Google's Dutch auction initial public offering.

Robicheaux, Sara ; Herrington, Christopher

CASE DESCRIPTION

This case concerns the Initial Public Offering of Google, Inc. in August 2004. Instead of using the traditional best-efforts style IPO, Google used a Dutch Auction to allow small investors to buy in on the IPO. This case is intended to be used in an advanced corporate finance class. It can be taught in two hours of class time and should take about two to three hours of outside preparation by the students.

CASE SYNOPSIS

In August 2004, Google, Inc. took its firm's stock public for the first time using a Dutch auction process. This case study details the company's history as an Internet search engine company. Then it explains Google's initial public offering and the market environment in which Google was going public. The case concludes with questions for discussion.

COMPANY HISTORY

Google, Inc. is an Internet search engine company that was established in a California garage on September 7, 1998. The company was created during a time of unprecedented growth and innovation in the technology industry. The company chose its name as a pun on the word "googol," which is represented by the numeral 1 followed by 100 zeros. The name is representative of Google's goal of organizing the infinite information on the Internet. It all started when Larry Page and Sergey Brin met while they were graduate students at Stanford University in 1995. Urban legend says that they did not like each other at first and could not agree on anything. Then they found something they did agree on, the fact that there needed to be a better search engine on the Internet. The two decided to merge their respective talents in an effort to solve this problem. Page took on the responsibility of developing algorithms and the computer programs while Brin is the company's visionary.

Page and Brin first started working on the search engine in 1996 and called it "BackRub." At the time, there were a multitude of search engines available for free on the Internet, but Page and Brin believed their search engine would be distinct from all the others. The unique thing that would separate their website from others was that it performed a mathematical analysis of the relationships between websites in order to get more accurate and relevant search results. Seeing the potential in their new technology, David Filo, the cofounder of their main competitor Yahoo!, recommended that they start the company in 1998. After several months, while they still had their office in a garage, they already had 10,000 search queries a day. More importantly, they had established recognition among people in the high tech field and were named one of top 100 web sites and search engines for 1998 by PC Magazine.

In 1999, Google moved into an office building with 8 employees, at which point they had more than 500,000 search queries a day. Later the same year, they moved once more into the "Googleplex," which remains the company's main headquarters in Mountain View, California. The main reason they were able to move into the "Googleplex" at such an early stage in the growth of the company was that they received $25 million in capital from the venture capital firms Sequoia Capital and Kleiner Perkins Caufield & Byers. Page and Brin also used the money to hire more people and expand their young company. As part of the capital funding agreement, both of the contributing companies received a seat on Google's board of directors to enable them to have a say in Google's leadership and direction. Mike Moritz represented Sequoia and John Doerr represented Kleiner Perkins. Shortly after their move, Google's reputation continued to grow as the company appeared on Time Magazine's top ten best cybertech list. Google continued to grow rapidly in 1999, as other major companies such as AOL/Netscape, the Italian portal Virgilio, and the UK's best online guide Virgin Net,began recognizing the value of Google technology and incorporating it into their own businesses. By the end of 1999, the number of customers Google served daily had bypassed 3 million.

In 2000, Google achieved the Webby Award and a People's Voice Award for technical achievement. The company also made a major strategic move in the market when it made a deal to post supplementary search results on Yahoo. This proved how good the company really was to the rest of the world, not to mention the fact that it was now handling 18 million queries a day. After this deal, NetEase, China's best portal and NEC's BIGLOBE portal in Japan made a partnership deal with Google. The company was now known all over the world. As the year 2000 drew to a close, Google introduced the Google Toolbar, which allowed "Googlers" (a term coined for people who search the Internet using Google) to use the search engine anywhere on the web without going to the homepage. The tool bar also had other desirable features, such as the ability to have keywords highlighted in the search results, which made them easier to sort through for relevance. The toolbar proved to be very successful and Google was handling over 100 million queries a day by year-end 2000. Finally, as an act of homage to Google's roots in academia, the company began to offer free search service to schools and universities all over the world.

