Joe2

At Google, Shareholders Have No Clout

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.