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Analysts Are Seeking Guidance From Google

Zonk posted more than 8 years ago | from the analyzing-googs dept.

119

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.'"

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Google Pool (2, Insightful)

Anonymous Coward | more than 8 years ago | (#14805849)

How long before "do no evil" is replaced by make mo money?

Re:Google Pool (0, Offtopic)

skoaldipper (752281) | more than 8 years ago | (#14805904)

How long before Ford realizes Chevy ownz joo!

Re:Google Pool (1)

Douglas Simmons (628988) | more than 8 years ago | (#14806239)

That happened in August '04 when Google went public, thereby letting their purpose be defined by the law as "to increase shareholder wealth."

When... (0)

Anonymous Coward | more than 8 years ago | (#14806275)

How long before "do no evil" is replaced by make mo money?

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.

Re:Google Pool (0)

Anonymous Coward | more than 8 years ago | (#14806502)

Reminds me of 'The New Industrial State' by JK Galbraith. The gist of it being that a corporation's goal is not, as is commonly assumed, to make as much profit as possible, but a sort of aggregate of the goals of the management (or technostructure as he'd put it). The goal of the shareholders is to make as much profit as possible. However the management's goals can be divided into affirmative and protective goals.

The protective purpose of management is to shield themselves from the influence of outside stakeholders (shareholders, merchant bankers, governments etc) so they can pursue their affirmative purposes. The main methods of protection are to return an 'acceptable' dividend to shareholders, pay campaign contributions to political parties etc. Where 'acceptable' is determined by factors like the performace of other companys and perhaps the interest rate. Board members dont get thrown out when the company is turning a profit.

Affirmative purposes can be anything from the technostructure pursuing their own pecunary interests (fat executive pay checks) to I think what Galbraith called their 'adaptive interests': attempting to influence (adapt) the direction of an organization to align it more with their own. Google's 'don't do evil' policy is a perfect example of this: the management attempting to push the orgainization in a direction that does not directly maximize the benefit to shareholders (maximum profit). The affirmative interests fall apart however, as the parent poster pointed out, when the protective purposes of the technostructure are not met.

Its been a while since I read any Galbraith, I hope I've done his ideas some justice.. (although probably not)
Thouroughly good read tho..

My little prediction for what Google will end up doing..

dividend yield below acceptable level,

investors get angry and pressure management,

Google does a little 'evil' by doing something like inserting paid advertisements in there list of search results (maybe every 5th result or somthing) clearly marked as an advertisement.
dividends pick up,

investors get happy =),

share price goes up in expectation of more increases..

dividends dont match the expectation,

investors get angry and pressure management,

Google does a little more 'evil' like making advertisements a little less obviously advertisements..

etc
etc
etc

Re:Google Pool (0)

Anonymous Coward | more than 8 years ago | (#14806523)

How about we wait and see how long it takes people to remember that the motto's "Don't be evil", not "do no evil"? After that, we'll see how many people can understand the difference.

Hey Analysts! (0)

Anonymous Coward | more than 8 years ago | (#14806542)

Google this! [flickr.com]

About time.... (2, Insightful)

Anonymous Coward | more than 8 years ago | (#14805857)

...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.

Re:About time.... (4, Insightful)

mattjb0010 (724744) | more than 8 years ago | (#14805916)

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.

Re:About time.... (2, Insightful)

frank_adrian314159 (469671) | more than 8 years ago | (#14806209)

...they need to be more honest and open in the marketplace for the market to do its job.

And that job would be?

As far as I know, other than a few shares squirrelled away for future needs and the options for its employees, Google has no particular reason to make its share price go up any further than it is now. Nor is it clear that releasing quarterly estimates would help them to do so.

If they were smart, they'd do even more to decouple themselves from the "market" and tell the "Street" to s*ck it. Replace the employees' options with stock grants and encourage them to sell. Sell the founders' shares. The best play Google could make with respect to its long term health would be to get out of the market altogether and not worry about what the bottom feeders who inhabit that zone think.

"Oh!" but you cry, "What if they ever needed to raise more cash?"