In 2001, Google made a strategic move to attract more customers by putting wireless search capability into the hands of millions through the use of mobile communication technologies. To accomplish this goal, Google developed numerous partnerships with companies like Sprint PCS, Cingular and AT&T Wireless, whose customers were granted access to the 1.6 billion web documents in Google through their wireless devices. As Google's popularity soared through the roof their profitability grew through 2001. Agreements with large corporations worldwide brought Google search to new groups of Asians and Latin Americans. Hamburg and Tokyo emerged as cites for new sales offices because of the immense popularity of Google's advertising programs. By the end of 2001, Google created Google Image Search, which allowed users the capability to search through millions of digital images on the web, as well as Google Catalog Search, which allowed Googlers to search and browse virtual versions of more than 1,100 mail order catalogs. Google's index of searchable web documents also reached a new high of 3 billion, which showed that Google was well on their way to achieving their goal of making all of the world's information accessible.

From the beginning, advertising had been the core of Google's revenues. In February 2002, Google revamped its self-service advertising system, Adwords, to be more cost-effective for both small and large businesses who wanted to advertise on the Google website. Google has always maintained an advertising philosophy which focuses on the user. In other words, Google's system used keywords input by the user to find the most appropriate ads and select which ones the user would see. For advertisers, this meant that their ads were not being wasted on customers who did not care, but were being targeted specifically to users who had indirectly expressed some interest in their product. In May 2002, the success of advertising on Google earned the company a partnership with America Online (AOL). AOL called Google "the reigning champ of online search" and chose it to provide both search and advertising to over 34 million AOL subscribers and customers (http://www.google.com/corporate/history.html). At the end of 2002, Google introduced Froogle, a service which allowed frugal Googlers to search for products online and instantly access a list of pictures and prices for the desired items.

In the spring of 2003, version 2.0 of the Google Toolbar was released, and the Google Deskbar followed it in the months soon after. The newest version of the toolbar came with a pop-up blocker and form filler, while the Deskbar went one step further, allowing users to search Google from their desktop without even opening a web browser. In addition, many more options were available with these two added features, including a calculator, parcel tracking, and flight information. One of Google's latest innovations, called "Gmail" was announced in April of 2004. Gmail is a free email account similar to many others on the web, but it is different in that it provides users with a powerful built-in search function, which can store emails for years because they are archived in the system and easily accessible. (Unless otherwise cited, all information in "Company History" section was obtained from "Google History" or "The Google Timeline.")

INITIAL PUBLIC OFFERING

As was mentioned earlier, Google lagged behind the high-tech wave of the 1990's. While hundreds of other Internet and technology companies were gearing up to go public in the late 90's--during one of the hottest IPO periods in history--Google was just beginning to gain its footing as a company. Jay Ritter reports that there were 4,417 initial public offerings in the ten year period from 1991 to 2000, which averages out to about 442 per year (Ritter, 2004)). By comparison, there were only 81 initial public offerings in 2001, 71 in 2002, and 67 in 2003. By far, 1999 and 2000 were the most profitable years, with IPO's grossing over $65 billion each year. Additionally, Ritter notes that the average first-day return on initial public offering stocks was nearly 70% in 1999 and around 55% in 2000. Granted, many of the companies that did choose to go public during this IPO frenzy were too unstable and immature, which is why many ended up going out of business within two or three years. But regardless of whether the companies were correct in going public when they did, there is little debate about the fact that the IPO market was as ripe for entry as it has ever been.

GOOGLE'S IPO

Without a doubt, Google was not ready to go public during the tech-stock boom, but on April 29, 2004, Google filed its first document ever with the Securities and Exchange Commission (SEC), an S-1 form which stated Google's intention of ending its tenure as a private company by holding an initial public offering. The move created a worldwide buzz among both investment firms and individual investors, all of whom wanted to get their own piece of the success that Google had experienced over the past 6 years. However, some analysts questioned whether Google was choosing the appropriate time for its IPO. While the now-established company was much more stable and financially secure than several years before, the IPO market was not. Having come off of its all-time high, the market was anything but ripe and ready. Gross proceeds from all initial public offerings had fallen drastically, from all time highs of over $65 billion in 1999 and 2000, to a ten-year low of only $10 billion in 2003 (Ritter, 2004). Simply put, investors were not as willing to put their money into risky new stocks as they were several years prior.

