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Google Share Loss Amounts to Billions
aCoward writes "Today's full page headline on the UK Independent: £13,000,000,000 in Googlised colours, with the subheading Google shares plummet in one day amid growing fury over censorship and plagiarism. While the company says it isn't worried about the stock price correction, there are other issues at hand." From the article: "Google is under mounting pressure from many traditional industries: telecommunications companies do not like its plan for free internet phone calls, book publishers and newspapers have filed a lawsuit to try to prevent it from digitising library materials, governments are worried about its satellite-imaging service Google Earth and privacy advocates have a growing list of concerns about everything from its e-mail service to its desktop search function, both of which may make it easier for hackers or government agencies to gather information about individuals without their consent."
Arrgh- read my above post. The high stock prices were based largely on analysts projections- when google's profits didn't meet the projections, the stock dropped.
It doesn't matter how big the profits are- they could be 1000%, but if the projections were 1100%, the stock will drop... Nothing asshat-ish about it....
And All I Ask is a Tall Ship And a Star to Steer Her By
The founders have no where near 51% of the shares, but the shares they do have carry the right to 10 vote 10 times so they have well over 51% of the vote. (Ford, Dow Jones, and Comcast all have similar corporate structures). They have to release quarterly reports or they cannot trade in the US. The quarterly reports are required to include certain items (financal statements and notes, certification of CEO/CFO that numbers are valid etc). They are not required to inform investors of their quarterly results, but most companies do in the form of a conference call between large investors (or their representatives) and management. I believe if held these conference calls must be available to listen to by smaller investors. Google unlike most techonology companies does not provide earnings guidance (or what management believes they will earn in the next three months) given that one of the three months is done, managment is in a good position to forsee the quarter's results.
Degaussing scares the bad magnetism out of the monitor and fills it with good karma.
"Google doesn't release quarterly reports."
Correction--they don't release quarterly estimates. Every public company has to release their actual, quarterly results through SEC Form 10-Q. fyi, 10-K is the annual report.
Bill Clinton: Pimp we can believe in. - The Shirt!!!
Google lost $13B US, not $23.1B US
Google is simply the most prominent of many companies riding the wave of history. They appeared with good tools at a time when people were just starting to really depend on such tools. They still have a lot of work to do, but the basics (their search engine and business model) are good enough to keep them on the wave.
The U.S. is in a transition, for better or worse, from the manufacturing economy we've had since 1900 or so to an information economy. I put the date at 1900 since that was about the time the country was mostly settled and people started to buy cars and appliances. The connectedness of everything, in which the primary means of communication is the Internet, spells fabulous riches for those who can take advantage of it.
The culture and legal micro-management of companies which encourages them to extract the highest short-term profit, at the expense of the long-term health of the company, is destroying our manufacturing base. Everything except weapons will soon be built overseas, since weapons have to be built in a Congressman's home district or they don't get his vote. Most such are built in as many different districts as possible, at the expense of efficiency and quality.
Google, Yahoo, Microsoft, AOL, and others will be the new GEs and GMs. The hardware companies will continue to make money, but with lower and lower margins, as more and more capability to access the network gets built into different appliances. Wal-Mart will suck up all the retail business, buying up all the corner grocery stores.
Wrap all of this together and you see that it's pointless to fight the information wave. Google isn't inventing new, illegal uses for other people's information; they're applying old principles to the new connectedness. Others will copy their model, to varying success. The folks in suits had better get in the boat, or be washed away.
sigs, as if you care.
The sad part of this is it's because investors weren't happy with profits being up "only" 82%. They had expected more. So they sold.
Is the stock market full of asshats or what?
No, what you forget is that stock prices are determined by how valuable people think the shares are. If I expect profits to be up, say, 90%, I might be willing to buy shares for $450 each, but if I expect them to be up 82%, I might only be willing to pay $400 per share. So, if my expectation of 90% growth isn't met, but I've already bought my $450 shares, I may sell to cut my losses before others sell.
Look at it this way: "only" 82% profit is a lot of growth, but the stock price has also gone up a lot over the past year. The market made a wrong prediction on how Google would do, so it corrected for its excess-enthusiasm for Google. Even if the stock price had gone up to "only" $390, it would still have increased enormously.
I have discovered a truly remarkable proof of this theorem that this sig is too small to contain.