Well, what of it? If they really ever needed to again, they could float another issue. As long as the sharks sensed they could make a dime, they'd buy again, bad reputation with the analysts or not.

The bottom line is that, right now, the stock market needs a winner like Google a hell of a lot more than Google needs a stock market.

Re:About time.... (0)

Anonymous Coward | more than 8 years ago | (#14806856)

Sell the founders' shares. The best play Google could make with respect to its long term health would be to get out of the market altogether



Yes! what a wonderful idea! That way, microsoft can buy 50.1% of the shares and control google! Oh wait, no, that's kind of a bad idea then isn't it.

Re:About time.... (1)

bogjobber (880402) | more than 8 years ago | (#14806213)

Google doesn't need to give every minute detail about running the company, or even general information beyond that required by the SEC. They file the paperwork just like every other public company. That gives enough information for the market price to be appropriately values, at least according to the current market theory. Anything else they do is just politics, and they can do whatever they want as far as I'm concerned. Like previous posters have pointed out, companies such as Berkshire Hathaway have been very successful without giving a damn what the analysts think.

Re:About time.... (0)

Anonymous Coward | more than 8 years ago | (#14806313)

"ability to make revenue or generate growth (they've been doing both fine)"

They may be doing fine, but not great. Look at their P/E ratio - it's way too high. The GP post just (IMO rightly) stated that the advertising market is tiny relative to their market cap.

Re:About time.... (1)

anthony_dipierro (543308) | more than 8 years ago | (#14805932)

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.

That, and nearly $2 billion in profits, anyway.

Re:About time.... (3, Interesting)

stevesliva (648202) | more than 8 years ago | (#14805942)

How does providing specific profits and revenue guidance have anything to do with being more than a company that gets its revenue and profit stream from adwords? If Google provides guidance, it's not revealing the secret playbook to become the next Microsoft, it's estimating how many ads it will sell next quarter and year. Investors will learn nothing really new from this, other than a better idea of whether the Forward P/E is 40 or 20 rather than 32. Wall Street analysts, on the other hand, will get a nice benchmark for their own estimates, and get a pat on the head if their estimates are more accurate because of the guidance from google.

No, no, no (2, Interesting)

LeonGeeste (917243) | more than 8 years ago | (#14805992)

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.

Re:About time.... (1)

Damana Mathos (825898) | more than 8 years ago | (#14806053)

A lot of their free products do help the company directly or indirectly.

Gmail shows ads.
Google Video has for-pay content.
Google Maps (now Google Local) shows ads.

Google News (and other ad-free services) don't make money directly, but arguably these extra services increase their brand and the likelihood people use Google for other services they do make money from.

Given they don't break out the profit on a per-product basis, and we don't know the extent that other products (like News) really do help, it's hard to judge them on much else other than the numbers they do provide -- and they've been excellent.

Re:About time.... (1)

Firehed (942385) | more than 8 years ago | (#14806151)

...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.

Woah, when did Google and Y! merge?

Re:About time.... (0)

Anonymous Coward | more than 8 years ago | (#14807044)

If Google didn't offer their services for FREE, I would not be a user! My philosophy when it comes to the Internet: NOT FREE, NO ME!!!!!!!!!!!!!

Respectfully submitted

Don't ask questions or... (0)

Anonymous Coward | more than 8 years ago | (#14805867)

it will turn out like Enron

The analysts skepticism is warranted... (1, Funny)

Anonymous Coward | more than 8 years ago | (#14805868)

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...

Re:The analysts skepticism is warranted... (1)

MobileTatsu-NJG (946591) | more than 8 years ago | (#14806470)

"Analysts will no longer be necessary after the free, ad-supported GAnalyst (Beta) debuts next week..."

Enron Executive: "We can't use this, they don't let you delete anything!"

They deserve it (4, Insightful)

bogaboga (793279) | more than 8 years ago | (#14805870)

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.

Re:They deserve it (0)

appleLaserWriter (91994) | more than 8 years ago | (#14805930)

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.