In addition to the less-than-ideal circumstances, wary investors both large and small would have to cope with the fact that the Google IPO, like the company itself, would be far from ordinary. In fact, the process would be fraught with miscalculations, hiccups, and even questionable decisions by Google executives that bordered on SEC violations. From the very beginning of its first SEC filing, Google stated that it "is not a conventional company," and that it would not proceed through the IPO process in the conventional ways accepted by Wall Street (Google, Inc. S-1 Form). If investors did not like this, they could simply choose not to invest; as far as Google was concerned, they only wanted investors who were willing to trust the company leadership, hang in for the long haul, and allow the company to operate on the same unorthodox methods that have proven successful for it as a private company (Google, Inc. S-1 Form). The first hint that the Google IPO would be different was that the company chose to use a Dutch auction process to value its shares rather than relying on underwriters to set the IPO price, as is traditional. Under the Dutch auction method, the company allowed all investors, from the world's largest investment banks down to individual investors, to bid on Google shares based on what each was willing to pay. Google's intention, it stated in the S-1 filing, was to ensure that the company was priced at fair market value, and that the company had a good blend of both large institutional and small individual investors. Under the traditional IPO process, individual investors are omitted and can only buy shares secondhand from investment banks, after the IPO has taken place. Google, however, wanted to have a true public offering, so they opened bidding to anyone who was willing to buy a minimum of at least 5 shares.

While Google's intentions with the auction process seemed noble enough, they caused a lot of discomfort throughout Wall Street, making even some of the largest investment firms wary about underwriting the Google IPO. Initially, there were 31 firms lined up to underwrite the Google IPO headed up by lead underwriting firms Morgan Stanley and Credit Suisse First Boston. As the preparation for the IPO proceeded, however, several of the underwriters decided to drop out, including one of the largest firms, Wall Street giant Merrill Lynch. Officially, Merrill Lynch stated that it discontinued its services because the fees of 3% of the offer price were not sufficient to cover its costs associated with the IPO. Unofficially, it was widely rumored that Merrill Lynch was concerned about the stock offering being overpriced, among other uncertainties (Craig & Sidel, 2004).

Despite initial hurdles and concerns, though, Google pressed onward and continued to tout the merits of its stock auction. On June 13, 2004, Google announced that it would be listing its stock on the NASDAQ exchange rather than vying for a seat on the New York Stock Exchange. While a price range still had not been stated at this point, more details were beginning to emerge in the media about the IPO. For one, Google would be dividing its stock into two different classes, labeled classes A and B. Class A stock would be the standard variety sold daily to common investors, and each share would carry one vote, whereas class B stock was reserved for the founders and insiders of the company and carried ten votes per share (Google, Inc. S-1 Form). The stated purpose of this discrepancy was to allow the founders the control they wanted over the company's direction and decisions, and to keep outsiders from having too much control over Google (Google, Inc. S-1 Form ). Again, this decision highlighted the fact that investors would be placing a lot of trust in the hands of Google executives, and that Google would not conform to conventional methods. While some investors may have viewed these decisions as signs of Google's strength as a company and a culture, others found it to be unnerving and felt less secure placing their investments with the company.

Undeterred, Google announced on July 26, 2004, that it projected its shares to sell between $108 and $135 per share. This was an unusually high price range for an IPO. While no price was set in stone yet, if the IPO did occur as Google predicted it would raise as much as $2.7 billion for the company in a single day. Additionally, Google's total market value would be near $36 billion, which would have been comparable to several well-established companies such as McDonald's, eBay, Yahoo! and Ford Motor Company. Google executives went on a pre-IPO road show with this information, but news began circulating that many investment firms they visited were not completely satisfied with the details and responses they were receiving from the company. One major point left unaddressed was what exactly the Google executives intended to do with the overnight capital they would be getting from such a sale. The lack of answers contributed to the growing sense of uncertainty surrounding Google and its initial public offering.

