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Cloud turning a profit is good for Google, but the rest of the picture is not great. Stock buybacks are great for shareholders, but terrible for the employees a

Cloud turning a profit is good for Google, but the rest of the picture is not great. Stock buybacks are great for shareholders, but terrible for the employees and long term prospects for the company. Also, WTF is going on with their headcount? Up another 20k employees over the last year including those laid off? The future for Google almost certainly includes a lot more layoffs in order to keep their EPS up.

VirusNewbie 4y ago
People laid off in January were technically still employed for two or three more months after they were notified, depending on their state's WARN act.
karmasimida 4y ago
> As of March 31, 2023, the number of employees includes almost all of the employees affected by the reduction of our workforce. We expect most of those affected will no longer be reflected in our headcount by the end of the second quarter of 2023, subject to local law and consultation requirements. The layoff isn't counted yet. But I agree, if ads isn't printing as much money, Google layoffs are going to continue.
barrkel 4y ago
Stock buybacks are the other side of the coin of RSUs (GSUs). A significant portion of employee income is in the form of stock.
- bombcar 4y ago
  Do buybacks equal RSUs? If not they’re either distributors of cash or they’re issuing stock.
  - adam_arthur 4y ago
    Depends. For Google historically the buybacks have exceeded SBC, but looks like in the recent quarter that was not the case. Meta was famous for its buybacks being fully canceled out by SBC, though recently buybacks have started to exceed employee comp. Which is why FCF is a poor metric to use for a company that has a large portion of SBC. Completely hides the actual economics of the business. https://www.macrotrends.net/stocks/charts/GOOG/alphabet/shares-outstanding https://www.macrotrends.net/stocks/charts/GOOG/alphabet/shar... https://www.macrotrends.net/stocks/charts/META/meta-platforms/shares-outstanding https://www.macrotrends.net/stocks/charts/META/meta-platform...
alliao 4y ago
isn't cloud profiting an one off event when they axed whole bunch of legacy good will products?
- crop_rotation 4y ago
  What legacy cloud products did they kill off? AFAIK the only thing they did was change BigQuery costing and maybe change amortisation schedules.
- woeirua 4y ago
  My understanding was that it was a one off due to a change in how they amoritize costs for the hardware underpinning GCP.
crazygringo 4y ago
Stock buybacks are fantastic for employees as part of compensation is in stock. But even if compensation were just in cash, buybacks are irrelevant for employees and have nothing to do with long term prospects. Profit is always going to be returned to shareholders via dividends or buybacks (they're basically the same thing) or corporations wouldn't even exist in the first place. And profits being returned to shareholders are the sign of a healthy, profitable, sustainable corporation.
- adam_arthur 4y ago
  Dividends and buybacks are both neutral in the short term for shareholders. Buybacks provide deferred gains if any only if the business grows to justify the buyback. If you buy back 10% of shares, you have also paid 10% of the market cap of the company out in cash, which is net neutral for share NAV in the present. Ignoring sentiment based factors. BBBY bought back 50% of shares over the last 10y and what did that amount to for shareholders in the end? https://www.macrotrends.net/stocks/charts/BBBY/bed-bath-beyond/shares-outstanding https://www.macrotrends.net/stocks/charts/BBBY/bed-bath-beyo... Similarly with dividends, you’re paying out a portion of NAV in a distribution, net neutral. Though if your business can reasonably expect to cash flow steadily over time, of course your total wealth will grow as the business accrues earnings. Dividends are a return to shareholders in the present, buybacks are a deferred return which may never materialize as tangible value for the stockholder
  - joshuamorton 4y ago
    This doesn't really make sense unless you're making weird assumptions around liquidity/investment that probably don't add up in reality. Most people who invest in a stock will reinvest dividends, and so a 2% dividend ends up with you holding 2% more of the stock at the same value. A buyback that results in a 2% price increase results in you holding the same # of shares at 2% more value, with the overall market cap the same. As long as you assume the market is fairly efficient and liquid, you can sell your shares, or not, in either case. If instead you choose not to reinvest your dividends, you can also sell off excess value after a buyback (e.g., say "I will hold no more than $1000 and when the value increases beyond that I will sell excess shares to reduce my value to that number", or sell buyback/market cap% of your holdings, or whatever). Ultimately the difference is taxation, where buybacks win out (cap gains, not income). > BBBY bought back 50% of shares over the last 10y and what did that amount to for shareholders in the end? Well, for the shareholders of the 50% that was bought back, probably pretty well I'd assume.
deleted 4y ago
[deleted]

