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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.'"
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.
I think the day Google doesn't have a certain secrecy around them, they will loose a lot of their appeal.
The services may be free but they increase revenues from advertising, what's at issue here is not Google's ability to make revenue or generate growth (they've been doing both fine) but that they need to be more honest and open in the marketplace for the market to do its job.
And in the end, it really doesn't matter to the Google executives and the long term investors. Google already received its investment. Going forward it's just a matter of a zero-sum game among the traders (actually less than zero-sum if you include commissions).
For the long term investor, this quarter to quarter stuff is meaningless anyway. Where is Google going to be in 10, 20, 50 years. That's what matters to the long-term investor, and that's what the Google executives want their investors to focus on. Hey, it works for Warren Buffet's Berkshire Hathaway (Buffet most likely being the influence for this decision as well as the decision not to split).
"And when a CEO makes a pronouncement--even one that's largely based on hopes and guesses--employees will use whatever means necessary to make it come true. If earnings are supposed to be $1 a share, they will be, even if it takes some creative accounting. That's one reason Warren Buffett refuses to provide financial guidance at Berkshire Hathaway and why he has encouraged other companies on whose boards he sits, such as Coca-Cola, to give up the practice." - http://money.cnn.com/magazines/business2/business2 _archive/2005/11/01/8362824/index.htm
Uh, no. This is the Wall Street Journal, and they're talking business. "Guidance" refers to a company providing a range of revenue and profit for the coming quarters and years. Usually no more than two years. Stock analysts also come up with their own estimates, which are averaged to decide each quarter whether a company met or exceeded expectations. If Google provides guidance, it has an affect on controlling those expectations. Part of the wild rise in Google's stock price was that the analyst estimates were on the low side, until last quarter, when Google finally missed. Even though it is their job to read the tea leaves, the analysts are essentially asking Google to do so as well.
Who do you get to be an expert to tell you something's not obvious? The least insightful person you can find? -J Roberts
I need to get a job like that.
I'm a leaf on the wind. Watch how I soar.
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.
"What gives?"
Indeed, and that backlash really smarts, I have to say on a personal note.
Anyone given any consideration that the downgrading of the stock by the analyst community might be a deliberate act of passive-aggressive punishment? Give us access or we destroy your rep on Wall Street? As I said, passive-aggressive; it's not that they slander the company, it's that they won't buoy it up by the usual flim-flam good press they give to the reputations of companies that toe the line and let the analysts get inside info they can use to make themselves very rich. Very, very rich.
Google has my respect if they are resisting those thieves. But they are paying a dear price. So am I, ka-ching.
Analysts want to game a company's activities to produce high short-term profits that will enrich the casino on Wall Street. Google is right. The best way to produce value to your shareholders is to grow a company over the long haul, even if it sacrifices short-term cashouts for the inside traders.
How many companies would still be in existence if they hadn't squeezed themselves dead to satisfy the expectations of those horse thieves?