On July 30, Google officially opened the registration process to investors, and said that it would allow about a week for everyone interested to make their bids, but after "logistical troubles," the registration process was kept open for another week, until August 13. In the days preceding the close of registration, Google ran into some of its most intense speed bumps to date. On August 10, after a lengthy legal debate with rival Yahoo! over patent and copyright disputes, Google agreed to settle by giving Yahoo! more than $300 million worth of the shares to be issued. Not only would this decision cut into the number of shares that could be sold, it forced Google to announce that it would probably experience a third-quarter loss in net income--not at all a good prospectus for a company trying to sell itself. Two days later, on August 12, another unusual snafu hit Google when an article appeared in Playboy magazine containing an interview with Google founders Larry Page and Sergey Brin. The interview was a huge deal for Google because it potentially broke one of the SEC's rules requiring company insiders to maintain a period of silence for a certain time before and after the initial stock sale in order to keep from artificially inflating the demand for the stock. The interview was originally conducted on April 22, 2004, one week prior to Google's official filing of the S-1 form with the SEC stating its intentions to go public. Reportedly, Google had no say in when the article would be published. In Google's defense, executives claimed they refused a follow-up interview that would have taken place after the April 29th filing of the S-1 form. Because of the timing of the article, though, it raised great concern about SEC rules violations and threatened to further delay the already controversial IPO.

As Google inched closer and closer to the big day, it hit perhaps its greatest hurdle with the SEC on August 16, when the commission realized that Google had failed to register 23 million shares of stock that it had issued to 1,046 company employees between September of 2001 and July of 2004. Google claimed, naively and somewhat untruthfully, that it did not know it had to register the shares with the SEC because the shares were issued as options to insiders and selected suppliers rather than the general public (Dwyer). The SEC threatened legal action, so Google offered to buy back the shares at a cost of over $26 million dollars. However, holders of the options were not likely to accept the buyback deal as their shares currently valued at $3 on average, would likely sell for over $100 once the stock went public.

In the most shocking announcement yet, on August 18, 2004, the day before the stock began trading under the ticker symbol GOOG on the NASDAQ exchange, Google lowered the projected price range of the stock from between $108 and $135 to between $85 and $95. In addition, they cut the number of shares they planned to sell almost in half, to 19.6 million. In combination, the two moves effectively lowered the company's potential market value from $36 billion by over 30% to $25.8 billion. Additionally, the projected capital gains from the sale were cut substantially, from about $2.7 billion to $1.9 billion, far less than Google executives had intended to earn from the sale.

POST IPO STOCK PRICES

After one of the most unusual roller-coaster rides in IPO history, Google stock began trading at $85 on August 19, 2004. When all was said and done, Google had brought in only $1.67 billion from the sale of 19.6 million shares. By the end of trading on day one, the stock price was already up over $100, exactly the price inflation that Google executives had hoped to avoid by using the Dutch Auction process. Chart A shows the closing stock prices between August 2004 and May 2005. About six weeks after the IPO, on October 4th, GOOG stock topped $135, the upper price limit that was initially anticipated by Google. The stock continued to rise, and by November 3rd, the stock had crept across the $200 mark. In May 2005, the stock continued to rise to a high of $232 per share.

CONCLUSION

The Google Dutch Auction IPO was the first of its kind for a well established technology company. It was watched by many small investors who hoped to be able to benefit from traditional IPO underpricing. Nine months after the IPO the stock was trading at 2.7 times the offer price, which is very unusual. This case presents the history of Google and their initial public offering process. Tables of the company's income statements, balance sheets and cash flows for 2002 through 2004 are provided.

QUESTIONS FOR EXPLORATION

1. Much controversy was centered on the whether or not both the IPO market and Google as a company were ready for the IPO. Did Google, Inc. make the correct decision by choosing to go public when it did? Explain why the move was or was not justified financially and circumstantially. Financial statements are provided in Tables 1, 2, and 3 for 2002-2004

2. One major complaint of potential investors was that Google was not specific enough in explaining how the money from the IPO would be used. Explain why this is or is not a justified grievance, and detail some of the options Google should consider for spending of the IPO capital. Which option is most promising?

3. One of Google's main intentions in using the Dutch auction process to price its stock was to get the most accurate price possible. Was the Dutch auction successful in achieving this goal? Would the price have been more representative of fair value if Google had let the underwriters set the price, as is traditional? Based on your calculations, what would you have considered to be a fair market value for Google stock?

4. Google hit several speed bumps along the road to its initial public offering, many of which were exacerbated by Google's own actions (e.g. failing to register shares, losing major underwriters, Playboy article, etc.). Which ones, if any, hindered the successfulness of Google's IPO and why?

5. Now that Google's IPO has come and gone somewhat successfully, what strategy should Google adopt for the coming years to avoid a fate like so many other Internet and technology companies? Are there any issues in Google's financial data that you feel are problematic and should be addressed by the company's management?

