Google IPO may help raise fortunes of tech industry
More than two dozen high-tech companies have filed for IPOs in recent months
IDG News Service - Google Inc.'s filing for an initial public offering could provide a boost for other technology companies seeking to raise public funds, although the popular search-engine company is by no means ahead of the field with its move to become a listed company, industry watchers said.
Google filed papers for its much-anticipated public offering yesterday (see story), hoping to raise more than $2 billion from the sale of its stock. The company's popularity, combined with an almost nostalgic regard for its dot-com business model, has attracted widespread attention to the move among investors and the media.
In fact, the IPO wagon had already started rolling without Google's help. More than two dozen high-tech companies have filed for public offerings in recent months, including Salesforce.com Inc., Shopping.com, Brightmail Inc. and Lindows Inc.
"The Google filing is certainly good news for the technology sector, because it demonstrates the impressive growth for which technology companies generally have the potential. However, Google's IPO is not driving a revival of the technology sector. That revival is already well under way," wrote Jonathan Silver, managing director of Core Capital Partners, in an e-mail response to questions.
Even so, if Google's IPO is as successful as many analysts predict, it could serve as a public statement that will entice investors back to the technology sector and make it easier for other, lesser-known companies to follow suit, said Tom Taulli, a finance professor at the University of Southern California in Los Angeles and author of Investing in IPOs (Bloomberg Press, 2001).
"I think the Google IPO will have a positive impact overall on IPOs," Taulli said. "Does it mean a huge surge in the volume of public offerings? I don't think so, but I do think it will lift all boats."
For smaller companies, going public can provide an injection of funds for developing and marketing their products, a chance to publicize their brand and a way to generate returns for their venture investors. For larger companies like Google, it can also provide a means to make acquisitions.
Analysts don't expect a rerun of the late 1990s, when investors threw money at companies that sometimes had little more than a bright idea. But if Google's IPO goes well, the fact that the company is so well known could lure investors back into high tech, some analysts said.
"If we see a situation where those shares jump up, then we're back off to the races," said Fred Siegel, president of portfolio management company The Siegel Group Inc. in New Orleans. "I don't think we'll see another bubble anytime
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