Update: Google files IPO registration

Google Inc. has filed a registration statement with the U.S. Securities and Exchange Commission (SEC) for an initial public offering (IPO) of common stock, putting the Internet search pioneer on its way to becoming a public company.

The move by Google Thursday had been rumored for months and the expectations for this IPO are extremely high in the technology sector, which views it as emblematic of a turnaround in the industry.

The proposed maximum aggregate offering price, as stated in the S-1 filing, is $2.72 billion.

Morgan Stanley and Credit Suisse First Boston Corp. are the underwriters and they will be in charge of conducting an auction process on Google's behalf to determine the IPO price, a method Google acknowledges is unconventional in the U.S. The auction will consist of five stages -- qualification; bidding; auction closing; pricing; and allocation.

"It is important to us to have a fair process for our IPO that is inclusive of both small and large investors. It is also crucial that we achieve a good outcome for Google and its current shareholders. This has led us to pursue an auction-based IPO for our entire offering," the filing reads. "Our goal is to have a share price that reflects a fair market valuation of Google and that moves rationally based on changes in our business and the stock market."

The company will have both Class A and Class B common stock, or a dual-class voting structure, which is designed to give the company's management more control over the company after it goes public, the filing says. "We have a dual-class structure that is biased toward stability and independence," the filing reads.

The Class B common stock will have 10 votes per share and the Class A common stock, which is the stock that will be sold in this offering, will have one vote per share. This will limit Class A stockholders' ability to "influence corporate matters," the filing reads.

Google's executive team had so far resisted taking the company public. Founded in 1998, Google is reportedly profitable and the most widely used search engine, but competition is heating up, as Microsoft Corp. and Yahoo Inc. invest heavily in improving their own search technologies.

"From what we can tell, Google is running a healthy profit now, so they don't need the IPO cash to survive," said analyst David Schatsky from Jupiter Research, on Wednesday, before Google filed for the IPO.

Indeed, in its filing Google disclosed that it closed 2003 with net income of $105.6 million and revenue of $961.9 million. The company has been profitable since 2001, when it had $6.9 million in net income and $86.4 in revenue.

In its filing, Google wasn't very specific about its plans for the IPO's net proceeds, saying it will use them for general corporate purposes, such as sales and marketing expenses, research and development expenses and general and administrative expenses; capital expenditures; and possible acquisitions of businesses, technologies or other assets, although it currently has no agreement or commitments with respect to any material acquisitions.