Google IPO Seen Delayed

the biggest initial public offering

The list of troubles confronting the Mountain View, Calif., company includes administrative delays, skepticism from big and small investors and Google's acknowledgement that it violated federal securities laws, which has sparked an investigation by California regulators.

Google has yet to give a firm date for its planned $3 billion IPO, but media reports pegged it for as early as next week. However, The Financial Times, quoting sources familiar with the situation, said Google's unusual Dutch-auction system, which includes a series of Web sites set up by syndicate banks, is taking longer than expected and could delay the IPO by at least a few days.

But logistical problems does not appear to be Google's most serious troubles. Those stem from increasing skepticism from large institutional investors, as well as small investors, The New York Times reported Friday.

A few months ago, excitement over Google's IPO appeared to have the potential of reinvigorating the market for tech stocks. Now, however, investors big and small are greeting the stock offering with skepticism because they believe the company's price target of between $108 and $135 a share is too high and its auction too cumbersome, the Times said.

As a result, some investors are starting to predict Google will have to delay the offering into September, or even reduce the number of share it plans to sell, the newspaper said. Google had planned to sell 24.6 million shares.

CBS MarketWatch reported that three hedge fund investors have been unable to place their bids, indicating the offering is still a number of days away, and CNBC reported that Google is delaying the IPO until the week of Aug. 16.

Google, which is in a government-mandated "quiet period" before a stock offering, has declined comment on the reports.

But surely adding to Google's troubles is an investigation launched by California regulators. The state Department of Corporations said its investigating Google for possible securities violations stemming from the company's issuing of stock and options to its employees between 2001 and 2004.

The company this week acknowledged in filings with the Securities and Exchange Commission that it violated securities laws by issuing stock and options without registering them with the SEC. The company is making amends by offering full refunds, plus interest, to anyone who bought shares during that period. It will also buy back the options for 20 percent of the exercise price.

Google's offer, however, may not be attractive, given that the average price of the shares is $2.86, far less than the expected offering price.

With this much commotion around this most public of offerings, its safe to say that the Google drama is a ways from reaching its climax.

For more on Google, see CRN.

This story courtesy of TechWeb.