Google has become so large a brand that it has turned into a common verb. They are now a publicly traded company with an $81 thousand million market capitalization (number of shares total times price at which they sell). Here we are in the year 2005. Surely any internet company that has survived to this day has learned from the mistakes of the heady internet bubble days. Right?
Wrong.
Google does not appear to have learned a darn thing from the failed and floundering businesses that preceded it. Nor do they appear interested in the lesson. After all, they are Google and their corporate motto is “Don’t be evil.” Let’s look at some of the foolishness.
They tried to take Wall Street’s money without playing by Wall Street’s rules. Perhaps you remember that, when Google went public, they auctioned the shares. This was an attempt to get the highest price possible; if there was to be a big first day pop, they wanted the money to go into their own pockets, not the broker’s pockets. In the end, they had to settle for a little less money up front. The shares have risen quite a way since then. Google thought they had a way to prevent Wall Street from making a killing on their shares the way they had on such companies as TheGlobe.com. The truth is that shares do not trade without Wall Street.
They tried to publicly release information about their business without actually saying anything. The earnings statement filed with the SEC was sufficiently complicated that it was the next day before CNBC’s Joe Kernen felt comfortable he had an accurate earnings per share number to announce. Playing the cards close to your chest is one thing when you are privately held. It is another thing altogether when you are publicly traded. This is part of the reason Google traded down on the news. The other part is that when you announce that your profits quadrupled over the previous quarter, it’s really hard to continue that trend.
And I haven’t even gotten to today’s stupidity. Parts of the online community have been up in arms over the last sentence of this article. I’ll start there.
They are capriciously withholding information from certain news outlets. Why? It seems that last week, C|net Googled the Google CEO and published the results. They were demonstrating that search engines are a powerful tool for finding information about people as well as companies. Since I was employed as a research analyst during the internet boom, I know this only too well. There are two problems with Google’s reaction to the article. First, it’s childish. “You did something I don’t like so I’m not talking to you” was a strategy most of us left behind in High School if not before. It’s just not something you do in the business world. Even if the policy is to not say anything to certain people, you don’t make that policy public. The second problem is legal in nature. SEC Regulation FD (Fair Disclosure) says that publicly traded companies cannot “selectively disclose” information. The regulation was designed to prevent management from giving insider information to selected analysts and not telling the public. If Google chooses to not let C|net in on information disseminated to other news sources they may be in big trouble.
Focusing on this one line, however, masks a potentially serious ongoing labor issue. Google has stepped up hiring lately, adding to the job creation numbers (what a shame that nationwide 100,000 people a month are still getting laid off). Google has some unusual fringe benefits according to C|net: “Tasty victuals–free breakfast, lunch and dinner–are only one of the many perks the company offers its burgeoning number of employees. Others include a staff doctor, dry cleaning pickup and delivery, onsite car wash and oil change, gym, personal trainers, tuition reimbursement, proximity parking for pregnant employees and nursing rooms for mothers.”
At some point, they are going to have to give up the dotcom era luxuries. It is one thing to have an executive dining room, or even a company cafeteria. It is quite another to commit to serving every employee ” Ahi Tuna & Avocado Poke, Calypso Rice Salad, Roasted Pork Loin and Hazelnut Shortcakes with Plum Compote” three times a day. There will come a quarter when, to please stockholders, they will have to cut such extravagance in order to focus on the bottom line.
When that day comes, they will have a few thousand unhappy geeks on payroll.