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Analysts Are Seeking Guidance From Google
Carl Bialik from WSJ writes "Following last quarter's disappointing earnings, Google's annual analysts' day this Thursday is shaping up as a test of the company's reluctance to provide financial guidance -- and of investors' tolerance of that tight-lipped approach, the Wall Street Journal reports. 'Now, Google watchers expect analysts to bring tough questions on Thursday and to pressure executives for answers that might give analysts greater confidence in their forecasts,' the WSJ reports. 'There's no reason to believe that Google will yield to any such pressures.' However, 'There is one recent sign that the company aims to be more analyst-friendly. Company representatives earlier this month solicited analysts for input on what investors wanted to hear about on Thursday, according to a person familiar with the matter.'"
How long before "do no evil" is replaced by make mo money?
...investors started to question why they were throwing their money at a company that's pretty much cornered the rather modest (compared to their market cap) market of web advertising and shown nothing more than lots of FREE! email and FREE! search and FREE! videos and FREE! map products.
I can sort of understand why some people thought they might do something wonderful early on, but come on. It's been too long and they have virtually nothing to show for it other than grandeous rumors from morons like Cringely that never materialize.
it will turn out like Enron
But in the end it's of no consequence. Analysts will no longer be necessary after the free, ad-supported GAnalyst (Beta) debuts next week...
I have no sorrow for all those so called pundits/analysts and others. All they want is an avenue to be able to speculate after being provided with some data. How come they were not able to predict and prevent the ENRON scandle? Let then leave Google alone, after all, this America.
"Could you outline all of your secret projects, and everything that you do not what your competitors to know about?"
On the other hand, the tight lipped approach seems to have worked well for them, giving them a certain strategic advantadge. Other wise Microsoft would get wind of their IOS project. y'know, the secret Internet Operating System project.
What? they haven't said anything about this?
ooooops. nevermind. forget about all this. these are not the droids you are looking for.
"It is a greater offense to steal men's labor, than their clothes"
Google blows away analysts' projections for the first three quarters of last year. Those analysts wise up and factor in some fudge, and suddenly their projections for the fourth quarter are much higher. Google fails to beat the inflated projections and is now suffering an investment backlash?
What gives?
Shouldn't they, maybe, do some analysis and work for a change instead of regurgitating whatever dreck the company throws at them?
If they want their questions answered, Google them. It's what i would do.
I love the smell of Karma in the morning
I think the day Google doesn't have a certain secrecy around them, they will loose a lot of their appeal.
The earnings were off of what was expected due to an adjustment to taxes that made them have to pay in more. It wasn't anything to do with their performance which, except for those taxes, was above expectations.
They've got no reason to start coughing up info.
vk.
GOOG's been bucking the trend on Wall Street from the day it came out. Remember, they had the insiders up in arms with the unconventional way that they auctioned off their IPO shares. Insiders didn't get their traditional advantage, average Joes got it instead. The quick profits from the opening day bounce went to the people who bid high enough to get IPO shares, not those well connected enough to get access to a rapidly-selling IPO.
So, now, what law says a company has to provide earning guidance? Google will provide their earnings data when it's good and ready, and that's all they're obligated to do. Sure, it makes the analysts play guessing games, but what good are they anyway in a day when everybody has access to the same raw sources?
Hire every IQ above 190
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Give out free stuff
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Profit
I loved the tone of a previous Google/analyst call, where the Google's tone was basically
All Analysts do is make companies sacrifice long term opportunities for short term ones.I welcome the company that tells them to fuck off.
I need to get a job like that.
I'm a leaf on the wind. Watch how I soar.
Since Disney is now Google's competition, they better answer up first to the analyst questions. Google is still making money. They will never bow down to the analysts.
The long term investor is quite content to wait till the quarter is actually over before finding out how well the company did.
Having said that, Google's price is still too high.
Google has a big cash cow -- the search engine advertising. Some of the free things you listed are already making them money, and some have yet to go. But this isn't a fly-by-night company hoping to cash out at a peak.
And your premise (actually, the premise of the entire story posting) is way off. Google's performance was decidely not lacking. They did very well. They just didn't do as well as many expected. If you transferred their numbers over to virtually other company, normalizing for size, the investors would be pissing in their pants with joy. From an investor's standpoint, Google has good long-term health. From the perspective of someone trying to make a quick buck, okay, they failed you. But a) that's not investing but gambling, and b) Google doesn't want your investment anyway.
Rank my idea: http://www.sinceslicedbread.com/node/531
If the analysts wanted answers, they could go here. Honestly, what's the problem?
Have you tried going to http://www.google.com/ and Googling for guidance? It has been a source of much guidance for me. If you can't find it there, then you're SOL and it probably doesn't exist.
EvilCON - Made Famous by
I kid you not.