Enron lied to analysts, google won't talk to analysts. Both companies show very little respect for teh average stockholder. The only difference is that google's motto is "do no evil," so it isn't unreasonable to expect more from google.

Re:They deserve it (3, Insightful)

LostCluster (625375) | more than 8 years ago | (#14805955)

Enron lied to analysts, google won't talk to analysts. Both companies show very little respect for teh average stockholder.

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.

Google's way of doing things is to release it all in a sometimes surprising earnings report. Sure, the stock tumbles when they miss the baseless estimates, but just wait to see how much it jumps when the baseless estimates come in too low.

Regulation FD (1)

panaceaa (205396) | more than 8 years ago | (#14806329)

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.

Re:Regulation FD (1)

Moofie (22272) | more than 8 years ago | (#14806594)

If you don't like the terms, don't buy the stock. What's the problem?

Re:Regulation FD (1)

Angostura (703910) | more than 8 years ago | (#14806933)

You have to understand that all company "guidance" to analysts is, is a way for most companies to manage expectations so that, shock-horror, their actual results come in just a little better than expectations and the stock can nudge up a bit on announcement day. I think "guidance" is fundamentally manipulative.

Re:They deserve it (1)

drsquare (530038) | more than 8 years ago | (#14806689)

Google have said themselves that they don't care about stockholders. But why would they when they're dumping billions worth of stock every month?

Re:They deserve it (4, Insightful)

anthony_dipierro (543308) | more than 8 years ago | (#14805979)

Enron lied to analysts, google won't talk to analysts. Both companies show very little respect for teh average stockholder. The only difference is that google's motto is "do no evil," so it isn't unreasonable to expect more from google.

And more is exactly what Google is giving. What's good for the analysts isn't necessarily what's good for the stockholders. And it's not like Google is the only company which refuses to provide financial guidance. Most likely they got the idea from a company you may have heard of called Berkshire Hathaway - a company whose stock has grown to over $85,000 a share.

Re:They deserve it (1)

TheOriginalRevdoc (765542) | more than 8 years ago | (#14806290)

The very high share price of BH doesn't mean that the company is inherently great, nor that witholding profit guidance is a good thing; in fact, all it means is that BH don't so stock splits. There are plenty of other companies around that would have prices like BH, except they recognise that having an extremely high share price is a barrier to entry for a lot of investors, so they regularly do stock splits to keep the prices in a reasonable range.

OTOH, it's great marketing for BH to have a very high stock price. It's "cool" to own one. For a lot of people, it's the stock market equivalent of buying a Merc. The mere fact that BH could split their stock 85,000:1, have a stock price of $1, and still be the exact same company, is probably lost on such people.

More on-topic: generally, there are two kinds of company that withold profit guidance. There are good companies, like BH, and there are companies that are trying to hide Very Bad News. The latter outnumber the former by a huge magin.

Re:They deserve it (1)

anthony_dipierro (543308) | more than 8 years ago | (#14806427)

The very high share price of BH doesn't mean that the company is inherently great, nor that witholding profit guidance is a good thing

You're right of course. But that doesn't change the fact that the company is inherently great, nor that witholding profit guidance is a good thing.

More on-topic: generally, there are two kinds of company that withold profit guidance. There are good companies, like BH, and there are companies that are trying to hide Very Bad News. The latter outnumber the former by a huge magin.

Are you talking about companies which consistently withhold profit guidance every single quarter. If so, I'd like to hear some examples of the latter.

Fast reactions (4, Insightful)

rumblin'rabbit (711865) | more than 8 years ago | (#14805988)

This practise of giving earnings guidance is a game that has little or no benefit for the long term shareholder. It only benefits analysts with fast reactions and access to after-hours markets. Some of the best companies in the U.S. (many have Warren Buffet on the board of directors) now no longer give guidance and I approve of this.

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.

Re:Fast reactions (2, Insightful)

Uber Banker (655221) | more than 8 years ago | (#14806345)

This practise of giving earnings guidance is a game that has little or no benefit for the long term shareholder.

