Leave Google Alone!
Why are tech shareholders so greedy? Yahoo defends itself from a hostile takeover, and Wall Street punishes them for shunning a suicide payday.
Now, Google reports spectacular growth, and Wall Street punishes them for not growing spectacularly enough.
Uh, what?
Google (GOOG) reported net profits of $1.25 billion, or $3.92 per share for the second quarter. Excluding stock-option costs, Google came in at $4.63 per share. The Street had expected $4.74, according to a Thomson Financial survey.
Despite Google’s shares tumbling below $500 for the first time since the company reported its last earnings, analysts insist shareholders shouldn’t worry. “There’s more positive here than negative,” said Youssef Squali, an Internet analyst with Jefferies & Co. “People are freaking out for nothing.”
Google’s gross revenue climbed 39% from a year prior to $5.37 billion and its hiring declined 10.3% from the same period, a sign that Google is controlling its spending. Investors spooked by earnings news from big tech companies like Microsoft (MSFT) and IBM (IBM) were swift to punish Google too.
“Google had a good second quarter performance,” said Bernstein Research analyst Jeffrey Lindsay. “But anything other than a definitive knock the ball out of the park is open to criticism.”
It’s hard being at the top. No matter how well you do, someone will always find fault.
It’s as if tech shareholders want the same kind of get-rich-quick paydays that precipitated the dotcom bust. It’s as if the expectation of sustainable growth, such common sense in almost every other investment, gets thrown out the window when it comes to tech investments.
Ironically enough, by expecting get-rich-quick paydays and punishing tech companies that don’t deliver, Wall Street is hurting those companies’ long-term growth prospects. They’re killing the geese that lay the golden eggs.
Remember Chris Crocker’s screed about how audiences keep wanting more, more, more, more, more from Britney? That’s pretty much what Wall Street wants from Google. Unlike Britney, however, Google is actually getting sexier.
They’re growing spectacularly, and they’re getting punished for it. How crazy is that?
Tags: Google, Investment, stupidPOSTED IN: Investment
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