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Have stock analysts confirm that the law of gravity applies to even Google?
Wall Street analysts like guidance because it gives them something to base their own estimates on, which hopefully means estimates overall are closer to the mark.
Google, following true Warren Buffett style, have so far refused to give guidance and I think this will continue.
The problem with giving guidance is it can distract management by putting the focus on meeting short-term estimates, which can be at odds with creating long-term guidance.
For example, let's say you run a company and you've put a number out there for earnings this quarter. You notice your sales are coming in strong, so you'll miss. What do you do? The temptation is to cut back on discretionary spending like, say, advertising, even though doing so might not be in the best interests of long-term shareholders.
Better to just not provide guidance, and let the numbers speak for themselves over time.
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Aren't we all?
Google search for guidance.
And so it begins... google will be assimilated.
Correct link
Excuse me if I'm wrong, but didn't Google double in size in a year?
The retarded analysts gave insane expectations of Google (remember the $2000 a share thing, one said they'd be making many more billions than they are now), and then got all upset when Google, despite doing exceptionally well still, didn't meet those expectations. Duh! What'd you expect? Google is still growing very fast, and is now bigger than Yahoo! in terms of revenue, and just short of Yahoo! in profit.
Mo' Money Mo' Problems!
When the latest, greatest, Web 2.0ist search engine pops up and steals all their business. In the beginning there was Excite, then there was Yahoo, then Google... and people forgot the bubble. They forgot that each of these companies were started by college kids. Each rising up and toppling the other. There is no massive infrastructure investment required to challenge a search engine like there is to challenge an automobile manufacturer or even a clothing manufacturer. Out there right now, there's a very smart nerd working on something s/he think is just plain neat. When that neato thing is shared with the world, watch out Google. Investors basing share price on estimated future earnings of a web company are idiots. Very little changes faster than the landscape of the internet. People are fickle. The "do no evil" company has all the buzz right now. It won't last. Google will be replaced like spring fashions.
No, it's just another thing they inherited from Stanford. It'll be karmic justice when they start being open, and dealing with Midwesterners with seriousness. That's the reasoning.
Twitter supports and protects racists - by smearing their critics with the "Hate Speech" label.
How is not talking to analysts disrepectful to the average shareholder? The average shareholder doesn't have time or sometimes even access to read analyst reports, those are mainly used by the big-pocket investors.
Regulation FD requires that any information that a company gives to anyone, including analysts, must be provided to all investors. So if Google is not talking to analysts, it's not talking to anyone. Perhaps many individual investors don't have time to research into Google's statements, but to not provide any information is as disrespectful to individual investors as it is to analysts and institutions. And I personally believe that if individual investors don't have time to research into company statements they should stay in mutual funds where someone does the research for them.
my blog
...shows their motivation and, I believe, how much Google respects them:
Investors: make money by purchasing a stock, holding it for a "long term" (investor defined, but usually over years), and sells it at - hopefully - a higher price while making some money along the way in dividends. (See Benjamin Graham). Google respects them just fine, as they have an interest in the value of the company.
Traders: make money by buying/selling shares over the short term. Google's not so much worried about them as they are only interested in the stock price over days, weeks, or months. However they do provide the service of market liquidity.
Brokers: make money when *someone else* (a trader or investor) buys or sells shares. Their income is more dependent on trading volume than the price of the stock. I don't think Google even acknowledges their existence.
Analysts: make money when someone else purchases their opinion...er, I mean, "research". If their opinion is wrong, fewer people are willing to purchase it (or they should be - once again, see Benjamin Graham). They perform their function to "protect the investor", but look again at how they make their money. They are gadflies. Google puts up with them because they are a reality of the market.
Graham and Buffet are two of a kind. Hopefully Google will continue their practices from the corporate side.
As posted elsewhere, they are just part of a wall st. game. the sooner investors stop paying attention to these touts who skim from the investor, the better off the average investor will be.
That probably goes double for workers in industries that analysts cover - we are seeing a valuation of style over substance as a result of these marketing games done by those who know just enough to be dangerous - and the IT industry is probably the worst.
But the Wall St. Journal (the original article), and most trade press seems to have a vested interest in keeping the game going, so I don't expect to stop hearing about 'industry analysts' anytime soon.
Google had its own mini-bubble - it was over-bought by people who pushed it's P/E to 100. Now they've figured the PEG (growth) isn't so pretty as before, so the P/E is dropping to something a little more earthly.
The following factors mean Google is a long-term win:
If I were an analyst I would sit back and enjoy the ride. Buy at $350 in March, then take a vacation.
Zen tips: Pay attention. Don't take it personally. Believe nothing.
Google this!
Enron fears again!
.com crash or Enron isn't particularly appealing as an IT skillset worker.
The best part is the statements that Google is helping Analysts by asking what they want to hear...
