tl;dr: Google is acting like an Asian company and pretending to be a publically owned company while screwing shareholders out of voting rights.
Shareholders are kind of dumb.
Google splits into GOOG and GOOGL today
121–130 of 151 posts
Re: Google splits into GOOG and GOOGL today
#122This is meant do to one thing -- let the founders retain control while allowing for large stock acquisitions. It's possible Google was muscled out of the Whatsapp deal simply because they couldn't pony up the money. $20B is almost half of their cash on hand. Note that the Nest and Waze acquisitions (small in comparison) were paid for almost entirely in cash.
I understand why we have dual-class share structures. There are cases in which investors may trust management more than their fellow shareholders. Yet I am concerned about the structures' dynastic qualities. Larry Page is a competent executive. That may not be the case in 40 years. Tom Perkins's letter to the editor comes to mind [1]. The question of what happens after Page is more troubling. Limiting control to the…
I thought the old Class B shares converted on transfer? Did the split change that, or am I misunderstanding that passing the shares to offspring would be a transfer?
Re: Google splits into GOOG and GOOGL today
#123Earlier quoted context omitted.
Muscled? I mean... not to rain on anyone's parade. Perhaps someone just came to their senses? 19 billion dollars, for a messenger app, is more than just a little bit ridiculous. It's the kind of ridiculous that will be a runner-up in wikipedia for most idiotic business move ever.
People thought the same about YouTube, but that turned out to be a brilliant (and very profitable) move. Then again, they also thought the same about AOL/TimeWarner, and they were absolutely right then. It's usually pretty futile to try to predict the future. I can see Zuck's reasoning with the Whatsapp purchase, though, and I don't think he's insane. He and Larry probably understand the structure of the tech industr…
Google already had a solid youtube competitor. The primary reason for the acquisition was not for the userbase, but rather because youtube was being sued by the entertainment industry, and by google stepping in to take over and fight the legal battle, they managed to preserve the future of online video.
It was definitely the right move, but this situation can't be compared to the WhatsApp acquisition.
Re: Google splits into GOOG and GOOGL today
#124Earlier quoted context omitted.
People thought the same about YouTube, but that turned out to be a brilliant (and very profitable) move. Then again, they also thought the same about AOL/TimeWarner, and they were absolutely right then. It's usually pretty futile to try to predict the future. I can see Zuck's reasoning with the Whatsapp purchase, though, and I don't think he's insane. He and Larry probably understand the structure of the tech industr…
Google already had a solid youtube competitor. The primary reason for the acquisition was not for the userbase, but rather because youtube was being sued by the entertainment industry, and by google stepping in to take over and fight the legal battle, they managed to preserve the future of online video. It was definitely the right move, but this situation can't be compared to the WhatsApp acquisition.
Solid? I'm sorry, I used Google Video at the time. It was far from it.
Re: Google splits into GOOG and GOOGL today
#125I'm assuming they are also planning on buying back a chunk of the A-shares (and will only issue C shares in the future)? Will be interesting how much the price gap between A and C, or in other words the premium on control, will be.
Re: Google splits into GOOG and GOOGL today
#126Earlier quoted context omitted.
> Would you believe those 999,999 non-voting shares are worthless? If the owner of the company had shown no indication of ever wanting to pay a dividend, and if there was no reason to assume the company would ever be liquidated, then yeah -- there is no reason for those shares to have any non-zero value. Future cash flows are only relevant insofar as shareholders can receive or influence them. If those 99999 shares h…
> If the owner of the company had shown no indication of ever wanting to pay a dividend... future cash flows are only relevant insofar as shareholders can receive or influence them The stock of a company which will never pay out any dividends is worthless. The company's profits will go to everyone - bondholders, suppliers, customers, employees - except the shareholders. This will continue until liquidation, at which…
The reason for not paying a dividend is that cash distributed that way is taxed more highly than cash distributed in a share buy-back.
I agree with you that if no dividend is payed and shares will not be bought-back, the company is effectively worthless.
Re: Google splits into GOOG and GOOGL today
#127Is 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.
I traded in Russian stock exchange and many companies had "preferred" stocks which didn't have voting rights. Usually, they are traded substantially lower than "normal" stocks.
Preferred stock is actually a form of debt. It gets paid after the bond-holders but before the shareholders.
It almost never carries voting rights.
Re: Google splits into GOOG and GOOGL today
#128Earlier quoted context omitted.
Yes, and Google has committed to pay an extra dividend if the prices diverge too much, because laws.
I can't find details on this... do you have a link? (I'm wondering what conditions would trigger this 'extra dividend', and when.)
Sorry, can't find it, but one of the recent news stories on the split said there would be a special dividend that kicks in after 2% divergence in price.
Re: Google splits into GOOG and GOOGL today
#129Earlier quoted context omitted.
> Would you believe those 999,999 non-voting shares are worthless? If the owner of the company had shown no indication of ever wanting to pay a dividend, and if there was no reason to assume the company would ever be liquidated, then yeah -- there is no reason for those shares to have any non-zero value. Future cash flows are only relevant insofar as shareholders can receive or influence them. If those 99999 shares h…
> If the owner of the company had shown no indication of ever wanting to pay a dividend... future cash flows are only relevant insofar as shareholders can receive or influence them The stock of a company which will never pay out any dividends is worthless. The company's profits will go to everyone - bondholders, suppliers, customers, employees - except the shareholders. This will continue until liquidation, at which…
The discussion has referenced management owning the voting shares. Such shares have value, for management or any other party that may be paid for services provided to the company, even if they never pay dividends, because self-dealing.
Re: Google splits into GOOG and GOOGL today
#130If you're in GOOG options, it's going to get goofy. http://www.cboeoptionshub.com/2014/03/28/goog-get-ready-next...
Also, if you have a "stop loss" orders then I think it is worth cancelling them. I'm not sure if they are smart enough to pick up on splits.
All stop orders are canceled in case of a split. They will need to be replaced.