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Why would Brin and Page sell enough shares to lose their majority vote? Google's IPO, and their insistence on keeping control of the company via two classes of
by mixmax 17y ago
Why would Brin and Page sell enough shares to lose their majority vote? Google's IPO, and their insistence on keeping control of the company via two classes of shares seems contradictory to this move.
Obviously they don't need the money, and don't need to diversify their holdings to have a luxurious life. So why do it?
Also, a majority share held by Brin and Page was what was supposed to keep Google from doing evil.
- kk3 17y agoevil wins.
- danteembermage 17y ago48% of the vote is well above what would be required to control google, especially considering that google probably has a high fraction of individuals holding their shares who don't usually vote their proxies. I don't begrudge these guys their diversification at all, I doubt the market does much either.
- grandalf 17y agothe market will probably like it :)
- mixmax 17y agoApparently not. They're currently down 5.6% from yesterday http://www.google.com/finance?q=goog http://www.google.com/finance?q=goog
- paulsmith 17y agoI've never understood this impulse to try and divine a market's reaction to news from a 1-day timespan. Especially for move like this, where the effects in corporate governance might not be seen for some time, wouldn't the better indicator of how well-received it is be the stock price after 3, 6, 12 months? Aren't these just big fund managers making snap judgments and moving sums around for the biggest bang?
- randombit 17y agoActually, more likely it's a few hundred different automated trading systems all playing off each other. If you're managing a pension fund, volatility is the last thing you're after.
- xenophanes 17y agoApple went down about the same amount, so it was probably something else...
- jganetsk 17y agoThat's because of the earnings report.
- ctingom 17y agoI doubt they are losing majority vote. They probably have more shares than anyone else, still. Right?
- aresant 17y ago"don't need to diversify their holdings to have a luxurious life". Good point, but they do need to diversify to fund billions on the kind of change-the-world projects that they've expressed interest in in the past: a) Alternative energy. b) Genome / disease research & mapping. c) etc. The recent mega-philanthropy of gates / buffet / etc people @ the top realize that they have a chance to alter the course of human history in other ways that may require a ton of capitalization (vaccines, health, disease, geneome mapping, etc).
- cellis 17y agoI suppose cash is king but couldn't they could also simply take out loans on the value of their shares a la Ellison?
- evgen 17y agoThe danger in this is that it is quite possible that at ~36 P/E Google is near the upper limit of its practical valuation for the near future. If they borrow big against their holdings then they have to pay back the loan and also service the debt. If the share price drops then they would have to sell even more shares to cover the loan. As it stands now they will still have such a huge chunk of voting rights that it would take near unanimity against them to overturn their decisions and in return they get big piles of cash that they can probably get a better return on by placing bets on other ventures.
- wisty 17y agoIt's risky. If their new investments don't make any money, and google drops in valuation, they could be forced to sell a larger portion of their stake.
- rms 17y ago48% is still a majority vote. Only a small percentage of non-institutional shareholders actually vote.