That doesn't sound Enroney.
Now I think Google is doing many excellent things, but the possibility of another
I hope everyone investing remembers that the current Google stock price is based on their UPCOMMING inventions and businesses when those inventions and businesses start the price shouldn't change.
Google enjoys a "honeymoon" period with investors, and obviously they would like to extend that period as much as possible... how you do that? Leak "hype", beta products, and "strategic uncertainty" about your next big thing.. I would be particularly interested to hear how significant is the click-fraud problem, and how effective is the technologies they use to identify click-fraud.
Google isn't going to last 2 years if they keep up their "holier than though" attitude. Investors aren't keen on public companies who refuse to disclose information and their stock price will suffer accordingly. Google is no different from any other company out there and unless things change, at this point in time their future looks especially bleak.
In the begining there was http://web.archive.org/web/19960511013133/http://w ww.altavista.digital.com/ .. :) .. The first GOD of Search Engines. Eventually all Gods die, and of course Google will too. I am allready looking for alternatives. One that seems as a potential sucessor is clusty.com.
Cheers...
Reminds me of the Seinfeld episode where Kramer by some accident starts getting calls for the Movie Phone guy and when after a few attempts he can't figure out the name of the movie George is entering on the phone he says "Why don't you just tell me the name of the movie you selected?"
Sounds like these analysts.
They've had a go at actually doing the hard work of coming up with estimates and they were way off on their projections (as anyone who has done financial modelling and forecasting will tell you, that isn't very hard to do) so now they just want Google to tell them what the target numbers should be.
"Why don't you just tell us what your quarterly earnings will be".
And to think that these firms are able to sell their research services for up to hundreds of thousands of dollars per year!!
Even Tom Donohue, president and CEO of the U.S. Chamber of Commerce, has come out against quarterly earnings guidance, saying that it leads to companies managing to hit their numbers rather than grow a solid long-term business.
Build a man a fire, he's warm for one night. Set him on fire, and he's warm for the rest of his life.
Analysts are Seeking Guidance from Google.
Google says, "Buy more Stock!"
The whole analysts thing has become a joke. It's all BS. A huge portion of the economy turns on whether some yahoo (not Yahoo) correctly predicted to within 0.1% the income and profits of a handful of companies. It's absurd.
I hope google tells them to crawl back into their caves with their pet mammoths.
I don't believe that companies should *have* to give out expectations and forecasts for the coming months to the public, however, Google is still a young company, and while they've had quite a ride at the outset, there are sides of Google still to be determined. Specifically, is Google the kind of company that paints a rosy picture to the world while in fact internally things are going somewhere warm in a handbasket? Or will they be forthright and honest in their downtimes?
It's easy to be open and honest when things are on the up and up, and it seems harder to do it in downtimes. Every company has down times, and if they're lucky, some up times too.
My point is, I think Google needs to earn more investor trust. I don't think anyone has any trouble feeling confident with Berkshire-Hathaway because BH has been around quite a while, and it's pretty clear how that company does its business, in good times and bad. I like Google, and I want them to prove to me and other investors that they're going to run the place with integrity. Give me solid honesty during the downtimes for a few years, and then you'll have earned my trust and more of my money.
I just think it is scary when such a new company suddenly goes quiet, even when they're as cool as Google is.
In Soviet Russia, us are belong to all your base.
Being an analyst is a horrible responsibility, especially if you work for a NRSRO.
If you estimate a stock too high, such as what happened in the Internet bubble, you can ruin the lives of millions of innocent investorsm and even go to jail yourself.
If you estimate it too low, you can destroy jobs, prevent companies from getting access to the operating capital they need, and even alter the course of history by preventing the exploitation of technology or resources.
What makes it even worse is that there is a tendency for predictions to be self fulfilling. an anayst can save a company (or give it a merciful death) by fudging the estimates slightly....the prediction alone might alter the companies value significantly enough to make a difference.
And then again, there are all sorts of laws about what information can be shared with analysts in advance of the public. Analysts have ways of finding out that information, but they don't dare use it, in fear of being accused of crimes...even when it would prevent serious losses by the public.
Google is real difficult to read right now. They are in a war with a number of groups, ranging from various governments to Microsoft, and none of those groups are known for their niceness. Asking for Googles view of the situation, especially since most of those fights are unecessary and irrelevant to the companies business, is not at all unwarranted. The analysts aren't asking for any secrets (they probably have them anyways), just for Google to comiit to an estimate of what they will earn in the short term and in what areas. At teh end of that term, the comparison of those predictions to what actually happned will make a powerful statement as to how well the company is in control of its business.
Google has gone to the capital markets to ask for money, and gotten it. The investors who gave them that money, and the analysts who advise those investors, have am obligation to monitor their investments. When they haven't (such as in Enron) that money was lost.