Yes and no. It, sort of, has no effect on the long term average price. And I have no sympathy for analysts playing guessing games and racing to get their estimates out.

But it does have an effect. It affects the average variance of the stock. If the long term investor is going to release stock one day, it is preferable to have a lower variance. For an investor to be indifferent between two stocks with an average price of $10, for 2 companies with pretty much the same long term business prospects, but one stock has 15% aveage variance and the other has 2% average variance, the investor would have to be completely risk neutral. Going for the higher variance stock means buying risk, which could be interesting for some investors, but more so the day traders.

Variance also impacts the pricing of options. And having a less discontinious price for the stock (i.e. the company smooths its earnings reports in terms of regular press releases) allows more reliable cross-correlations with the market and other factors so the long term investor can more reliably see whether they're exposed to various contagion risks or what would happen when correlation goes wrong (and correlations tend to work only for only a limited period of time, so short time span data is important).

Not releasing regular reports disadvantages average investors, which is to the advantage of an investor like Berkshire Hathaway, which takes a (usually late stage) private equity style approach to investing by taking a long term approach coupled with indepth analysis on each company.

It is interesting to contrast individual companies hesitant about giving out regular data, to central banks which decide interest rates going to pains to signal their future opinions and changes in those opinions. "We want the business of forecasting to be boring," the head of the Bank of England regularly says.

Re:Fast reactions (1)

70Bang (805280) | more than 8 years ago | (#14806490)


Responding to several things at once:

This:
.Process took 68284.67 cpu seconds or 19:00:32 wall time. .Used 142270158467 bytes or 132.5 gigs. Return code 4

Should be Return Code 42.

Re: Google's price too high? I think it's not just some future expectation and certainly not what someone believes the be the current value (or value in the next six months).

There's too much "peer pressure" in society to buy Google. People who are innumerate and can't figure out why their PC is broken because they unplugged it to plug in the vacuum cleaner know who Google is.

(BTW, I agree about Buffet) Try Berkshire Hathaway. The higher prices keep serious investors around and avoids flipping. Flipping starts to influence the market, particularly during IPOs. That begins to affect the market, in and of itself. Buffet's purpose of stock is to be a long-term investment and to avoid flipping at all costs.

Then again, he's wary of tech stocks and didn't buy one until after the dot-drop. Unfortunately, it was a rather notorious spamhaven (Level3). He has since unloaded it. He believes tech firms are a bit too fickle for his tastes. And whilst we're on the subject of Warren, he doesn't believe forecasts or indications of performance should be leaked prior to the actual announcement. He's the single-largest stockholder of Coco-Cola and has long worked to avoid even hinting at at future expectations. Believe in the company (or) not. Let the chips fall where they may. Make your own expectations. If they fail, sell, and move on.

Analysts are a scam (1, Interesting)

Anonymous Coward | more than 8 years ago | (#14805950)

I also have no sorrow for the analysts.

I loved the tone of a previous Google/analyst call, where the Google's tone was basically

"Guys, we're looking for long term business opportunities; and don't give a damn what you think about quarterly numbers. For the long term, our corporate culture that attracts and retains and motiviates top people is far more important than 3-month-spreadsheets - so instead of talking to the CFinancialO, how about we introduce you to our more important CFO, the Chief Food Officer instead".
All Analysts do is make companies sacrifice long term opportunities for short term ones.

I welcome the company that tells them to fuck off.

Re:They deserve it (0)

Anonymous Coward | more than 8 years ago | (#14806030)

Let then leave Google alone, after all, this America.

Spoken like a true American.

Prostitute Schedule for Feb. 26 at the MBOT in SF (0)

Anonymous Coward | more than 8 years ago | (#14806032)

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I kid you not.

Please establish a hypertext link to this message. Spread the word!

Re:They deserve it (1)

Saeed al-Sahaf (665390) | more than 8 years ago | (#14806114)

How come they were not able to predict and prevent the ENRON scandle?

Because the truth is, as long as they where making MONEY on Enron, they where perfictly happy. Wall Street folks are basically whores in $2000 suites.

