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Google Faces Wall Street Revolt
Fred Flange wrote to mention a Times of London article, which explains a minor rebellion against GOOG on Wall Street. The company, which has always refused to offer guidance for its stock, is now being peppered with requests to do just that. From the article: "Sergey Brin and Larry Page, Google's founders and biggest shareholders, made plain in their listing prospectus that the company would reject many of the orthodox methods of doing business with Wall Street and instead adopt a mantra to encourage its employees to do good and not 'evil'. Other Wall Street analysts last night were also preparing reports that agreed with RBC, The Times has learnt. 'The time has come for Google to step into line,' one analyst said. 'It is in the interest of all shareholders, including the company's employees and officers, that the share price achieves some stability.'"
In all fairness, the US economy has more debt than it can pay off, and is very nicely positioned for a currency collapse, not to mention a recession at mininum. Google isn't the only company under attack, but is the most noticible because of it's very high P/E. The dollar, bonds, housing, and the stock market are in very high risk of a breakdown. The only safe sector left is commodities.
I'm not a stock broker, but I do know that companies can be delisted from a stock exchange for a variety of reasons. Could Google get delisted for being too tight lipped? They've got to offer at least some guidance to stockholders in their annual reports.
I'm not saying I don't respect what Brin and Page are trying for, but they're going into a well-established arena and trying to do things in what seems to be a very unique way, an arena which is largely satisfied with the way things work. Perhaps we might see some minimum disclosure requirements added to the requirements for being listed on NASDAQ.
Frame it in the open source discussion, and some opinions might change. Isn't what analysts are calling for just like what the open source community calls for? We want to know how code works, to make sure it's doing the right things and not hiding wrong things. Isn't this what the Bush administration is criticized for, not giving guidance as to what they're doing? This is financial analysts wanting to get an idea of what's going on underneath the hood, rather than just guessing.
Again, I respect what they do, and if they push gently, they'll get something put in motion. But, if they push too hard for what they want before the market is ready for their philosophy, something might break.
IANAL, but as far as I know, a publically-traded corporation is, by law, only required to uphold what it says in its corporate charter. Most corporation charters say they will pursue shareholder's interests, but there can be other clauses in it which can allow the company to act in ways which might not directly benefit shareholders.
I side with google on this. But their "do no evil" policy may be incompatible with the legal rights of the shareholders. Ever since Dodge v. Ford it's been pretty much accepted in the US that companies cannot practice philanthropy at the expense of shareholders.
Though we all like the idea of "do no evil", when it comes to business the idea can be very subjective.
It's really simple: as long as Google follows the letter and spirit of the law, then they can manage their company as they see fit under the direction of their board of directors.
Should investors prefer another philosophy they can replace the management team.
If they cannot do that, then they can sell their stock and not be involved with Google any longer.
It's really pretty simple. Analysts have no power within a company other than to make suggestions to management and to offer guidance to investors. They cannot compell Google to do anything whatsoever, so they may as well deflate their chests and get over themselves.
One good example of analysts being wrong is when you look at Costco vs Walmart.
Walmart has a high turnover rate, low customer satisfaction, and questionable business practices. Wall St. analysts constantly praise Walmart despite the fact their stock has been on the decline.
Costco pays its employees very well, allows their workers to unionize, and tries to be socially conscionable. Analysts lament Costco's business practices and yet their stock has been steadily rising.
Seems like some analysts are more into pushing political theory rather than what is profitable (and sane).
There is no legal requirement for a public company to provide quarterly earnings guidance, and in fact a number of large, successful public companies do not provide such guidance. Google can easily meet their legal and fiduciary requirements without providing such guidance.
Contrary to what the analysts would have us believe, companies do have some rights in what and how they communicate to the public. (Because of Regulation FD, communication to investors and communication to the public are one and the same thing.)
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.
You either have diminished comprehension abilities, or you are trolling.
Google cannot legally not publish quarterly statements - they are doing it, period. What they are not doing is predicting in advance what these statements will be, which has always been a guess. All the information you are talking about is available in the SEC filings every quarter.
Umm... in case you didn't notice, Berkshire Hathaway's Class A share price is 89 THOUSAND dollars a share. Hell of a lot more than Google's $350/share right now.
No, I understand the dynamics quite well. Legg Mason owns 4.3 million Class A shares, or about 2% of the company. Google insiders hold 271 million shares, of which 238 million are Class B "preferred". Class B shares get 10 votes to every 1 Class A share, making Legg's voting power 4.3 million votes to Google Insider's 2.4 billion votes.
