What he said was not wrong, but if I was a shareholder and long at the time of the comment I would have been fairly rattled, the CFO is supposed to be on the shareholders side, trying to help the stock price as well as the company grow, he is also "ASSUMED" to be a somewhat intelligent individual, I just think that that someone who is that high up in a company should be smart enough to refrain from making a comment like this.
I noticed MSFT dropped to about 40% of its peak shortly after it topped in '00. EBAY stands at about 2/3 of its peak and of course YHOO flattened out. Do you see GOOG crumbling in similar fashion?
I don't see it your way. The CFO is on the side of shareholders meaning that he should be doing his best job to CREATE shareholder value, not LIE about creating shareholder value. It is his duty to fairly and accurately portray the business and how well the company is performing. My opinion of Google changed with today's announcement. The stock from this point will be more sanely valued as this information takes the 'fluff' out of the story.
Bagging on the CFO is weak. The guy's just doing his job. First, nobody here can question his facts. It is his job to know the state of Google's finances better than anyone else in the world. Even if he's doing a terrible job he knows a hell of a lot more than any of us. Second, nobody here can question his motivation. Unless you've got more GOOG than he does, which is not bloody likely! So the only thing you can question is his judgement, but with far less information than he has. If there is <i>no plausible scenario</i> in which he was doing the right thing for Google shareholders, then maybe he misjudged the markets. I think there is a very plausible scenario in which he did just the right thing. He knows the analyst forecasts and he knows how Google is performing. He knows expectations are way too high, and will need to be adjusted downwards before the next earnings. Another big miss would be the kiss of death, all the analysts who reaffirmed last quarter are going to have egg on their face. He has to talk the market down slowly and gently and convince analysts to rachet down their estimates without spooking them. He can't put out his own forecasts, it's too late for that. So put yourself in his shoes, how are you going to get the message across? Seems like he pitched it just right. The market action after the initial selloff confirms that he didn't spook the institutions out of the stock. I predict some more guardedly bearish talk on Thursday and another small correction. Martin
I'm not questioning what he said but rather the way he said it and perhaps the forum he chose. Can we agree that a statement by the company's CFO, that revealed no new information, yet caused a >10% intraday drop in the most important stock in the entire market is subject to criticism? All I'm saying is it is his responsibiliblity to understand the effect, perhaps unwarranted effect, his comments are likely to have. Guidance usually is done after hours for this reason. At a minimum he should have prefaced hsi remarks by saying he was repeating what they said in the last public filing, so that it was clear this was not a bombshell. GOOG has chosen to operate unconventionally. They have a 360, for now, stock. They do not issue guidance, they don't kowtow to Wall Street. In many ways, I like the way they do things, but they have to consider the effects of what they say or pay the consequences. For now, the stock is uninvestible.
And I'm saying, he probably did. I don't think it was a mistake, and I don't think it was against the interests of shareholders either. In any case, we'll find out soon enough. Martin