At Google, Shareholders Have No Clout

Robert Cyran is unimpressed with Google's (GOOG) push into clean energy:

The company risks spreading itself too thin -- chasing everything from personalized biotechnology to space flight. Its shareholders probably don't want Mr. Page and other executives spending their time, or Google's cash, on a spate of questionable pet projects that may accomplish little more than satisfying its founders' hubris.

This is exactly the kind of thing that Google was very explicit about when it went public. We will not give public shareholders any kind of useful voting rights, they said, nor will we give quarterly earnings guidance. We will spend our money on pet projects that shareholders might not like or want. If you don't like that, don't buy the stock. Google's executives are, quite explicitly, not answerable to their public shareholders. So it seems a bit rich to criticise them for doing just what they said they were going to do all along.

Comments

[highdent]

I sense quite a bit of jealousy here. You obviously don't get what Google is attempting to acheive. That is to add, as though the company hasn't already acheived enough to cover several lifetimes
for all of us in respect to information. Way ahead of it's time! Thank you Google. I remain your greatest fan.

[[e-mail]]

Nice to see one corporation in America even thinking about the ridiculous price of oil. Good for Google. I'll buy more.

[Nimish Mehta]

I am amazed at the comments of readers supporting GOOG's push into areas like Clean Energy, Space, and even spectrum. I personally think it absurd that the company pushes its own agenda, with the attitude of "don't buy my stock if you don't like it". GOOG is a public company and the stock is trading at ~$700 because there is future expectation of growth reflected in the price. It is this incredible valuation that enables GOOG to invest in all these initiatives (eg borrow money for their spectrum bid). So basically the company is using shareholder cash and optimism (as reflected in the stock) to invest in all these pet projects. This is fundamentally wrong.

Now, I am the first to admit that obviously there may well be a grand plan, which I don't get. I also admit that some of the investments (eg OHA and 700 MHz spectrum bid) are closer to the core business and you could possibly draw conclusions like OHA can generate ad revenues on mobile devices etc etc. But I can't, for the life of me, figure out how, for example, Clean Energy improves GOOG's core business in the next 2-3 years. If there is a grand plan here, and somehow these initiatives create better EBITDA margins and revenues, then I owe the company an apology. But until then, I am looking for a point when a) these initiative start to distract the management team from their day job, b) expectations of returns from these other investments start to get factored into the stock. That's the time to exit, and possibly short GOOG.

[anonymouse]

You missed the entire point, NM. That's exactly what Google said they would do. Think about it, and whether it is "fundamentally wrong."

[mgrund]

Public companies are not able to act like private ones. The law says so. Now as far as meaningfull voting rights go-- this is under regulatory review. Meanwhile as long as the Google Boys hold as much of the stock as they do they have much more to loose than most.


So far they are doing fine,but if needed by god I will sell and so will everyone else.
Konwing the voiing power of your shares is part of due dilagence out that does not mean that you can not complain, or even lobby for regulations.

Think about WSJ UPS or even dare I say BRK they all distrust there comon share holders and not with out reason. I do not know if GOOG will not go the way of others like yahoo and aol but as I said so far they are not doing so bad.

That said I to not think that GOOG should get to side tracked by its pet projects but so far I think they are to small to impact earnings.
I am wondering if GOOG will, in the event that they stumble onto "cold fusion" will they also give it away or do they think the the shareholders deserve some return