Thus Google is in a perfect position to tell each and every shareholder in the market to, "buzz off." Even Fidelity and Legg Mason.
Javascript + Nintendo DSi = DSiCade
All your comment shows is that you don't know how insider selling works or that you're purposefully trying to stir up a conspiracy.
I suggest you read this article.
http://news.com.com/2102-1030_3-6030223.html
Summary: Their stock sales were planned over a year advance. They actually setup the schedule before Google went public, so that n00btards like you wouldn't be able to say "ZOMG, teh c0nsp1racy!"
AFAIK, just about every corporate officer signs up for a 10b5-1 plan so that they don't have to deal with accusations of insider trading. The funny part, is that the linked article I gave you has some idiot analyst saying the same thing you are.
Allow me to say this again: The stock sale was planned over a year ago. It is an unfortunate coincidence that their stock sale happened at the same time as any bad/good news.
The fact that Google's stock dropped 60 dollars per share in less than 10 seconds is interesting, but the rest of your post is over rated.
[Fuck Beta]
o0t!
If you care so much about your charity and organization you'd file for 501c3. This is a very simple thing.
1. It'd allow for more businesses to donate to you. It's not only about a tax deduction but THEY need it for themselves so THEY don't get taxed on money they are providing. Otherwise you get LESS funds as they have to cover the taxes.
2. There is a limit they can give if you're not a 501c3. A company just can't GIVE you a donation.
You clearly aren't concerned about your charity or organization or you'd get it not for profitted. If you're a for profit charity then you really aren't practicing charity. In which case your major goal is PROFIT and that my friend, isn't what charity is about.
In the case you feel you need a for-profit arm. You start a seperate organization and keep the books open and clean as to why your not for profit is hiring or using the services of your for profit for whatever reason.
This isn't google being evil. On the surface it's you being incompetent and clearly ignorant to how these things work. You shouldn't be running any sort of volunteer/charity service.
Stocks grow faster than real estate, but with more volitility, and depending on your views of CAPM, that explains it or doesn't...
.5% over inflation
That said, when you buy real estate, going 500% long (putting 20% down) is EXTREMELY conservative, and 1000% long is extremely common, even in business settings.
In the stock market, you can at MOST go 200% long.
In addition, the cost of capital (borrowing the money) is MUCH higher for stocks... You might be paying 7% or 8% of Margin Interest, vs. 6.5% on mortgage interest.
Basically, the stock market DOES outperform real estate significantly... but it doesn't...
In the long run, the "risk-free rate" is something like 4.5% with inflation of 3% (there are the gold standard years or 0%, plus hyper inflation, but whatever)...
Long run rates:
Inflation: 3%
Risk Free: 1.5% over inflation
Real Estate:
Stock Market: 8% over inflation (depending on time periods viewed of course)
So while the stock market looks good...
$1 invested in the stock market makes 8 cents in year 1 after inflation, or 11 cents if we went 200% long and paid our margin rate...
$1 invested in real estate BOUGHT $10 of real estate, each of which grow by 3.5% before inflation, so we made 35 cents, lost 3 of them to inflation, and ended up 32 cents, so we made a 32% return. This requires ONE HUGE assumption, we were able to collect in rent enough from the real estate to cover the "holding costs" taxes + interest. If we don't, our return goes WAY down.
Real Estate does out perform the stock market, because it is lower risk and people give you money at lower rates...
Alex
Google is just following good business practices in refusing to adopt a short-term earnings business slanted model. Since wall street wants to predict and analyze something they have no fundamental clue about, even with guidance they'd make bad predictions, which is bad for everybody. For Google to do things 'the wall street way' would substancially hurt their profitability, and be irresponsible to their shareholders, to whom they actually are responsible. For a business to become so dependant on Wall street capitalization that they change how they do things to suit wall street is likely a death knell or a sign of a long downward slide. People who know nothing about how to run a business should have zero say, especially in terms of short term considerations, which are by definition what WS deals with.
Other companies that run their own business without WS intervention (i.e. no earning guidance): Coca-Cola, Gillette and The Washington Post.
"We are all geniuses when we dream"
- E.M. Cioran
Nonsense. It's a common misconception that public companies are required to maximize share vaule. This is not the case. A public company is legally obligated only to abide by their prospectus and charter. Which Google does.
Hey, I finally got my first freak! Took you long enough!