6. What has led to Google's success? What appears to be its strategy? Has their strategy changed since they went public? Do you see a need for their strategy to change in the future?

7. Did Google need to go public to satisfy its need for capital? What would you forecast their capital needs will be over the next few years? What sources other than common stock could be used to satisfy those capital needs?

8. If you were a stock analysis hired by a mutual fund to make a buy, sell or hold recommendation on Goggle today, what would you recommendation? Why? What characteristics of the company make it a risky investment?

9. In the context of agency theory, do you think Google's choice to go with a Dutch auction favored their insiders?

REFERENCES

Craig, S. & R. Sidell (2004). Wall Street Vindicated by Google. The Wall Street Journal. August 19, 2004.

Definition of Google (Company). WordIQ.com. 2004. Retrieved November 2, 2004. <http://www.wordiq.com/ definition/Google_(Company)>.

Delaney, K. & R. Sidel (2004). How Miscalculations and Hubris Hobbled Celebrated Google IPO. The Wall Street Journal. August 19, 2004.

Dwyer, P. (2004). The SEC Could Still Slap Google. Business Week Online. August 19, 2004. LexisNexis Academic. <http://80-web.lexis-nexis.com.ezproxy.bsc.edu/ universe>.

Fordahl, M. (2004). SEC gives final nod to Google's initial public offering. Associated Press. August 18, 2004. LexisNexis Academic. <http://80-web.lexis-nexis.com.ezproxy.bsc.edu/universe>.

Google History. Google, Inc. Copyright 2004. Retrieved November 2, 2004. <http://www.google.com/ corporate/history.html>.

Google, Inc. S-1 Form Registration Statement. Google, Inc. April 29, 2004. Mergent Online; EDGAR Search. <http://80-www.mergentonline.com.ezproxy.bsc .edu/ compsearch.asp? type=edgar &criteriatype=findall&submitvalues=>.

Google Timeline. Google, Inc. 2004. Retrieved November 2, 2004. <http://www.google.com/ corporate/timeline.html>.

Historical Prices: Google, Inc. Yahoo! Inc. Retrieved November 30, 2004. <http://finance.yahoo.com/ q/hp?s=GOOG>.

Liedtke, M. (2004). Google Playboy interview raises regulatory concerns ahead of IPO. Associated Press. August 13, 2004. LexisNexis Academic. <http://80-web.lexis-nexis.com.ezproxy.bsc.edu/universe>.

Liedtke, M. (2004). Google to give Yahoo more stock to settle patent dispute. Associated Press. August 9, 2004. LexisNexis Academic. <http://80-web.lexis-nexis.com.ezproxy.bsc.edu/universe>.

Martinez, M. (2004). Exploring the Intricacies of Google IPO. Associated Press. August 3, 2004. LexisNexis Academic. <http://80-web.lexisnexis.com.ezproxy.bsc.edu/universe>.

Ritter, J. (2004) Some Factoids About the 2003 IPO Market. University of Florida. August 18, 2004. <http://bear.cba.ufl.edu/ritter/IPOs2003.pdf>.

