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Google’s #$#ing shareholders

Posted by Michael Bloch in ecommerce (Thursday February 2, 2006 )

Even though Google’s revenues in the last quarter of 2005 were $1.9 billion, which was 86 percent higher than the previous year final quarter and 22 percent more than the third quarter in 05, shareholders spat the dummy and the stock wound up being devalued by 12% in after hours trading.

In one fell swoop, $15.5 billion in market value was wiped off. *Analysts*, not Google, predicted a profit of $1.77 a share, but Google’s profit only (?) rose by $1.22 a share.

So we have a company who goes by the maxim of “don’t be evil”, with a stack of shareholders who would seem to subscribe to the opposite. It’s situations like this where young idealistic companies are pretty much well forced off the path of their original ethos.

Expectations are unrealistic, share prices go down, the company needs to increase profits; and then continue with stellar increases. Unfortunately the first thing usually to suffer in increasing profits is the human element and general quality of goods and services.

I’m sure Google has plenty of tricks up its sleeve so they don’t need to do this -for now – but it’s the nature of modern business where increasing profits are required on an ongoing basis, and in the case of web based companies, it’s expected to be far higher than their bricks and mortar counterparts.

It all smells of dot-com bubble to me. Added to this shareholder lunacy, firstly in driving the prices so high and then the sudden retreat, Google will see increasing legal challenges this year – issues relating to copyright and the China Syndrome.

To be honest, I wouldn’t be Larry or Sergey for the world. I wonder if they ever feel deep down inside that they are now only just passengers (albeit wealthy ones) on a runaway train.


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