Re:They deserve it (1)

freedom_india (780002) | more than 8 years ago | (#14806810)

I seriously wish i had mod points to mod you to insightful++

I read Conspiracy of Fools and realized how true it is.

Re:They deserve it (0)

Anonymous Coward | more than 8 years ago | (#14806877)

I wouldn't mind being a whore for that kind of money :-P

Men need not apply. kthx.

Of Course (1, Insightful)

Alien54 (180860) | more than 8 years ago | (#14805875)

you know that some of this is going to be the typical clueless reporter nonsense, along the line of

"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.

Re:Of Course (2, Insightful)

JeffSh (71237) | more than 8 years ago | (#14805928)

the mystery approach is the way to go and the way to stay. in business and personal relationships.

you aren't interested in the girl you know everything about.. you aren't interested in the girl you've seen naked..

you're interested in the shy, complex girl who you don't know anything about. she's quiet, and always wears those clothes that cover up the curves that you know are just under there somewhere...

plus, theres always the addage of "if you're thought a fool, it's best to keep your mouth shut than open it remove all doubt."

mystery >>>>> knowing everything. in every conceivable social and business situation.. atleast when you're the one being courted. if you are the couter, well then, its you who are intrigued by the mystery.

Re:Of Course (1)

magicchex (898936) | more than 8 years ago | (#14806522)

I'm actually interested in the girl wearing these [victoriassecret.com] .

Don't really care if she's shy or not as long as she rocks the hot boyshorts.

Re:Of Course (3, Insightful)

stevesliva (648202) | more than 8 years ago | (#14805967)

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.

Re:Of Course (1)

Alien54 (180860) | more than 8 years ago | (#14806019)

Yes these are the same analysts who were disappointed because Google grew only 68% last year.

I for once would continue the under promise and over deliver angle

Re:Of Course (1)

Breakfast Pants (323698) | more than 8 years ago | (#14806599)

Even if Google grew 68% for the next billion years analysts would be disappointed. That is how highly valued Google is at their current price

Re:Of Course (1)

geobeck (924637) | more than 8 years ago | (#14806022)

"Could you outline all of your secret projects, and everything that you do not what your competitors to know about?"

If I were in charge of a company like Google, I would love to have 'analysts' ask me questions like this. It would be so much fun watching them react to all of the misinformation I would feed them.

Re:Of Course (1)

19thNervousBreakdown (768619) | more than 8 years ago | (#14806619)

That's illegal.

So let me get this straight... (5, Interesting)

Anonymous Coward | more than 8 years ago | (#14805883)

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?

Re:So let me get this straight... (1)

josepuerto (951665) | more than 8 years ago | (#14805895)

beats me...but all i know is that when i search...i use yahoo first because it's my homepage....and if i don't find what i'm looking for i move on to google and find it...and don't even get me started on adwords...i wanted to buy some space and they had some kind of analyzer telling me the projected costs for the best spots....with the prices they showed me....they better beat the next quarters estimates.

Re:So let me get this straight... (3, Insightful)

anthony_dipierro (543308) | more than 8 years ago | (#14805963)

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 [cnn.com]

Re:So let me get this straight... (1)

theskipper (461997) | more than 8 years ago | (#14806087)

"Going forward it's just a matter of a zero-sum game..."

Just a nitpick, google for "zero sum stock market". Zero sum is a common misconception wrt wealth creation and market capitalization.

Re:So let me get this straight... (1)

anthony_dipierro (543308) | more than 8 years ago | (#14806137)

If you're going to nitpick, at least say something of substance. I'm fully aware of the fact that the stock market in general is not a zero-sum game. In fact, I was using that as an assumption as I was discussing the difference between trading and investing.

Re:So let me get this straight... (0, Flamebait)

panaceaa (205396) | more than 8 years ago | (#14806383)

I'm fully aware of the fact that the stock market in general is not a zero-sum game.

It sure didn't seem like you were fully aware of this in your original post. I was about to write the same reply to you.

But thanks for making us fully aware that you're an asshole.

