Honest question: why do voting shares get traded at all? In most cases, several specific people will have majority control and will either retain it over time or deliberately give it to someone else. Sure, I can buy up a large portion of the stock, but for the most part, never a majority. So why bother trading voting stock at all? Or am I missing some power that a minority stakeholder can have with, say, 10% ownership?
Google splits into GOOG and GOOGL today
131–140 of 151 posts
Re: Google splits into GOOG and GOOGL today
#132Earlier quoted context omitted.
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.
Right, and there wasn't a community on Google Video, there was (and is) on YouTube.
Re: Google splits into GOOG and GOOGL today
#133This 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…
... or they could just not buy Google.
Re: Google splits into GOOG and GOOGL today
#134Earlier quoted context omitted.
Solid? I'm sorry, I used Google Video at the time. It was far from it.
Right, and there wasn't a community on Google Video, there was (and is) on YouTube.
Exactly. Google Video was an average video host. YouTube was the community it is today, though it didn't have the ad programme.
Re: Google splits into GOOG and GOOGL today
#135Bad news for Google shareholders in the long run. Companies with multiple share classes having different voting rights tend to underperform companies with stock that is one share, one vote. Please note: that doesn't mean Google won't do well, but that on average it's likely to do worse for shareholders than if all stock had the same voting rights. Since someone is sure to ask for a citation, http://irrcinstitute.org/…
Does it mean the existing employees who hold shares are going to get lesser value for their shares after split?
Current shares held (or shares already offered in a contract) are all subject to the same GOOG A -> GOOGL A+ GOOG C split.
New shares offered (to employees, aquisitions, public) are likely to be GOOG-C
Re: Google splits into GOOG and GOOGL today
#136Earlier quoted context omitted.
Thank you, that was very clear. > if Class A gets a $1 dividend Class B must receive the same. Does this mean that companies cannot split into voting and non-voting stock without paying out a dividend?
You'd think so, but in practice it's the other way around. The decision to pay a dividend is effectively made by the voting shareholders, and the voting shareholders see paying a dividend as giving money away to the non-voting shareholders.
1. GOOG's stock structure specifically guarantees equitable dividens and even share price parity.
2. Directly voting seizing the economic value of minority shareholders is about the easiest deleliction-of-fiduciary-duty case to win.
Re: Google splits into GOOG and GOOGL today
#137Earlier quoted context omitted.
> "Ownership" without control gives you precisely nothing This statement implies non-voting stock is worthless. That is untrue. There are people willing to pay good money for nonvoting stock. Imagine a dual-class share company. Class B shares cannot vote. Class A shares can vote - they own 100% of the vote share. But both classes are pari passu in economic terms - if Class A gets a $1 dividend Class B must receive th…
Is there anything Larry and Sergey could have done when they first set up the shares that would have avoided (or delayed) having to do a stock split? e.g. given the Class B shares 20 or 100 votes?
They did! Class B is 10:1. Google has grown beyond their original wildest 10x dreams. It took 15 years.
Re: Google splits into GOOG and GOOGL today
#138Honest question: why do voting shares get traded at all? In most cases, several specific people will have majority control and will either retain it over time or deliberately give it to someone else. Sure, I can buy up a large portion of the stock, but for the most part, never a majority. So why bother trading voting stock at all? Or am I missing some power that a minority stakeholder can have with, say, 10% ownershi…
Non-voting shares weren't generally accepted 15 years ago. Page+Brin were able to secure 10%-voting shares for the IPO and employee RSUs. Now they have stopped the creation/distribution of new tradable voting shares.
Re: Google splits into GOOG and GOOGL today
#139tl;dr: Google is acting like an Asian company and pretending to be a publically owned company while screwing shareholders out of voting rights.
dividend shares are different from voting shares.
Apple juice is different from milk.
No one is getting screwed, they can buy what they want, or not.
Re: Google splits into GOOG and GOOGL today
#140Anyone know the tax implications of this? I have seen splits before but supposedly this was equivalent to a special dividend as the stock's value halves.