Google Inc. priced a follow-up stock offering of 14.16 million shares at $295 late Wednesday, offering investors a slight discount from the online search engine leader’s recent market value.
Google’s shares fell $8.68, or 2.8 percent, to close at $303 before the company announced the pricing of stock. The shares are the first that Google has sold since its highly anticipated initial public offering at $85 a little over a year ago.
The follow-up sale will raise $4.18 billion and could generate even more money if Google’s investment bankers exercise an option to sell an additional 600,000 shares.
After the offering, Mountain View-based Google expects to have nearly $7.1 billion in cash, providing ample financial muscle for potential acquisitions or thwarting potential competitive threats from its larger rivals, Yahoo Inc. and Microsoft Corp.
Google has not specified how it will use the money, leaving the technology industry guessing wildly about where the influential company’s next move might lead.
Some analysts believe Google might be preparing for something truly bold, like building a wireless network to extend the reach of its search engine, while others think executives are merely capitalizing on the company’s lofty stock price to build a nest egg.
Like most young companies, Google has emphasized it has no plans to pay a dividend.
Selling so much stock at once sometimes unnerves investors because it dilutes a company’s earnings per share, but Wall Street reacted positively to this offering, just like it has to almost everything the company has done since going public. Google’s shares have surged by 8 percent since the company filed its plan for its latest offering a month ago.
The steady appreciation reflects the stock market’s belief that Google will be as successful during the next few years as it has in its first seven years of existence.
Since its start in a dorm room by former Stanford University graduate students Larry Page and Sergey Brin, Google has quickly established itself as a household word and a moneymaking machine. The company earned $712 million on revenue of $2.6 billion during the first half of this year, prompting some analysts to think its stock will soon soar above $330.
As it is, Google’s market value stands at $89 billion, based on the 292.8 million shares expected to be outstanding after its latest offering. That makes it more valuable than older Internet companies such as Yahoo and eBay Inc., but still behind heavyweights such as Microsoft and Intel Corp.