VirusNewbie 4y ago

People laid off in January were technically still employed for two or three more months after they were notified, depending on their state's WARN act.

karmasimida 4y ago

> As of March 31, 2023, the number of employees includes almost all of the employees affected by the reduction of our workforce. We expect most of those affected will no longer be reflected in our headcount by the end of the second quarter of 2023, subject to local law and consultation requirements. The layoff isn't counted yet. But I agree, if ads isn't printing as much money, Google layoffs are going to continue.

barrkel 4y ago

Stock buybacks are the other side of the coin of RSUs (GSUs). A significant portion of employee income is in the form of stock.

bombcar 4y ago
Do buybacks equal RSUs? If not they’re either distributors of cash or they’re issuing stock.
- adam_arthur 4y ago
  Depends. For Google historically the buybacks have exceeded SBC, but looks like in the recent quarter that was not the case. Meta was famous for its buybacks being fully canceled out by SBC, though recently buybacks have started to exceed employee comp. Which is why FCF is a poor metric to use for a company that has a large portion of SBC. Completely hides the actual economics of the business. https://www.macrotrends.net/stocks/charts/GOOG/alphabet/shares-outstanding https://www.macrotrends.net/stocks/charts/GOOG/alphabet/shar... https://www.macrotrends.net/stocks/charts/META/meta-platforms/shares-outstanding https://www.macrotrends.net/stocks/charts/META/meta-platform...

alliao 4y ago

isn't cloud profiting an one off event when they axed whole bunch of legacy good will products?

crop_rotation 4y ago
What legacy cloud products did they kill off? AFAIK the only thing they did was change BigQuery costing and maybe change amortisation schedules.
woeirua 4y ago
My understanding was that it was a one off due to a change in how they amoritize costs for the hardware underpinning GCP.

crazygringo 4y ago

Stock buybacks are fantastic for employees as part of compensation is in stock. But even if compensation were just in cash, buybacks are irrelevant for employees and have nothing to do with long term prospects. Profit is always going to be returned to shareholders via dividends or buybacks (they're basically the same thing) or corporations wouldn't even exist in the first place. And profits being returned to shareholders are the sign of a healthy, profitable, sustainable corporation.

adam_arthur 4y ago
Dividends and buybacks are both neutral in the short term for shareholders. Buybacks provide deferred gains if any only if the business grows to justify the buyback. If you buy back 10% of shares, you have also paid 10% of the market cap of the company out in cash, which is net neutral for share NAV in the present. Ignoring sentiment based factors. BBBY bought back 50% of shares over the last 10y and what did that amount to for shareholders in the end? https://www.macrotrends.net/stocks/charts/BBBY/bed-bath-beyond/shares-outstanding https://www.macrotrends.net/stocks/charts/BBBY/bed-bath-beyo... Similarly with dividends, you’re paying out a portion of NAV in a distribution, net neutral. Though if your business can reasonably expect to cash flow steadily over time, of course your total wealth will grow as the business accrues earnings. Dividends are a return to shareholders in the present, buybacks are a deferred return which may never materialize as tangible value for the stockholder
- joshuamorton 4y ago
  This doesn't really make sense unless you're making weird assumptions around liquidity/investment that probably don't add up in reality. Most people who invest in a stock will reinvest dividends, and so a 2% dividend ends up with you holding 2% more of the stock at the same value. A buyback that results in a 2% price increase results in you holding the same # of shares at 2% more value, with the overall market cap the same. As long as you assume the market is fairly efficient and liquid, you can sell your shares, or not, in either case. If instead you choose not to reinvest your dividends, you can also sell off excess value after a buyback (e.g., say "I will hold no more than $1000 and when the value increases beyond that I will sell excess shares to reduce my value to that number", or sell buyback/market cap% of your holdings, or whatever). Ultimately the difference is taxation, where buybacks win out (cap gains, not income). > BBBY bought back 50% of shares over the last 10y and what did that amount to for shareholders in the end? Well, for the shareholders of the 50% that was bought back, probably pretty well I'd assume.

deleted 4y ago

[deleted]