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John Simkin

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I have just been told how much Google are making from each ad they service on people's web pages. I have calculated that they are making £25,000 per month from my website. No wonder their share prices are going up so fast.

Have you been advertising Shell, too??

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From today's CNN...


Google plunge may lead to greater disclosure

NEW YORK (Reuters) -- A plunge in Google's stock may have forced the company to shed a bit of its aloofness toward Wall Street, some analysts said Wednesday.

Google missed earnings expectations on Tuesday for the first time since it went public in August 2004, sending its shares down almost 20 percent at one point in after-hours trading and slicing billions of dollars off its market capitalization.

Contrary to its reputation of indifference to the market, management did care about that dive, two analysts said, since the company uses its high-flying stock as a tool to hire the best talent the company can find.

"They saw their stock price dive right after the numbers came out, they heard it loud and clear. They saw that the Street didn't like what the Street saw," said Sasa Zorovic, an analyst at Oppenheimer & Co.

Zorovic said he talked twice to Google's management on Tuesday night after the earnings report, possibly a first, and they were "fairly amiable, talking at length."

Management does indeed care deeply about the company's stock price, said Jason Schrotberger, an analyst at Turner Investment Partners, a big Google shareholder.

"The misconception is that the management does not care about the shareholders, and if they did, they would give more information," Schrotberger said. "I think the stock price is extremely important to them."

However, Schrotberger said he doubted Google would ever conform to Wall Street's desire for earnings forecasts, and Ian Warmedan, a fund manager at Henderson Global Investors, said the stock drop won't be particularly worrisome to Google management.

"It's highly likely that they will keep sticking to their guns, about giving very little away to the Street," said Warmedan, who helps oversee about $800 million in technology assets, including Google, at Henderson.

Warmedan said he did not think Tuesday's earnings miss was enough to force management in the future to act like other companies, but someday a big earnings miss might.

"Sooner or later they're going to have to do it the same way as everyone else," he said. But until a big miss, "they won't feel compelled to bow to what the Street looks from them."

Though Google is benefiting from tremendous growth, the company's stance toward Wall Street poses risks to the stock, said Paul Keung, an analyst at CIBC World Markets who has a 12- to 18-month price target of $520.

Google shares closed at $401.78 on Wednesday, about 7 percent below Tuesday's $432.66 closing price, before the earnings report was issued. Google shares hit an all-time high just above $475 on January 11.

The objectives of management and investors may not line up, Keung said. Investors worry that Google does not issue earnings outlooks to Wall Street and is less accessible to analysts than most other companies, he said.

Investors also are concerned that management has repeatedly said it would run Google differently from how other companies are run, and that its founders lack public company experience, he said in a note to investors.

Gus Zinn, a technology analyst at Waddell & Reed, said investors who knock Google for perceived disclosure shortfalls don't take the time to go through earnings releases. The company does talk about its business, but won't provide the earnings projections Wall Street craves, he said.

"Trading off the headline number is probably the worst thing you can do," Zinn said. "People are a little disappointed today only because of these guys who had no idea of what they were doing and were just dead wrong."

But Oppenheimer's Zorovic said Google's policy of providing no earnings expectations remains a nagging issue and increases the risk of investing in the company's shares.

For investors who hope Google might open up someday, Zorovic said, there might be this ray of hope: Google pays close attention to Yahoo, which does a phenomenal job of disclosing information to investors, he said.

"At some point Google will be humbled," said Zorovic, who reiterated a "buy' recommendation and a price target of $540 for Google's stock on Wednesday.


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