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Virus strikes Google as it files for IPO
On a day when Internet search giant Google Inc. stuck its neck out and placed a $36 billion value on itself - higher than even McDonald's Corp.-many users found its services worthless, shut down by the latest version of the MyDoom virus, which first appeared this year and is spread through seemingly innocent e-mail attachments.
The hit came as Google, which downplayed the setback, outlined plans in a filing with the U.S. Securities and Exchange Commission to sell 9 percent of its stock - 24.6 million shares - for between $108 and $135 apiece next month in its initial public offering.
The deal could raise about $3 billion and give the company, co-founded by a University of Maryland alumnus, an estimated value higher than General Motors Corp. and almost as high as competitor Yahoo Inc., which is valued at about $38 billion.
Google's two founders and its president could personally gross about $360 million from the offering if prospective investors bid near the top of the company's suggested price range.
"This is much bigger than a search engine," said David Berkowitz, a spokesman for icrossing, a search engine marketing company headquartered in Arizona. "The whole tech sector is [watching]."
The estimate of Google's value issued by the company yesterday was just that - a guess of how its stock might be valued. The actual value will be determined by investors, some of whom might be disheartened by yesterday's attack.
"Unfortunately, this is a particularly public moment for Google for [the virus] to happen to it," Berkowitz said. "I think it will give people maybe a momentary jolt."
Security experts were split on whether the worm-style virus was intended to disable Google, or simply go about its illegal business of gathering e-mail addresses through the Internet, possibly for spamming purposes. It attacked early yesterday, sending thousands of queries to search engines including Yahoo, AltaVista and Lycos. But Google - the most used search site on the Internet - seemed to suffer the most, with its service apparently disabled by the overload for up to four hours in some areas.
Computers and networks infected by the virus experienced longer outages, said Google spokesman Nathan Tyler, adding that "at no time was the Google Web site significantly impaired." But visitors to the site were often met with an error message when they tried to perform a search, reading "The service you requested is not available at this time."
Appears as attachment
The worm works by appearing in an e-mail box as an attachment that when opened begins to hunt for valid e-mail addresses. This version, dubbed by some MyDoom.o - a through n have already run their courses - moves the process a step further, taking the e-mail search onto the Web.
"It's very hard to defend against," said Daniel Schrader, a product marketer and hobbiest worm tracker at SafeNet Inc., an information security specialist in Belcamp. "It's staying under the radar."
To Google and the other affected search engines, the queries initially appeared legitimate until they began doing damage, slowing the networks and in some cases making them unusable.
New mother Amy Passen, who was at a cafe yesterday in Canton, was unaware of the attack, but it frightened her nonetheless.
"If it were out, what would I use?" she asked. "I don't even know."
Passen said she turns to Google to research car seats, strollers and other baby products for her 5-month-old son, Jacob.
Nia Banks, a third-year resident in the plastic surgery program at Johns Hopkins School of Medicine, said she uses Google to put together class presentations. And Susan Reed, a cultural anthropologist visiting friends in Baltimore yesterday, said she has come to depend on Google for doing research at work, finding phone numbers, scouting movie reviews and digging up information on just about any question that comes to mind.
Still, normally loyal users made do. Baltimorean Alan Sun switched to another search engine.
"Google and MSN are about the same," Sun said, though he prefers Google. His was the only comment to knock Google down a bit on a day when - except for the virus - it was riding high.
"Google has obviously hit upon a success formula which seems right now to be unstoppable," said David Menlow, president of IPOfinancial.com, a research firm based in New Jersey. "There are Google fanatics that would walk off the edge of the Earth for the betterment of Google."
Google will offer the initial shares in an online auction, meant to give small investors a chance at getting the stock - IPO shares are usually sold to a group of select investors - but some said the price might preclude the average fan from participating.
"The equivalent might be a rock legend saying I'm going on tour for the fans, and then the cheapest seats are $500," Berkowitz said. "A lot of casual fans aren't going to be attending this one."
Google's current stockholders are selling nearly half of the 24.6 million shares expected to be auctioned - a larger share than normal.
Sergey Brin, one of Google's two founders, plans to sell 962,226 of his shares, which could be worth $129.9 million if investors offer bids near the top of the price range suggested by the company. Larry Page, the other founder, will sell 964,830 shares, which could be worth as much as $130.3 million. Eric Schmidt, who is the company's chief executive, plans to sell 737,930 shares, which might be worth $99.6 million.
The two founders are each selling 2.5 percent of their holdings and Schmidt is selling 5 percent of his.
Google's SEC filing revealed the company earned $143 million in the first six months of 2004 - more than double the profit from the same period last year. Google will trade its shares on Nasdaq under the ticker symbol "Goog."
Sun staff writers Paul Adams and Sara K. Clarke contributed to this article.