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Another explanation might be that tech companies are doing poorly in general at the moment, and Google is one of the few companies that hasn't done mass layoffs
by bla3 4y ago
Another explanation might be that tech companies are doing poorly in general at the moment, and Google is one of the few companies that hasn't done mass layoffs yet.
- emodendroket 4y agoProbably a bit of both but yes the rate hikes have been especially hard on tech. I think it is also a reasonable question why Google needs to have two competing products that do the exact same thing.
- ghaff 4y agoThey're two products that ostensibly do the same thing. And, if your answer is WELL, having a separate product like Waze lets us do slightly (arguably) sketchy things like route people through residential neighborhood streets with pedestrians to save 30 seconds or flag police speed traps, I'm not sympathetic. Do or not do but own it in either case. It's the same company.
- AndrewKemendo 4y agoThat's not "another explanation" that's the exact dynamic: TCI, who do not actually run the business, are threatening the CEO (addressed to Sundar) that they will move their money if Google doesn't do what they say - namely cut costs etc... Is it more likely that TCI investors know how better to run Google than Google does or that they don't care and are blindly seeking alpha with no care for the people that run it?
- michaelt 4y agoTo be fair, every single person on HN thinks they know how to run Google better than Google does.
- AndrewKemendo 4y agoYes, well luckily nobody on HN can compel Google to do anything differently. This group of investors however can compel Google to do things differently and as George Carlin once said: "It's a big club, and you ain't in it"
- ryanwaggoner 4y agoThere’s no evidence that this group of investors (who hold 0.5%) can compel Google’s management to do anything.
- BurningFrog 4y agoAlso most of the married people, I'd say!
- bdavis__ 4y agoThat is business insight. You can generalize that to say the average HN reader knows how to run anything better. 90% of management is equal to or worse than calling random() to make decisions. If the margins are large enough, and the competition is asleep, anyone can be a successful CEO.
- extesy 4y ago> TCI, who do not actually run the business, are threatening the CEO (addressed to Sundar) that they will move their money if Google doesn't do what they say - namely cut costs etc... What does "move their money" technically mean in this situation? Google is not a bank, they don't keep TCI's money. Is this a threat of tanking the stock price by selling all $6B at once? TCI would hurt themselves too if they do that.
- AndrewKemendo 4y ago>What does "move their money" technically mean in this situation? Sell GOOG and buy META (or whatever) >Is this a threat of tanking the stock price by selling all $6B at once? TCI would hurt themselves too if they do that. The act of liquidating their position is what reduces the price. So they drop their ask to the lowest bid price that liquidates their position net positive and in theory that action would cause a price cascade. It's a threat, not a guarantee.
- hexis 4y agoTCI investors, among other people, are the literal owners of Alphabet. The CEO is an employee who takes direction from the owners.
- UncleMeat 4y agoHow much GOOGL do they own vs GOOG? Larry and Sergey own 51% of GOOGL. Owning GOOG doesn't give you any control over the behavior of the company.
- hexis 4y agoYeah, the tech stock games around ownership vs control are real, and it's unlikely that GOOG owners can assert direct control. Still, if the company fails to listen to GOOG owners, the price will drop, almost as a matter of course.
- netheril96 4y agoWell since you are ignoring the proportion of ownership, let me tell you I am also an owner of GOOG.
- hexis 4y agoSure, and you get a vote. Same for me.
- xen0 4y ago> they will move their money if Google doesn't do what they say - namely cut costs etc... Why would Google care? This fund owns Google stock; it isn't giving money to Google, it gave money to whoever it bought that stock from. Selling a fraction of a percent of the total in the market might move the stock price a little, but probably not much. 'Moving their money' just means transferring that stock to someone else who may have more faith in the company's strategy.
- mrtksn 4y agoIs it true that tech companies are doing poorly or is it something else, like the free money is nowhere around and tech companies are now expected to actually make money like a traditional company? The story seems about the same everywhere: When money was pouring and people were spending more time on their devices than usual, the projection was that people will just resign from the physical world and live in VR so hire as many people as possible but that projection looks silly now.
- strulovich 4y agoGoogle’s profitability came down as well. This affects the stock price, this in turn affects employees (not just hedge funds are invested in the stock, employees get a lot of their salary that way) This creates a pressure on Google to try and raise their profitability, and one way to do that is cut on areas where it seems wasteful. The letter mentioned above is just a trailing sign of this in my opinion.