Re:So let me get this straight... (1)

anthony_dipierro (543308) | more than 8 years ago | (#14806443)

It sure didn't seem like you were fully aware of this in your original post. I was about to write the same reply to you.

Well, I never claimed to be an eloquent speaker. If you misunderstood me, I apologize.

But thanks for making us fully aware that you're an asshole.

LMAO, you're as bad as the other poster. If you're going to accuse me of being an asshole, maybe you could explain why you think that.

Why do I feed the trolls? Oh well...

Re:So let me get this straight... (1)

theskipper (461997) | more than 8 years ago | (#14806573)

Ok after reparsing that line in the original post, I now understand the flavor of what you were trying to say. A knee jerk reaction on my part; it's just a pet peeve when the term "zero sum" comes up in relation to the markets.

Re:So let me get this straight... (0)

Anonymous Coward | more than 8 years ago | (#14806395)

Zero sum is a common misconception wrt wealth creation and market capitalization.

This is true in general of the stock market however the original poster is correct because he is talking about google. Read the google IPO document. It says that they do not intended to pay any dividends. It also says that the founders shares give them ten votes per share while the normal shares get one vote per share. This means that even though they have sold billions of dollars worth of stock the other shareholdrs will not be able to vote them out and change the policy.

Re:So let me get this straight... (1)

Jeff DeMaagd (2015) | more than 8 years ago | (#14806286)

And in the end, it really doesn't matter to the Google executives and the long term investors. Google already received its investment.

While Google Execs are likely to remain long term owners, price fluctuations may affect when they sell of a small portion of their stock if they want to pay for a new mansion or whatever.

Re:So let me get this straight... (0)

Anonymous Coward | more than 8 years ago | (#14806455)

Going forward it's just a matter of a zero-sum game among the traders (actually less than zero-sum if you include commissions).

Trading is only a zero-sum game if Google does not plan to raise any more money through equity offerings, as it did on September 30th, 2005. If Google does another equity offering, a lower stock price will mean existing investors must surrender more equity to get the same amount of capital.

Since the founders have shares that grant them 10 times the number of votes, an increasing number of shareholders with short-term mindsets does not change who is in control of the company. Thus, attracting investors with a short-term mindset has the advantage of making fund-raising easier. The only disadvantage is the costs involved in attracting such investors (i.e. doing the necessary research to provide earnings guidance).

Re:So let me get this straight... (4, Insightful)

Catbeller (118204) | more than 8 years ago | (#14806064)

"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?

Re:So let me get this straight... (1)

panaceaa (205396) | more than 8 years ago | (#14806391)

Anyone given any consideration that the downgrading of the stock by the analyst community might be a deliberate act of passive-aggressive punishment?

It's well established that analysts give better ratings to companies who produce predictable earnings results. Since Google is not providing its own guidance on the future, it's to be expected that it will receive a lower average analyst rating as a result.

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.

Inside trading is the trading of a company's stick based on information non-public information. For example, if you worked at Google and you knew it's quarterly earnings were $2 vs. the street's $1.50, and you bought stock in anticipation of the earnings release, you would be an inside trader. I think the term you meant was simply 'traders'.

Re:So let me get this straight... (1)

Jeff DeMaagd (2015) | more than 8 years ago | (#14806276)

Frankly, too many investors are jackasses. Very often, If a company earns a very respectable profit in its own right, but misses the earnings target, faces an immediate sell-off.

So, who pays these analysts to sit on their ass? (1, Funny)

Anonymous Coward | more than 8 years ago | (#14805900)

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.... (4, Funny)

canning (228134) | more than 8 years ago | (#14805908)

If they want their questions answered, Google them. It's what i would do.

Re:If they want their questions answered.... (1)

mqj (949877) | more than 8 years ago | (#14806285)

If they want answers, they should have to pay for them: http://answers.google.com/answers/ [google.com]

Secrecy as a Strategy (3, Insightful)

Beuno (740018) | more than 8 years ago | (#14805915)

I think the day Google doesn't have a certain secrecy around them, they will loose a lot of their appeal.

Re:It's just in their blood (1)

sethstorm (512897) | more than 8 years ago | (#14806308)

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.

