Zeev's Turnips Patch-No Politics (ZEEV)

[Teri Garner]

Thomas Weisel Raises Estimates on GOOG:

GOOG Google: Thomas Weisel comments on offering (394.98 )

Thomas Weisel notes that GOOG announced that that it would sell 5.3 mln Class A shares, raising approximately $2 bln in net proceeds at today's closing price. Given Google's high P/E ratio and the increased interest rate environment, they say the deal, which should close in early 2Q05, is expected to be accretive to FY06 and FY07 EPS by $0.03 and $0.02, respectively. As a result, firm is increasing their 2006 & 2007 EPS estimates accordingly. Given that Google just raised $4 bln in September and the co should end 1Q05 with over $7.5 bln in cash and equivalents (assuming the AOL deal is already closed), they say the timing of the deal is curious. They note that GOOG already has a cash balance larger than most of its competitors and growing significantly. While they believe the co may ultimately use the funds to gain share in Asia and/or invest in new search verticals or business line, they believe the offering could simply have been consummated because GOOG viewed its inclusion into the S&P 500 as a lower cost way to raise capital because it would be positioned to give less of a discount to investors.