Google Repurchasing Shares Already?
Take a look at this SEC filing, dated today, in which Google is announcing its intent to repurchase 23,443,819 shares of its own stock from current and former employees, plus 5,226,843 shares unexcersized options of Class B common stock. The shares will be repurchased at prices ranging from 30 cents to 80 dollars, equal to what those people paid, plus interest, while the options will be purchased at 20% of current stock value, plus interest. What does this mean? Thanks to Eric Lebeau of Zorgloob for the heads-up.

UPDATE: First off, reading through the filing, I see that Google has always intended this, mentioning it back in the original April 2004 IPO filing. This is an offer that former employees can choose to accept or reject, and Google says they expect the majority to accept it. Basically, that stock seems to violate the Securities Act of 1933 and the state securities laws of Arkansas, California, the District of Columbia, Maryland and New York. As a result, Google is offering to buy back the 23 million shares and 5 million options, held by 1,279 and 282 current and former employees, respectively. The filing says, strangely enough, that the offer expires on "November , 2004". Yes, that space is not a misprint, but an intentionally blank space, so there's no way to know when this offer expires.

UPDATE 2:There is a portion of the statement warning about potential risks, including this tidbit about Google's chief competitors:

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 and Yahoo. Microsoft has announced plans to develop a new web search technology that may make web search a more integrated part of the Windows operating system. We expect that Microsoft will increasingly use its financial and engineering resources to compete with us. Yahoo has become an increasingly significant competitor, having acquired Overture Services, which offers Internet advertising solutions that compete with our AdWords and AdSense programs, as well as the Inktomi, AltaVista and AllTheWeb search engines. Since June 2000, Yahoo has used, to varying degrees, our web search technology on its web site to provide web search services to its users. We have notified Yahoo of our election to terminate our agreement effective July 2004. This agreement with Yahoo accounted for less than 3% of our revenues for the year ended December 31, 2003 and less than 2% of our revenues for the six months ended June 30, 2004.

Both Microsoft and Yahoo have more employees than we do (in Microsoft’s case, currently more than 20 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. 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 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.

Also, this:

We also face risks associated with our trademarks. For example, there is a risk that the word “Google” could become so commonly used that it becomes synonymous with the word “search.” If this happens, we could lose protection for this trademark, which could result in other people using the word “Google” to refer to their own products, thus diminishing our brand.

I doubt that could happen, but I guess they have more reason to be worried. They even state that they must warn investors that the fact that they have three people at the top, Larry, Sergey, and CEO Eric Schmidt, may hamper their ability to make decisions. Guess you gotta cover all the bases.

Now we can wait and see how this will play in the mainstream media...

- posted by Nathan Weinberg @ 10/26/2004 08:01:00 AM