Google splits into GOOG and GOOGL today • Hacker News Board

Re: Google splits into GOOG and GOOGL today

#41

Post by dragonwriter » Thu, Apr 03, 2014, 3:19 AM UTC

clarky07 wrote: post #34

Ellipsis753 wrote: post #27

Earlier quoted context omitted.

Well I wouldn't say they have only a single line of business. Yes, they make pretty much all of their profits from advertising. However they no longer just do searches. They do email, file hosting etc. You name it and they probably do it. They do make money from ways other than advertising too. They have quite a few pay to use services. Like business emails or Google Drive.

and yet none of them make money except search advertising. it's almost all of their revenue on a percentage basis. edit: i do believe they make a bit of money with youtube now, but it is still advertising. they haven't successfully SOLD anything to date.

> and yet none of them make money except search advertising.

I actually think lots of them make money -- over $5 billion in non-advertising revenue in 2013 [1]-- its just they are dwarfed by the scale of the revenue from search advertising ($50 billion in 2013.)

> they haven't successfully SOLD anything to date.

If they haven't sold anything but advertising, they must have just conjured that $5 billion in non-advertising revenue (and that total, and the proportion of non-advertising revenue to total revenue -- has been growing every year) in 2013 out of thin air. Which, you know, would be even more impressive than selling stuff.

Re: Google splits into GOOG and GOOGL today

#42

Post by [deleted] » Thu, Apr 03, 2014, 3:28 AM UTC

fiatmoney wrote: post #18

"Ownership" without control gives you precisely nothing, except for perhaps standing in a shareholder lawsuit. A company being unaccountable to its investors should make it unattractive as an investment.

[deleted]

Re: Google splits into GOOG and GOOGL today

#43

Post by Klinky » Thu, Apr 03, 2014, 3:32 AM UTC

fiatmoney wrote: post #31

Klinky wrote: post #22

Earlier quoted context omitted.

Shareholder accountability is pretty much bogus. The only shareholders who have ever had a real say are those who owned vast quantities. The flood of blind investing through retirement funds has further diluted shareholder influence to little more than demanding increasing share price.

Large institutional investors like mutual funds, pension funds, etc. have at least some of their incentives aligned with their own investors - they want the value of their holdings to go up (to increase management fees), which means exercising some level of corporate governance. For instance, looking askance at value-destroying vanity purchases (arguably, Oculus being the latest example). Even this minimal level of o…

Shareholders are so far out of the loop, rarely are they consulted on important business decisions. Usually when things start going sour is when they start making noise, and by that time it's often too late. Most aren't going to question the actions of the company so long as the price keeps going up. While an institutional investor could divest themselves of a stock if they don't like how the company is managing their purchases, it would likely be hard to justify removing GOOG, APPL or FB from their portfolio right now. It's not like mutual fund managers are that great at beating the market, especially after fees.

Re: Google splits into GOOG and GOOGL today

#44

Post by habosa » Thu, Apr 03, 2014, 3:59 AM UTC

wtracy wrote: post #3

Does this imply that GOOG and GOOGL shares will have prices that will move independently going forward? This should be interesting to watch.

Check out Comcast which has two independent stocks (CMCSA, CMCSK). They move together pretty much, off by less than a dollar right now.

Re: Google splits into GOOG and GOOGL today

#45

Post by wutbrodo » Thu, Apr 03, 2014, 4:03 AM UTC

habosa wrote: post #44

wtracy wrote: post #3

Does this imply that GOOG and GOOGL shares will have prices that will move independently going forward? This should be interesting to watch.

Check out Comcast which has two independent stocks (CMCSA, CMCSK). They move together pretty much, off by less than a dollar right now.

Is the difference between CMCSA/CMCSK similar to the GOOG/GOOGL difference (specifically, limited voting rights) or is it a different case?

Re: Google splits into GOOG and GOOGL today

#46

Post by nickff » Thu, Apr 03, 2014, 4:06 AM UTC

fiatmoney wrote: post #32

snowwrestler wrote: post #30

Earlier quoted context omitted.

