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Wow, I seriously never thought Google would be vulnerable to activist investor actions because it's market cap is too big and its shareholders too idealistic. I

by mjfl 4y ago

Wow, I seriously never thought Google would be vulnerable to activist investor actions because it's market cap is too big and its shareholders too idealistic. I'm still not sure that's not the case? Activist investors are sending letters all the time, and it's not a given that they are taken seriously, only if a shareholder vote would approve of their company policy goals. How do you know that TCI has a serious chance of that happening? If not then it's likely that Google's leadership just ignores it.

AndrewKemendo 4y ago
From the headline and article respectively: "Google Combines Maps and Waze Teams Amid Pressure to Cut Costs" "...as the search giant faces pressure to streamline operations and cut costs." "The activist hedge fund TCI Fund Management called on Alphabet to aggressively cut costs last month, writing in a letter to management that it thought the company’s head count was too high." Are you suggesting that the WSJ is totally off base by drawing the conclusion that pressure from TCI, via this letter, is not the cause of the restructuring?
- jjulius 4y ago
  >Are you suggesting that the WSJ is totally off base by drawing the conclusion that pressure from TCI, via this letter, is not the cause of the restructuring? That's a misrepresentation of what the WSJ piece says. All the article is doing there is highlighting that there has been external pressure on Google to cut costs. The excerpt you highlighted points out TCI's request for reduced headcount, while a few paragraphs earlier, the article says that there is no plan to reduce headcount.
- joshuamorton 4y ago
  > Are you suggesting that the WSJ is totally off base by drawing the conclusion that pressure from TCI, via this letter, is not the cause of the restructuring? Yes. In fact its off base enough that I don't think they actually make that claim in the article. TCI holds something like .5% of alphabet market cap, that's less than is held by multiple individual human investors in Google, and likely less than rank-and-file employees hold collectively. It'd be weird to pay any attention to such a group.
  - AndrewKemendo 4y ago
    So then who is the pressure coming from?
    - nwiswell 4y ago
      The parent is suggesting that this is simply a sensible business move and the pressure is irrelevant.
    - joshuamorton 4y ago
      Google isn't responding to pressure. Like perhaps there is a pressure to fire people, but Google isn't firing anyone, so they are pretty clearly ignoring said pressure.
    - compiler-guy 4y ago
      General economic conditions--many companies thought that the pandemic bump would last forever and planned spending that way. It hasn't, so they adjust spending. It doesn't take an activist investor or outside consultants or anything to look at your numbers and the trendline, and then decide to adjust your business according to what you see.
- RC_ITR 4y ago
  >Are you suggesting that the WSJ is totally off base by drawing the conclusion that pressure from TCI, via this letter, is not the cause of the restructuring? What a masterclass in logical fallacies. The implication of the article is that generally investors think Google is too liberal on spending (anecdotally, I will tell you this sentiment is very real). The WSJ used a specific and public example of someone putting that into writing, but if you think a non-Top 20 shareholder can convince Google to do something (that Google doesn't believe most of its shareholders want), then you really don't understand how corporate governance works. Even the more aggressive well-known activists rely on the idea that they can convince more than 51% of shareholders to agree with them Google is doing this because it thinks the majority of shareholders agree with it, otherwise they'd tell TCI to kick rocks (as often happens with activists, Google knows that no-one can actually buy enough shares to influence their management decisions, unlike some SMID caps.)
  - AndrewKemendo 4y ago
    >Google is doing this because it thinks the majority of shareholders agree with it, otherwise they'd tell TCI to kick rocks (as often happens with activists, Google knows that no-one can actually buy enough shares to influence their management decisions, unlike some SMID caps.) I'm glad we agree. That's almost precisely the argument I made throughout this entire thread.
- opportune 4y ago
  Yes, I have read so many news articles about Google that are trying to tenuously piece together a narrative where there isn’t one. An investor with 0.5% of outstanding shares and effectively 0 voting power can’t make Google do anything. They can post pdfs and work the PR machine (which hates Google because news media sees Google and Facebook as their main competitors for revenue ie ads), and WSJ can try to link the two, but that doesn’t imply any causality
opportune 4y ago
They aren’t, TCI can call for whatever they want but they have no power in terms of board voting.
- bmitc 4y ago
  What is the angle then for them sending such a letter then? I’m just curious who TCI is and what their deal is? Are they just myopic or is this a publicity stunt?
  - 1123581321 4y ago
    Investor desires congeal into a messy influence on the company. An investor pushing on the company helps direct that blob of influence a little bit. It’s like when you’re annoyed about something local government is doing and you show up with 50 other people also annoyed. Now you’re part of a news story and a stakeholder faction. But you all got there because of your individual desires. Also, the letter is a public artifact. The investor is also meeting formally and/or informally with Google or individual directors.
  - netheril96 4y ago
    Publicity stunt. It’s not like sending a letter cost them anything, but now they are famous.
  - HDThoreaun 4y ago
    People read the letter and think they have more power than they do
  - UncleMeat 4y ago
    They do actually want people to act on their letter. This is the same as an analyst in an earnings calls saying "hey can you slow HC growth even faster?" They've got an opinion and put it out there. But there is no evidence that this change is related to their letter (especially since none of the changes made in this case match any of the specific requests in the letter).

