Google refuses to be tamed

Michele Gershberg

NEW YORK: Internet lovers rave about Google's irreverent company attitude, but the No. 1 search service will find it is hipper to be square when it comes to Wall Street, said analysts.

Google promised to remain true to its "Don't Be Evil" mantra, cultivate a better world and refrain from pandering to investors in its filing on Thursday for a $2.7 billion initial public offering.

To technology stock experts and image mavens, the pledge smacked of deja vu as they recalled how other Internet and tech upstarts eventually shed their more unconventional ways to weather investor demands.

"When you operate as a public company, you're dealing with more regulations and much greater scrutiny which often leads to a change in corporate behavior," said Mark Mahaney, analyst at American Technology Research.

Online media company Yahoo "started off with just as much of an unconventional tilt as Google, and it's become more conventional over time," he said.

Mountain View, California-based Google said it had no intention of smoothing results to match investor expectations, would continue to invest in high-risk ventures that promise high rewards and would not issue the quarterly profit targets shareholders and Wall Street have come to expect.

"Google is not a conventional company. We do not intend to become one," co-founders Sergey Brin and Larry Page wrote in the "owner's manual" released with its filing.

Barry Randall, portfolio manager at the First American Technology Fund, said the roadmap "borders at times on hubris."

"That's exactly the kind of statement that could come back to haunt somebody" if something went awry, he said. "Public companies are pretty much all run the same way and anyone who claims ... differently opens themselves to more scrutiny and perhaps worse down the road."

American Technology Research's Mahaney added that Google could find it harder to compete for investor dollars down the road against other tech and Web leaders like Yahoo and Web auctioner eBay, both of which give detailed disclosure on projected earnings.

KEEP THE QUIRK IN THE BRAND

Marketing experts said Google's charm would best serve its communication with consumers as it rolls out new services, like a promised free e-mail service called Gmail, which will offer far more storage than Yahoo or Microsoft's MSN.

Gmail's unveiling on April 1 already hit a snag, when Google had to convince the public its announcement was not an April Fool's joke, as well as reassure activist groups who feared it could violate privacy laws.

"If their brand attribute is a bit irreverent, then they should continue to be the brand that they are," said Carol Cone, chief executive of brand marketer Cone Inc. "They are (seen as) a valued tool and service that I can't live without. They will probably have to develop also the emotional side of the brand."

Ann Stephenson, chief executive of Stephenson Group, an image consultancy for technology companies, said one Google strength was the strong bond the company has with its employees, an asset coveted by many top Wall Street companies who invest millions of dollars to cultivate internal loyalty.

Page and Brin "don't appear as if they are being run by handlers. That's a very good thing," she said. "Many times companies are so smooth and slick, it's unbelievable."

(Additional reporting by Mark McSherry)

© Reuters