Quote:
Originally Posted by Don Plumley
Google has taken the angle of not providing any estimates, and cheers to them. But they are a lonely voice in a crowd of thousands, that are pressured by analysts to provide projections. Game on.
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I think you are letting yourself be "deceived" if you think Google is following their "no guidance" policy with the best interest of the public shareholders in mind.
Just look at their two-tiered stock system (the insiders' Class B shares have 10 votes for every one vote the public shareholders have with their Class A shares) -- I know Google tries to claim that this is for the "benefit" of the public shareholders ("they know better what is good for the company than the shareholders do, so they need to keep absolute control") but generally, anytime "power" it not given to the owners of the company proportional to their ownership capital risks, it's a "bad" thing.
As for the "lack of guidance" -- having listened to a good number of Google's conference calls, their policy sounds more like a way to avoid answering any "difficult" questions, than anything to "help" the company long-term. Essentially, their policy is used to avoid giving the public shareholders information which is critical for making investment decisions. Less information flowing from the company to the shareholders is generally a "bad" thing for the public shareholder.
Of course, if you argue that Google is somehow "not fixated" on meeting the (outside) analysts quarterly estimates because they don't give guidance -- you just have to look at some of the details in their SEC filings to see otherwise.
Look at how they "play" with things like their quarterly tax rates, or "adjust" their receivables numbers (currently standing at $1.6+ billion -- strange when their billing system is structured so that most advertisers pay "at the point of sale") to "meet" the outside analysts estimates.
I also monitor a number of forums with Google advertisers -- there is sort-of an "inside joke" about how the advertisers' budgets get "all used up" as the end of the quarter approaches. Google's system "mysteriously" becomes more aggressive in serving ads (and those ads seem to find more clicks) just in time for Google to book the revenue.
I've said it before, and will say it again, for anyone who wants to really start digging into the company -- I think you'll eventually reach the same conclusion I've drawn: There is some type of "culture of deception" within Google (perhaps, "self-deception" at its core) -- personally, I expect there to be some type of Enron-like collapse with the stock/company in the not to distant future.