced via an auction process that closed yesterday as the markets closed. The Securities and Exchange Commission made Google’s registration effective yesterday at 4pm US Eastern time, meaning the firm can IPO as soon as today.
The upset comes after a series of minor controversies surrounding the offering, the most recent of which was an interview with Google’s co-founders Sergey Brin and Larry Page published on Friday by Playboy.
Some said the timing of the publication could have upset the SEC’s vague quiet period rules, which forbids companies from hyping a stock by releasing information not in the prospectus in the days leading up to an IPO.
That issue was resolved when the SEC asked Google to publish the full text of the interview in its prospectus. The SEC is also investigating the company’s disclosures that it issued billions of dollars worth of shares to employees without registering them.