NEW YORK – Google Inc. (search), the world's No. 1 Web search provider, on Monday said its highly anticipated initial public offering would be worth as much $3.3 billion and could have an initial market capitalization as high as $36.25 billion, rivaling corporate stalwarts such as McDonald's Corp. (MCD) and Sony Corp. (SNE).
Google also reported that second-quarter profit rose 24 percent from the first quarter.
The Mountain View, Calif.-based company said 24.6 million shares will be sold for an estimated $108 to $135 each, depending on the unusual auction Google plans to employ as early as next month, according to a regulatory filing.
That would mean that between $2.66 billion and $3.32 billion in stock would be sold in the initial public offering. However, the amount the company itself expects to raise is $1.66 billion, because some of the shares being offered are being sold by existing stockholders.
It would be the eighth largest IPO in history, ranking higher than most that took place during the dot-com boom of the 1990s. Unlike those companies, however, Google has consistently been profitable and has posted steep revenue increases.
Google has received approval to list its Class A common stock on Nasdaq under the symbol "GOOG".
Google said second-quarter earnings rose to $79.1 million from $64 million in the first quarter. Revenue jumped 7.5 percent to $700.2 million from $651.6 million, according to the prospectus.
Operating income increased to $171 million from $155.3 million in the first quarter, according to the filing.
Google shares will be distributed in an auction designed to give the general public a better chance to buy stock before shares begin trading. In the past, companies' IPO shares have been restricted to an elite group picked by investment bankers handling the deal.
Analysts expressed some surprise that the search behemoth — given its "Do No Evil" mantra and its desire to democratize the IPO process — is not going to split its stock to bring the price range down to levels more appealing to average investors.
"I think that's a little bit ridiculous," said Paul Barder, an analyst at Renaissance Capital in Greenwich, Conn. If individual investors have $100 they want to invest, "they're not even going to get a single share."
Google executives appear to be following in the footsteps of star businessman Warren Buffett, who has called splits a Wall Street gimmick. Class A stock of his Berkshire Hathaway Inc. has never split and it now trades at about $88,000 per share.
Analysts also said Google's very size could set it up for a fall if it disappoints investors as a publicly traded company or if Internet stocks implode again.
"In a deal like that where it's priced for perfection, anything that occurs that isn't right on the number, you get hammered," said Jim Huguet, chief executive officer of Great Companies LLC. The Florida company manages $230 million in technology shares.
Of the thousands of public companies in the United States, barely more than a dozen have prices above $100 per share and trade at least 10,000 shares a day. As of mid-afternoon Monday, none of the Nasdaq-100 stocks or the components of the Morgan Stanley High Tech Index traded over $90 a share.
Google founders Larry Page (search) and Sergey Brin (search), who created the company in a Stanford University dorm room in 1998, also stand to profit handsomely from the IPO along with its venture capital investors. Google said Page and Brin will each sell 1 million of their shares, generating about $117 million for each based on the midpoint of the company's range, $121.50 per share. They will still own more than $4.5 billion worth of stock each, and their preferred shares will carry more voting power than the stock traded publicly.
But John Doerr (search) of Kleiner Perkins and Michael Moritz of Sequoia Capital stand to profit even more. Doerr will sell 2.1 million of his 21 million shares for an estimated $255 million; Moritz will shed 2.4 million of his 23.9 million shares for more than $290 million.
Among selling stockholders, Time Warner Inc.'s (TWX) America Online unit and Yahoo Inc. (YHOO) both plan to sell 10 percent of their stakes in the IPO, including 743,745 shares by AOL and 549,888 by Yahoo, according to the prospectus.
Meanwhile, the list of banks underwriting the Google offering has shrunk further as the cost of participating in the auction-style IPO could outweigh the benefits for some banks. In the latest amended filing with U.S. regulators, the list of underwriters participating in Google's initial public offering decreased to 28 from 30.
RBC Capital Markets Corp., the investment banking arm of Royal Bank of Canada, and SunTrust Banks Inc.'s SunTrust Robinson Humphrey unit are no longer listed as underwriters for the offering.
"Google has been driving a very hard bargain, and some firms will stay with it and some won't," a source close to the situation said, adding: "The fee structure for this transaction is very thin."
Reuters and the Associated Press contributed to this report.