> Oddly, no previous management research has looked at what the legal literature says about the topic, so we conducted a systematic analysis of a century’s worth of legal theory and precedent. It turns out that the law provides a surprisingly clear answer: Shareholders do not own the corporation, which is an autonomous legal person. What’s more, when directors go against shareholder wishes—even when a loss in value i…

Right. "Ownership" is a really fuzzy thing; in the context of owning shares of a public corporation it gives you the right to be treated equally (in some senses) with other shareholders, standing for shareholder lawsuits alleging breach of fiduciary duty, and most importantly the right to select the board and vote on certain proposals. No voting rights takes away the most important component.

It has not been shown that voting is the most important and effective means of maintaining accountability. There is a long-standing debate as to whether voice (voting) or exit (the ability to exit a long position) is more important.[1]

[1] http://en.wikipedia.org/wiki/Exit,_Voice,_and_Loyalty

Re: Google splits into GOOG and GOOGL today

#47

Post by [deleted] » Thu, Apr 03, 2014, 4:06 AM UTC

Aqueous wrote: post #2

"The much-awaited Google 2-for-1 stock split is finally happening on Wednesday when shareholders of record as of March 27 will get two shares for every one they owned." Out of curiosity what happens if you bought shares on March 28th? Does your stock price just go to $600 or can you petition Google to have the new Class C shares issued to you to make up the loss in price?

[deleted]

Re: Google splits into GOOG and GOOGL today

#48

Post by ksec » Thu, Apr 03, 2014, 4:07 AM UTC

Is it only in the US where it is allowed for stock shares to have no voting power?

Because I think this couldn't be done in HK or UK stock market.

Re: Google splits into GOOG and GOOGL today

#49

Post by wbl » Thu, Apr 03, 2014, 4:11 AM UTC

Klinky wrote: post #43

fiatmoney wrote: post #31

Earlier quoted context omitted.

Large institutional investors like mutual funds, pension funds, etc. have at least some of their incentives aligned with their own investors - they want the value of their holdings to go up (to increase management fees), which means exercising some level of corporate governance. For instance, looking askance at value-destroying vanity purchases (arguably, Oculus being the latest example). Even this minimal level of o…

Shareholders are so far out of the loop, rarely are they consulted on important business decisions. Usually when things start going sour is when they start making noise, and by that time it's often too late. Most aren't going to question the actions of the company so long as the price keeps going up. While an institutional investor could divest themselves of a stock if they don't like how the company is managing thei…

Some managers make turning around failing companies as stockholders their business. They go in, push for changes that will increase the value of the company, and exit, taking the cash and look for another failing company they think can do better.

Re: Google splits into GOOG and GOOGL today

#50

Post by greenyoda » Thu, Apr 03, 2014, 4:14 AM UTC

jrockway wrote: post #7

Aqueous wrote: post #2

"The much-awaited Google 2-for-1 stock split is finally happening on Wednesday when shareholders of record as of March 27 will get two shares for every one they owned." Out of curiosity what happens if you bought shares on March 28th? Does your stock price just go to $600 or can you petition Google to have the new Class C shares issued to you to make up the loss in price?

NASDAQ made the situation a little more complicated by reporting GOOG as the price of the Class A share (soon to be GOOGL) plus the price of the right to have a Class C share distributed to you. My brokerage linked me to this FAQ: http://nasdaqtrader.com/content/GOOGfaqs.pdf

To summarize the relevant part of this FAQ:

"On March 27, the Class C shares will commence trading on a WHEN ISSUED basis (GOOCV). At that same time, the EX DISTRIBUTION WHEN ISSUED market for the class A shares (GOOAV) would be made available. This market represents the ability to trade the Class A stock without entitlement to the Class C distribution.

From March 27 through April 2 we will be trading: Class A shares regular way, with entitlement to the class C shares (GOOG); Class C shares when issued (GOOCV); Class A shares on an EX Distribution, when issued basis (GOOAV)."

So on the 28th, you would have a choice: If you bought shares of GOOG, you'd pay the full price, and you'd be entitled to the stock distribution. If you bought GOOAV or GOOCV, their prices would reflect the fact that you would not be entitled to the stock distribution, which means you'd pay roughly half the price of what you'd pay for GOOG.