by mjfl 4y ago

AndrewKemendo 4y ago

From the headline and article respectively: "Google Combines Maps and Waze Teams Amid Pressure to Cut Costs" "...as the search giant faces pressure to streamline operations and cut costs." "The activist hedge fund TCI Fund Management called on Alphabet to aggressively cut costs last month, writing in a letter to management that it thought the company’s head count was too high." Are you suggesting that the WSJ is totally off base by drawing the conclusion that pressure from TCI, via this letter, is not the cause of the restructuring?

jjulius 4y ago
>Are you suggesting that the WSJ is totally off base by drawing the conclusion that pressure from TCI, via this letter, is not the cause of the restructuring? That's a misrepresentation of what the WSJ piece says. All the article is doing there is highlighting that there has been external pressure on Google to cut costs. The excerpt you highlighted points out TCI's request for reduced headcount, while a few paragraphs earlier, the article says that there is no plan to reduce headcount.
joshuamorton 4y ago
> Are you suggesting that the WSJ is totally off base by drawing the conclusion that pressure from TCI, via this letter, is not the cause of the restructuring? Yes. In fact its off base enough that I don't think they actually make that claim in the article. TCI holds something like .5% of alphabet market cap, that's less than is held by multiple individual human investors in Google, and likely less than rank-and-file employees hold collectively. It'd be weird to pay any attention to such a group.
- AndrewKemendo 4y ago
  So then who is the pressure coming from?
  - nwiswell 4y ago
    The parent is suggesting that this is simply a sensible business move and the pressure is irrelevant.
  - joshuamorton 4y ago
    Google isn't responding to pressure. Like perhaps there is a pressure to fire people, but Google isn't firing anyone, so they are pretty clearly ignoring said pressure.
  - compiler-guy 4y ago
    General economic conditions--many companies thought that the pandemic bump would last forever and planned spending that way. It hasn't, so they adjust spending. It doesn't take an activist investor or outside consultants or anything to look at your numbers and the trendline, and then decide to adjust your business according to what you see.
RC_ITR 4y ago
>Are you suggesting that the WSJ is totally off base by drawing the conclusion that pressure from TCI, via this letter, is not the cause of the restructuring? What a masterclass in logical fallacies. The implication of the article is that generally investors think Google is too liberal on spending (anecdotally, I will tell you this sentiment is very real). The WSJ used a specific and public example of someone putting that into writing, but if you think a non-Top 20 shareholder can convince Google to do something (that Google doesn't believe most of its shareholders want), then you really don't understand how corporate governance works. Even the more aggressive well-known activists rely on the idea that they can convince more than 51% of shareholders to agree with them Google is doing this because it thinks the majority of shareholders agree with it, otherwise they'd tell TCI to kick rocks (as often happens with activists, Google knows that no-one can actually buy enough shares to influence their management decisions, unlike some SMID caps.)
- AndrewKemendo 4y ago
  >Google is doing this because it thinks the majority of shareholders agree with it, otherwise they'd tell TCI to kick rocks (as often happens with activists, Google knows that no-one can actually buy enough shares to influence their management decisions, unlike some SMID caps.) I'm glad we agree. That's almost precisely the argument I made throughout this entire thread.
opportune 4y ago
Yes, I have read so many news articles about Google that are trying to tenuously piece together a narrative where there isn’t one. An investor with 0.5% of outstanding shares and effectively 0 voting power can’t make Google do anything. They can post pdfs and work the PR machine (which hates Google because news media sees Google and Facebook as their main competitors for revenue ie ads), and WSJ can try to link the two, but that doesn’t imply any causality

opportune 4y ago

They aren’t, TCI can call for whatever they want but they have no power in terms of board voting.

bmitc 4y ago
What is the angle then for them sending such a letter then? I’m just curious who TCI is and what their deal is? Are they just myopic or is this a publicity stunt?
- 1123581321 4y ago
  Investor desires congeal into a messy influence on the company. An investor pushing on the company helps direct that blob of influence a little bit. It’s like when you’re annoyed about something local government is doing and you show up with 50 other people also annoyed. Now you’re part of a news story and a stakeholder faction. But you all got there because of your individual desires. Also, the letter is a public artifact. The investor is also meeting formally and/or informally with Google or individual directors.
- netheril96 4y ago
  Publicity stunt. It’s not like sending a letter cost them anything, but now they are famous.
- HDThoreaun 4y ago
  People read the letter and think they have more power than they do
- UncleMeat 4y ago
  They do actually want people to act on their letter. This is the same as an analyst in an earnings calls saying "hey can you slow HC growth even faster?" They've got an opinion and put it out there. But there is no evidence that this change is related to their letter (especially since none of the changes made in this case match any of the specific requests in the letter).