Google is reported to be having second thoughts about its $16bn flotation in the spring because of concerns that market conditions are not yet right.
If true, the delay or even postponement of the hotly anticipated initial public offering (IPO) will be a blow to the tech industry, which is pinning its hopes on the Google flotation signalling a turnaround in fortunes.
Internet search giant Google has never formally announced its plans to float but the rumoured springtime IPO has been the worst kept secret on Wall Street.
But, according to a report in The Times, Google chairman and CEO Eric Schmidt is prepared to wait until the right moment to go public. In a round of private meetings with business leaders in London, Schmidt said Google is in no rush to float because its cash position is so strong.
“An IPO is not on my agenda right now,” Schmidt said, according to the paper.
The reason behind Schmidt’s change of heart is reportedly advice to delay the float from investment banks that claim the tech market will continue its rise.
Richard Holway, director at market analyst firm Ovum Holway, disagreed with the assertion that tech stocks are on the up.
“This goes against our views – and indeed the views of almost every expert we have spoken to,” he said. “The truth, however, is far more likely to be that, with pretty healthy cash balances, profit margins of c30 per cent and revenues estimated to be ‘between $500m and $1bn’, the pressure to IPO is much less intense. After all, being public can be a very uncomfortable place to be sometimes.”
If Google does delay its flotation then all eyes are likely to turn to salesforce.com – its IPO could raise $115m.