Google File For A Further $4Bn

Google File For A Further $4BnThe big news late yesterday was that Google announced a second round share offer – on the first anniversary of their IPO.

In their now-to-be-expected kooky way, their planning to sell 14,159,265 shares, which of course is derived from the value of pi.

At the current valuation for their stock, this would bring in another $4Bn, on top of the approximately $3Bn they have sitting in the bank currently.

Why do they need that money? Is the question on many lips. There’s been many project been floating around with Google’s name attached, among them, becoming a WiFi provider.

S&P analyst Scott Kessler view is that with Microsoft ($37.8 billion in cash) and Yahoo ($3.4 billion) having a ton of cash in the bank, Google needs the money to be able to compete in the global Internet market, in an “arms race” as he puts it.

Acquisitions would appear to be an obvious use of the money. To date Google hasn’t had to spent that much when it’s brought companies in to its fold, as it’s bought them at early stages, but perhaps their future targets are larger now.

Google File For A Further $4BnMary Meeker from Morgan Stanley clearly feels the same, “this cash balance could allow the company increased flexibility to consider large strategic acquisitions.”

Of the names that we’ve heard being knocked around as possible targets for a Google purchase including Tivo and Infospace and a number of Chinese companies.

Interesting extracts from the S-3 filing reveal some areas that they think are threats.

We face significant competition from Microsoft and Yahoo.

We face formidable competition in every aspect of our business, and particularly from other companies that seek to connect people with information on the web and provide them with relevant advertising. Currently, we consider our primary competitors to be Microsoft Corporation and Yahoo! Inc. Microsoft recently introduced a new search engine and has announced plans to develop features that make web search a more integrated part of its Windows operating system or other desktop software products. We expect that Microsoft will increasingly use its financial and engineering resources to compete with us. Both Microsoft and Yahoo have more employees than we do (in Microsoft’s case, currently nearly 14 times as many). Microsoft also has significantly more cash resources than we do. Both of these companies also have longer operating histories and more established relationships with customers and end users. They can use their experience and resources against us in a variety of competitive ways, including by making acquisitions, investing more aggressively in research and development and competing more aggressively for advertisers and web sites. Microsoft and Yahoo also may have a greater ability to attract and retain users than we do because they operate Internet portals with a broad range of content products and services. If Microsoft or Yahoo are successful in providing similar or better web search results compared to ours or leverage their platforms to make their web search services easier to access than ours, we could experience a significant decline in user traffic. Any such decline in traffic could negatively affect our revenues.

Other headline include

We expect our revenue growth rate to decline and anticipate downward pressure on our operating margin in the future.

We rely on our Google Network members for a significant portion of our revenues, and we benefit from our association with them. The loss of these members could adversely affect our business.

New technologies could block our ads, which would harm our business.

Google’s S-3 filing document