There's something very asshat-ish about it
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Those analysts don't have complete information.
Google said that if their tax rate hadn't been running 41.8%, they would have outperformed the analysts projections
here's a googd article explaining why their tax rate was higher
http://www.marketwatch.com/news/story.asp?guid={A
Or, you can pick your own article
http://news.google.com/news?q=google+tax+rate
The large investors & smart analysts stuck by Google once they heard the explanation.
[Fuck Beta]
o0t!
A thousand bucks? That'll get you like TWO SHARES ... ...(where's the damn article when you need it?) the high share price is apparently part of Google's strategy. By keeping a higher share price they limit the number of little investors, leaving more shares in the hands of big institutions who are less likely to buy+sell a lot, which in turn leads to a more stable stock price...
I don't know if you could even get someone to part with just two shares. While it's not always the case, most shares are sold in lots, and a common lot size is a multiple of 100...Expensive shares like Google will definately have more exceptions, but I still doubt you will be able to buy only a $1000 worth of Google.
In fact
Most companies "manipulate" their stock price by splitting when it's too high, and do a reverse split (not so common as it's not always seen as a positive sign for the company) when they want to increase the price of the shares. They do this to attract certain levels of investors.
If you think imaginary property and real property are the same, when does your house become public domain?
Except see you can't value a stock that pays no dividends unless you forecast its growth rate (actually you still need the growth rate even if it pays 100% of its earnings in dividends). Thus, stay with me here, you need forecasters. So calling the forecasters "asshats" really doesn't make any sense, now the fact that there were some "problems" with the quarterly report not meeting some of the aggressive forecasts mean that the average forecast was probably a little too high, thus a sell-off is completely normal.
>> Most companies "manipulate" their stock price
So true.
And there's always Berkshire Hathaway http://finance.yahoo.com/q?s=BRK-A
Never split, 88K per share. Stop by the home page http://www.berkshirehathaway.com/ and read the Owner's Manual for some great investing advice, not just for Berkshire shares.
1) The estimates aren't based solely upon the analysts' views. Frequently, the final estimate is based on a negotiation between the company and the analyst. It's not quite as explicit as that, but there are a lot of ways that the company can adjust the estimate (warnings probably being the most overt).
2) It's not necessarily clear that Sergey can sell those shares. Most of the time in an IPO, the founders (etc.) get N shares, but they can't legally sell them for a period of time after the IPO. That helps keep the founders (etc.) in line while the company gets used to being publicly traded. As such, his net worth on the N shares he has is N*(price of google stock), but it's illiquid.
Less formally, should that not be the case, and he dumps all his shares, what do you think happens to the company? A founder of the company has basically said that he has absolutely no faith in the ability of the company to make money moving forward. If that happens, a 12% dip is going to seem like a nice day.
The people who generally make real money in on IPO are the investment bankers and venture capitalists, not the founders.
ceci n'est pas un sig.
Umm... that would be the case if Google provided any EPS guidance to Stock Analysts. They are one of the few companies to not do that as this was a part of the founders original intentions. They don't play that game.
The way I look at it, the stock market is driven by three things: greed, fear, and information. To beat the market, you need to be more rational than the next guy (less subject to greed and fear) and/or have more information. Then you can recognize when the market has overpriced/underpriced and act accordingly. This isn't impossible, but it is difficult and it is risky. Unless you're good and disciplined, you're going to get burned bad at least once (speaking from experience). However, don't underestimate your advantages. If you're a college kid you probably have a much better sense of how Apple is doing with it's iPods, for instance, than some guy in a cubicle on Wall Street.
Now, ultimately, the value of a company is determined by its earnings, so the standard way to evaluate the price of a company's stock is the ratio of its stock price to earnings- the price/earnings (P/E) ratio. Google currently has a P/E ratio of 89, which means that its profits are about ninety times share price. That's really high, and the kind of overpricing seen in the Internet Bubble. For comparison, Microsoft has a P/E of 23, Yahoo has a P/E of about 27. Google obviously has a lot more potential for earnings growth than Microsoft, which justifies a higher P/E, but I think 89 is too high, and it would have to drop much more before I'd consider buying it. At this point, I think Microsoft and Yahoo are probably better bargains.
Incidentally, the whole P/E thing is Day One of Investing 101. If it isn't familiar to you, you're probably not ready to put your money in the stock market.