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Amid SEC Delay; Google Cuts Deal

Jeffrey R. Hirschkorn, Senior IPO Analyst, Aug. 18, 2004

Clearly, all eyes are on the pending initial public offering from �Net search engine Google (proposed: GOOG). After many critics, including yours truly, raised serious concern over the rather extreme pricing for the Google deal, reality is starting to set in. Earlier today, Google, which has retained Credit Suisse First Boston and Morgan Stanley to facilitate its Dutch auction IPO, lowered talk to $85-$95. Initial pricing was set at $108-$135.

Furthermore, the company�s highflying co-founders and selling holders have indicated in a newly filed amendment that they are selling fewer shares than originally planned. Due to the lowered pricing, selling stockholders are offering 5.5 million shares, down from earlier goals of 11.6 million. The company is still offering nearly 14.1 million shares in the IPO. In all, a total of 19.6 million shares are expected to sell.

Changes in this IPO structure reduce the maximum proceeds to $1.9 billion, creating a market value of $26-$36 billion for Google. The company has sent a second request to the SEC, asking for its registration statement to be declared effective. If it is approved, then the deal can price and trading will commence. Rumor has it that the SEC will grant release to Google late today. The downsizing of the mega-offering is also a sign of current weakness for IPOs across the board. As such, this is the last week of deals scheduled for the generally slow summer months. For 2004, we�ve bucked the trend and have had a strong run � albeit some weak performances � in the summer period.

Case in point: WebSideStory (proposed: WSSI), an Internet data analysis concern trying to go public for the second time in its corporate life, cut the proposed offering structure in its IPO. New talk has been set at $8-$9, down from $10-$12. Friedman Billings Ramsey and RBC Capital Markets are joint lead managers of the five million-share IPO. Pricing is expected to occur late-week.

eCost.com (proposed: ECST), currently a subsidiary of PC Mall, cut the proposed pricing on its IPO - expected this week - to $7 from $9-$11. William Blair is the lead manager.

Of particular interest: Tom Taulli, co-founder of Current Offerings, will continue his media appearances today with regard to the pending IPO from Google. Catch him on CNBC�s Street Signs today for his intricate analysis on the �Net search engine.

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