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Google isn't keeping quiet after IPO filing

This may be the "quiet period" before Google Inc.'s initial public offering of stock, but the company is bucking tradition by making plenty of noise.
/ Source: a href="" linktype="External" resizable="true" status="true" scrollbars="true">The Washington Post</a

This may be the "quiet period" before Google Inc.'s initial public offering of stock, but the company is bucking tradition by making plenty of noise.

Since filing papers in late April saying it wants to sell $2.7 billion of stock to the public, the California-based search engine giant has not been shy about rolling out new products or articulating its views on software.

It has released a new advertising product that combines images and photos with text, unveiled new online diary software for computer users, and put an official Google company blog, or diary, on the Internet.

Taking a stand
And this week, Google took a stand against deceptive software, issuing a challenge to the industry to develop software that does not secretly snoop on computers users or trick them into buying products or viewing pop-up ads online. The company outlined a code of conduct it said would govern its practices.

"We're alarmed by what we believe is a growing disregard for your rights as computer users," the company said in a statement posted on its Web site. "We feel a responsibility to be proactive about these issues."

All of this runs counter to the conservative approach private companies often follow, citing the advice of counsel: Don't grant interviews or talk publicly about your business during the quiet period, which encompasses the months after filing for an initial public offering, but before the Securities and Exchange Commission grants final permission to sell shares to investors.

Google watchers said the recent actions by the company and its executives were the latest examples of an unconventional company acting in an unorthodox way.

"It is against the norm to make these announcements and come out with new products during the quiet period," said Andy Beal, vice president of Websourced Inc., a search engine marketing firm. "It definitely shows that Google is not a company that conforms to the norm."

Walking a fine line
Google appears to be trying to walk a fine line, posting information on its Web site but limiting the scope of interviews. Danny Sullivan, editor of Search Engine Watch, said that while he was pleased that the company is continuing to talk openly about new products, Google had declined to answer his questions about its anti-deception software proposal, citing the "quiet period" as the reason it could not elaborate.

"They said they can't talk about that," Sullivan said. "It could be that with the week going by, they have decided they need to be more cautious here."

Sullivan was referring to the recent experience of Inc., a business software firm preparing to sell shares to the public. After its chief executive granted an interview recently to the New York Times, the SEC apparently put the brakes on the company's initial public offering, according to several published accounts.

Officials from the SEC and declined comment on the matter yesterday.

Securities law experts said that to avoid running afoul of the SEC's mandated quiet period, private companies must refrain from making statements that hype their forthcoming stock, or tout its attractiveness as an investment. However, they said, a company can release and discuss new products, particularly if they are in keeping with what it has done in the past.

The SEC's view of what constitutes acceptable behavior during the quiet period may be influenced by whether a company suddenly appears to be looking to heighten its profile in new and different ways or, like Google, already is well-known to the public. Prior to announcing plans to offer shares to the public, Google often used its Web site to describe initiatives in development.

Gray area
John F. Olson, a securities lawyer in the Washington office of Gibson, Dunn & Crutcher LLP, said he faced issues similar to the ones confronting Google several years ago when he advised privately held United Parcel Service Inc. after the delivery giant decided to go public. Like Google, he said, UPS was extremely well-known at the time, had a large number of employees who were shareholders and had a need to continue talking about new products during the quiet period.

"Product announcements are a gray area," Olson said. "The guidelines are not crystal clear. A lot depends on what you have done in the past. For Google, business as usual is to be in the news a lot."

Google officials yesterday declined comment on their handling of announcements and inquiries during the quiet period.

Olson said one piece of advice he often gives companies is that the chief executive and the chief financial officer should not grant interviews during the quiet period because it is hard for them to avoid talking about the company's future financial prospects. However, he said, product announcements and interviews can be handled by other executives, provided they do not discuss the financial impact.

New products
That is the course that Google appears to be pursuing. Last week, executives who handle advertising for the company discussed a new product that adds images to its traditional text ads. The rollout was interesting during the quiet period, legal experts said, in part because the company derives 95 percent of its nearly $1 billion in revenue from advertising, which this product would impact directly. However, Google executives who discussed the new image ads refrained from making any projections about their financial potential.

Also last week, Google released a new version of its blog software, dubbed Blogger, which is designed to make it easier for computer users to post their thoughts online. Yesterday, Google spokeswoman Eileen Rodriguez discussed Blogger in an interview but would not explain how it might affect Google's attractiveness as an investment.

"It is definitely simple, and it is free," Rodriguez said of Blogger. "The whole idea behind the redesign of blogger is to bring more voices to the Web."

Around the same time it released the new blog software for computer users, Google posted an official company diary on the Internet, beginning with satirical comments about its top three executives. "We're going to post stuff here -- regular bloggy things: What Larry had for breakfast. What Sergey thinks of that Hellboy movie. Which Dawson's Creek character reminds us most of Eric," the Google blog said.

Google's decision to speak out against deceptive software follows criticism the company received from privacy advocates for the way its new e-mail product served up ads based on the content of messages. Beal said the company's statement may also have been designed to neutralize any adverse publicity Google might encounter when it formally rolls out new software capable of searching through the files on a personal computer. Competitors might try to claim that Google is being overly intrusive or secretly monitoring the actions or personal information of computer users.

But then again, he said, the company may have done it for other tactical reason.

"Google never does anything straightforward. They keep you guessing all the time," Beal said.