Earnings Schmernings... (1)

venomkid (624425) | more than 8 years ago | (#14805924)

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.

Re:Earnings Schmernings... (2, Interesting)

satchmodian (657710) | more than 8 years ago | (#14806024)

Not exactly. They missed for several reasons, some of them relating to how well their business is run. While revenues were up, so were costs, both from spending more on acquisitions and hiring, and from expensing stock options. And there were a lot of stock options. Also, it is up to the CFO to know inside and out the financials of the company, so when he expects a 30% rate and it turns out to be a 40% tax rate, you have to wonder what he didn't know. Lots of CXXs have been fired for less. You can argue that maybe if they didn't have to pay so many taxes they would have made more money, but then I can argue the same thing... but it won't change the fact that I have to pay them.

Google: The Un-stock (1)

LostCluster (625375) | more than 8 years ago | (#14805934)

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?

Re:Google: The Un-stock (1)

16K Ram Pack (690082) | more than 8 years ago | (#14806941)

Who needs a traditional IPO any more? My guess is that this really scares the Wall Street guys.

At one time, you needed them to run things, set the price etc. The internet changed that.

And anyone who goes into something based on numbers, without asking how the numbers got there is an idiot. But I've met a lot of investors who bought into companies because they were going up, not because the fundamentals were any good.

Profit (0)

Anonymous Coward | more than 8 years ago | (#14805946)

Hire every IQ above 190
???
???
Give out free stuff
???
???
Profit

The analysts' big secret. (3, Insightful)

bgarcia (33222) | more than 8 years ago | (#14805969)

So basically, analysts do nothing. They act like they "analyze" and make predictions, but in fact they rely on the companies themselves to do all the work for them.

I need to get a job like that.

Re:The analysts' big secret. (0)

Anonymous Coward | more than 8 years ago | (#14806227)

Getting paid to do nothing? Hey, it works for Eric Schmidt [valleywag.com]

Re:The analysts' big secret. (1)

MobileTatsu-NJG (946591) | more than 8 years ago | (#14806480)

"So basically, analysts do nothing. They act like they "analyze" and make predictions, but in fact they rely on the companies themselves to do all the work for them."

As opposed to: "Analysts are so full of shit. They act like they 'analyze' and make predictions, but in fact they don't even talk to the companies they're researching. I need to get a job where I can rake in the cash by rolling some dice."

Re:The analysts' big secret. (1)

hutchike (837402) | more than 8 years ago | (#14806501)

Not only do they have a piss easy job, they even get it wrong most of the time. See this IDC Itanium [theregister.co.uk] analysis for example...

Disney (0)

Anonymous Coward | more than 8 years ago | (#14805971)

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.

WTF, mates? (0)

Anonymous Coward | more than 8 years ago | (#14806003)

If the analysts wanted answers, they could go here [google.com] . Honestly, what's the problem?

Dear Wall Street (1)

Comatose51 (687974) | more than 8 years ago | (#14806011)

Dear Wall Street,

Have you tried going to http://www.google.com/ [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.

Amazing... (1)

creimer (824291) | more than 8 years ago | (#14806033)

Have stock analysts confirm that the law of gravity applies to even Google?

In other news... (-1, Troll)

Anonymous Coward | more than 8 years ago | (#14806059)

Linux is STILL for fags.

Google shouldn't provide guidance (2, Interesting)

Damana Mathos (825898) | more than 8 years ago | (#14806068)

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.

"Analysts Are Seeking Guidance From Google" (1)

Beryllium Sphere(tm) (193358) | more than 8 years ago | (#14806069)

Aren't we all?

Re:"Analysts Are Seeking Guidance From Google" (1)

kadathseeker (937789) | more than 8 years ago | (#14806232)

I know that whenever I feel confusion, fear, uncertainty, doubt, and aimlessness, I turn to Google and Wikipedia. They are the shepards that guide me through the valley of darkness. Lighthouses on the rough and stormy seas of the net and of life. Without them, I would be truly lost.

