SAN FRANCISCO -- Google Inc. plans to sell another 5.3 million shares of its prized stock, hoping to raise more than $2 billion to finance its ambitious plan to expand beyond its Internet-leading search engine.
The move comes just before Google's closely watched stock will be added to the Standard & Poor's 500 index -- a breakthrough that snapped the company's shares out of a recent funk.
In a Securities and Exchange Commission filing yesterday, Google said it expects to sell the 5.3 million shares primarily to index funds, which must own a stake in the company because it's now in the S&P 500. Google's market value has climbed by more than 15 percent since Standard & Poor's said it would include the company's stock in the blue-chip bellwether. Based on yesterday's closing price of $394.98 on the Nasdaq Stock Market, Google's offering would raise about $2.1 billion.
But news of the offering raised a red flag for some investors worried the increase in outstanding stock will make it more difficult for Google to reach the earnings-per-share target set by analysts. Google's shares dropped $12.09, or 3.1 percent, in extended trading.
Google's SEC filing indicated the company will sell its latest round of stock some time next month.
Even as its iconoclastic founders have thumbed their noses at Wall Street's conventions, Google has used the stock market like an automated teller machine since its much-ballyhooed initial public offering in August 2004.
If the latest offering is priced near Google's current market value, the Mountain View, Calif., company will have raised about $7.5 billion from investors in 20 months.
After selling 14.1 million shares in its IPO, Google returned to the market in September, when it sold an additional 14.2 million shares at $295.
Google provided few clues why it wants more money. The company indicated it would earmark the money for its rapidly growing capital expenditure budget and possible acquisitions.
Google ended 2005 with $8 billion, but expects to draw down that amount during the second quarter when it spends $1 billion for a 5 percent stake in Time Warner Inc.'s America Online. Google's executives have made it clear they envision running an empire that extends far beyond the company's influential search engine.