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Evil Google shareholders

Posted by Michael Bloch in online world (Sunday April 17, 2011 )

Perhaps Google needs to clue in some of its shareholders on the company’s “don’t be evil” motto.

Earlier this week, Google announced its first quarter results. Revenue grew by 27 percent and profit was up 18 percent. Pretty impressive stuff, but Not for some shareholders it seems. Because profit was out a little from what *analysts*, Google was beaten over its head with share values falling 5 percent in after-hours trading, ultimately leading to the stock plummeting to a 6 month low. I often wonder about these analysts, after all, plenty were caught off guard by the GFC.

I was really, really tempted to buy some shares in Google when it went public – it seemed like a no-brainer financial decision to me. Google’s initial public offering happened in August 2004 at a bargain $85 per share. At the time of writing its shares are valued at $530 a pop.

So why didn’t I? I would have been in it for the long haul and I didn’t want to become an evil shareholder; one that demanded stellar growth quarter after quarter. The stock market makes a lot of people do silly things and I don’t think I would be immune to it.

I get why people invest in the stock market, I get that they demand more return than what they’ll receive from socking their money in the bank as it’s all relative to risk, but such a reaction to an amazing 18 percent growth in profit? Sheesh. Evil.

Reactions like this can send companies down the “evil” path – cutting costs and therefore cutting corners in the way staff are treated and resourced, the way services are delivered and general business ethics.

It’s not the first time this knee-jerk shareholder reaction has happened to Google. Way back in 2006, a similar thing occurred when Google’s revenues in the final quarter of 2005 were 86 percent higher than the previous year final quarter and its profits were not too shabby either. Its stock was devalued by 12% in after hours trading in that incident. Go figure.

I guess with my attitude I’ll never be rich, but sheesh; it doesn’t look like we’ve learned anything from the global financial crisis. Google’s “Don’t be evil” is losing out to Gordon Gekko’s “Greed, for lack of a better word, is good. Greed is right. Greed works.”

Maybe it does, but you can have it. If folks want to win big, they need to be prepared to lose big – and not whine about it when it happens. The stock market (or even relying on Google for your income) to me is just like gambling – don’t bet what you can’t afford to lose.



 

 
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