Analysts Are Seeking Guidance From Google (1)

SEWilco (27983) | more than 8 years ago | (#14806078)

Wrong link (0)

Anonymous Coward | more than 8 years ago | (#14806115)

Correct link [google.com]

Rot sets in (0)

Anonymous Coward | more than 8 years ago | (#14806079)

And so it begins... google will be assimilated.

You expect dumb things... (1)

rm69990 (885744) | more than 8 years ago | (#14806123)

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.

Re:You expect dumb things... (1)

Catbeller (118204) | more than 8 years ago | (#14806162)

Simple thieving, analyst-style.

1. After being shut out, raise the stock price projection to infinity-plus.
2. After Google doesn't reach $2000 a share, declare it a failure.
3. Dogpile! Mysterious amount of bad news about Google's mistakes start popping up everywhere. (I think you've all noticed this? 100 to 0 in 3.5 seconds? I mean, come on.)
4. Stock price plummets. Analysts can give this a nice helping hand :)
5. Analysts start buying up stock when they judge it hits bottom. They have a great deal of control as to when this happens.
5. Give Google notice that you want inside info from now on. Or else.
6. Google caves, due to stockholder revolt.
7. Stock goes up, largely because analysts now rate it a great buy, way undervalued!
8. PROFIT! PROFIT! PROFIT!

But not for Google. Gets eaten by Microsoft because it has been hobbled by short term market growth goals, while MS sits on a hundred billion in cash and doesn't give a fig about the analysts OR the stockholders.)

Re:You expect dumb things... (1)

Tough Love (215404) | more than 8 years ago | (#14806750)

not for Google. Gets eaten by Microsoft because it has been hobbled by short term market growth goals, while MS sits on a hundred billion in cash and doesn't give a fig about the analysts OR the stockholders

In case you haven't noticed, Microsoft isn't accumulating cash these days. Instead, spending all operating income buying back shares dumped by Bill Gates and otherwise issued to employees.

Re:You expect dumb things... (1)

dfwebbot (957452) | more than 8 years ago | (#14806187)

Go google stock. Come chat with my .NET AIM DFwebbot Yes .NET rocks and Linux blows. It can look up bugmenot usernames and passwords through IM.. Reply Help for instructions. Usage Bug:www.someurl.com Go google stock... oh and thank you google for the great services you provide.

Notorious B.I.G. said it best (1)

pmc257cool (956059) | more than 8 years ago | (#14806135)

Mo' Money Mo' Problems!

How everyone involved makes money... (2, Informative)

SchumpetersGhost (662472) | more than 8 years ago | (#14806336)

...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.

analysts are of little benefit (0)

Anonymous Coward | more than 8 years ago | (#14806420)

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.

Crazy talk! Google is a winner... (1)

hutchike (837402) | more than 8 years ago | (#14806486)

This is mad. Analysts are upset because Google's profits only rose 80% instead of the predicted 100%? Now that's a problem I'd love to have!

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:

  1. They hold the the PageRank [google.com] patent
  2. Meaning, nobody can provide search results that come close to Google's
  3. They are installed on Dell PCs, meaning they are exposed to lusers
  4. AdWords and AdSense are way better than anything else (+ patent protection)
  5. M$ still doesn't understand the internet - maybe they never will?

If I were an analyst I would sit back and enjoy the ride. Buy at $350 in March, then take a vacation.

Woohoo (1)

Deliveranc3 (629997) | more than 8 years ago | (#14806637)

Enron fears again!

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 .com crash or Enron isn't particularly appealing as an IT skillset worker.

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.

"do no evil" = "do nothing"? (1)

nanoit (906846) | more than 8 years ago | (#14806666)

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.

Re:"do no evil" = "do nothing"? (0)

Anonymous Coward | more than 8 years ago | (#14806764)

They do nothing on click fraud. Click fraud (via adsense) is the major force of their revenue growth. Google == Enron. Thaths why this year their execs are cashing out like there is no tomorrow.

hahaha (strong sell) (0)

Anonymous Coward | more than 8 years ago | (#14806752)

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.
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