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Shareholders and tech companies

Posted by Michael Bloch in online world (Friday February 1, 2008 )

I’m really glad I kept out of the stock market. I’m thinking it’s on par with heroin dealing at times given the level of greed involved. It just doesn’t seem sustainable and the knock on effects of fickle, greedy shareholders and crack smoking analysts can be horrid.

Case in point: what happened to Google’s share price today.

Google earned over $1.2 billion during the last quarter of 2007 – an increase of 17 percent from net income of $1.03 billion during the the same period a year earlier.

So how did the market react?

Well, Google shares shot up 16 bucks to finish at just over $564 in Thursday’s regular session… before the announcement …. then plunged $38.45 in extended trading after the last quarter results came out. Just like that.

Unreal. All because their performance didn’t match what external analysts *predicted*. It’s the first time Google’s profit Google’s quarterly profit has climbed by less than 25 percent since the company went public.

Under 25% huh? Only 17% .. omg.. the sky is falling – sell, sell, sell!

OK, I’m probably speaking out of ignorance, but I really wonder about some of these tech investors and analysts. I came so close to buying Google shares when they went public – it was a no-brainer, the stock was going to do well. Shares were about 190 bucks a pop back then I think. But I don’t regret not doing so and getting involved in these stupid greedy games

If you’re thinking of investing in tech companies, also bear in mind that not every company is a Google. I’m seeing a lot of venture capital cash being poured into some Web 2.0 startups over the last year or so that I’m convinced will go nowhere and it reminds me a little of the lead up to the DotBomb bubble burst back in 2000. Not as severe, but unsettling nonetheless. These are big boys games, stay out of them; or if you do decide to take a taste, don’t bet what you can’t afford to lose.

Read more about the farce with Google share prices here.


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