Google IPO Primer

ByABC News
April 30, 2004, 3:43 PM

May 3 -- When Internet search site Google filed its long-awaited plans to sell shares to the public last week, it set off a flurry of analyses about the outcome of the IPO as well as the past and future of the company. So, what does this all mean for investors?

The Buzz Behind Google

Google was founded in 1998 by Larry Page and Sergey Brin, who are purported to own one-third of the company. Venture capital firms Kleiner Perkins Caufield & Byers and Sequoia Capital Partners also own a portion of the company, as does Google's rival, Yahoo! Inc.

The moniker Google is derived from "googol," which is the term for the number 1 followed by 100 zeros. Google's founders chose this name to "reflect the company's mission to organize the immense amount of information available on the Web."

With more than 200 million searches conducted every day, Google has emerged as the Web's most popular search engine, accounting for more than 41 percent all of search queries, according to WebSideStory. Although the company refuses to reveal exact details about its operation, it is estimated to employ more than 1,000 people known as Googlers and runs on a network of more than 100,000 servers worldwide.

How Does Google Make Money?

Google makes money by selling targeted ad space alongside individual search results. After five years in business, the company is generating close to $1 billion in annual revenue from the ads placed on its Web site and the sites of its partners. Recently, it has expanded its business to include an e-mail service, Gmail, which distinguishes itself by allowing users to quickly locate their messages, which are housed on Google's servers.