Sara Robicheaux, Birmingham-Southern College

Christopher Herrington, Birmingham-Southern College Table 1: Google Inc. Consolidated Statements of Income (In Thousands) 2002 2003 2004 Revenues 439,508 1,465,934 3,189,223 Costs and expenses: Cost of revenues 131,510 625,854 1,457,653 Research and development 31,748 91,228 225,632 Sales and marketing 43,849 120,328 246,300 General and administrative 24,300 56,699 139,700 Stock-based compensation(1) 21,635 229,361 278,746 Non-recurring portion of set- tlement disputes with Yahoo 201,000 Total costs and expenses 253,042 1,123,470 2,549,031 Income from operations 186,466 342,464 640,234 Interest income (expense) and other, net (1,551) 4,190 10,042 Income before income taxes 184,915 346,654 650,234 Provision for income taxes 85,259 241,006 251,115 Net income 99,656 105,648 399,119 ** Financial Data acquired from Google, Inc. 2004 Annual Report. Table 2: Google Inc. Consolidated Balance Sheets (In Thousands, Except Par Value) 2002 2003 2004 Current assets: Cash and cash equivalents 57,752 148,995 426,873 Short-term investments 88,579 185,723 1,705,424 Accounts receivable, net of 61,994 154,690 311,836 allowance of $2,297, $4,670 and $5,611 Income taxes receivable - - 70,509 Deferred income taxes 12,646 22,105 19,463 Prepaid revenue share, 10,825 48,721 159,360 expenses and other assets Total Current Assets 231,796 560,234 2,693,465 Property and equipment, net 53,873 188,255 378,916 Goodwill - 87,442 122,818 Intangible assets, net 96 18,114 71,069 Deferred income taxes, net, - - 11,590 non-current Prepaid revenue share, expenses 1,127 17,413 35,493 and other assets, non-current Total assets 286,892 871,458 3,313,351 Current liabilities: Accounts payable 9,394 46,175 32,672 Accrued compensation and 14,528 33,522 82,631 benefits Accrued expenses and other 10,810 26,411 64,111 current liabilities Accrued revenue share 13,100 88,672 122,544 Deferred revenue 11,345 15,346 36,508 Income taxes payable 25,981 20,705 - Current portion of equipment 4,350 4,621 1,902 leases Total current liabilities 89,508 235,452 340,368 Long-term portion of equipment 6,512 1,988 - leases Deferred revenue, long-term 1,901 5,014 7,443 Liability for stock options 567 6,341 5,982 exercised early, long-term Deferred income taxes 580 18,510 - Other long-term liabilities - 1,512 30,502 Redeemable convertible 13,871 13,871 - preferred stock warrant Total Liabilities 112,939 282,688 384,295 Stockholders Equity Convertible preferred stock, $0.001 par value, 44,346 44,346 - Class A and Class B common 145 161 267 Additional paid-in capital 83,410 725,219 2,582,352 Note receivable from officer/ stockholder (4,300) (94,300) - Deferred stock-based compensation (35,401) (369,668) (249,470) Accumulated other comprehensive income 49 1,660 5,436 Retained earnings 85,704 191,352 590,471 Total stockholders' equity 173,953 588,770 2,929,056 Total liabilities, redeemable convertible preferred stock warrant and stockholders' equity 286,892 871,458 3,313,351 ** Financial Data acquired from Google, Inc. 2004 Annual Report. Table 3: Google Inc.Consolidated Statements of Cash Flows(In Thousands) 2002 2003 2004 Operating activities Net income 99,656 105,648 399,119 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortiza- tion of property and equipment 17,815 43,851 128,523 Amortization of warrants & intangibles 11,168 11,198 19,950 In-process research and development - 11,618 11,343 Stock-based compensation 21,635 229,361 278,746 Tax benefits from exercise of warrants and other - - 191,570 Non-recurring portion of settlement of disputes with Yahoo - - 201,000 Changes in assets and liabilities, of acquisitions: Accounts receivable (43,877) (90,385) (156,928) Income taxes, net 11,517 (6,319) (125,227) Prepaid revenue share, expenses and other assets (5,875) (58,913) (99,779) Accounts payable 5,645 36,699 (13,516) Accrued expenses and other liabilities 15,393 31,104 86,374 Accrued revenue share 13,100 74,603 33,872 Deferred revenue 9,088 6,980 21,997 Net cash provided by operating activities 155,265 395,445 977,044 Investing activities Purchases of property and equipment (37,198) (176,801) (318,995) Purchase of short-term investments (93,061) (316,599) (4,134,576) Maturities and sales of short-term investments 20,443 219,404 (2,611,078) Acquisitions, net of cash acquired - (39,958) (21,957) Change in other assets 99 - (36,906) Net cash used in investing activities (109,717) (313,954) (1,901,356) Financing activities Proceeds from exercise of warrants - - 21,944 Proceeds from exercise of stock options, net 2,262 15,476 12,001 Net Proceeds from Initial Public Offering 1,161,080 Payments of notes receivable from stockholders - - 4,300 Payments of principal on capital leases and equipment loans (7,735) (7,386) (4,707) Net cash provided by (used in) financing activities (5,473) 8,090 1,194,618 Effect of exchange rate changes on cash and cash equivalents - 1,662 7,572 Net increase (decrease) in cash and cash equivalents 40,075 91,243 277,878 Cash and cash equivalents at beginning of year 17,677 57,752 148,995 Cash and cash equivalents at end of period 57,752 148,995 426,873 ** Financial Data acquired from Google, Inc. 2004 Annual Report.