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It's probably because the shareholders only care about ads and making more money. He's probably trying to reframe the discussion. I have a bad feeling that Goo
by karissa 11y ago
It's probably because the shareholders only care about ads and making more money. He's probably trying to reframe the discussion.
I have a bad feeling that Google is going to have a hard time continuing the way they are without some serious deliverables. I think this is why you can't expect C corporations to continue to "be good citizens" and really push the envelope.
Being on the stock market is a lot like being on the stocks. Hostage.
- dylanjermiah 11y ago>It's probably because the shareholders only care about ads and making more money. Not necessarily. Firstly, the only reason people purchase a stock is for that stock to be worth more in the future, they're taking a risk and making an investment. Nothing at all wrong with that. Secondly, I'm a Google shareholder, one who hopes the stock will be worth more in the future than I payed for, the advertising business is very important, the advertising business is essentially funding all their other ventures, which have the potential to replace the ad business and continue the cycle.
- qubex 11y agoActually, no: the whole point is the net present value (NPV) of future dividend payments. The stock rises if there is a collective expectation that the discounted cashflows will rise. That this creates an opportunity to sell the stock at a higher price (foregoing those heightened dividend payments) is largely secondary. Bubbles occur when investors loose track of the fundamentals and focus on the second aspect you mentioned.
- klipt 11y agoDividends aren't strictly necessary - stock buybacks have the same effect of returning money to those who want it, while being superior (in terms of taxes) for those who would just reinvest dividends anyway.
- walshemj 11y agoBut its not real money in the share owners hands buy backs are bad you need to reform taxation of dividends make scrip dividends taxfree if reinvested. Of course the IB make a nice chunk of change for arranging the buy back
- TeMPOraL 11y agoIsn't it the other way around? I.e. sure, dividends are cool in principle but the actual reason people buy stocks is to sell it later, because it's a faster way to make money?
- eru 11y agoBut why would the next fool buy the shares at a higher price?
- dylanjermiah 11y agoBy this line of logic it would be a mistake to buy Microsoft shares on day 2 of trading, Apple shares on day 2, 'insert any successful company' shares when they're higher. People buy shares because they think it will be worth more in the future, they think the company will be worth more than it currently is. People buy Google at it's current market cap because they think it's going to be worth more.
- eru 11y agoAnd the ultimate value of any company is the stream of dividends it generates discounted to the present value.
- crdoconnor 11y ago>the advertising business is essentially funding all their other ventures, which have the potential to replace the ad business and continue the cycle. I'd never make a bet on any corporation being willing to branch out into something new that will cannibalize its core business. It just doesn't happen. Ever.
- NamTaf 11y agoHe's not saying it'll cannibalise the core business, he said it'd replace it by becoming a bigger profit centre. For example, Nintendo started out in playing cards and went via hotels among other things before arriving at electronics.
- dylanjermiah 11y agoYep :) One day search will not be relevant, Google is trying very hard to figure out what will be important.
- jfoster 11y agoAmazon started Kindle & Kindle books, which heavily cannibalized their sales of physical books.
- crdoconnor 11y agoTheir book business has not been their core business for more than a decade. Nonetheless, I suppose cannibalizing their ex-core business is pretty exceptional.
- ElijahLynn 11y agoIn the new book "How Google Works" Eric Schmidt talks quite frequently about the need to be able to innovate even if that means cannibalizing your own products. Because if you don't then someone else will. And when that happens, you die off. Most incumbants die from not cannibalizing their own products. Innovation is the key to survival.
- pchristensen 11y ago
- nationcrafting 11y ago>the only reason people purchase a stock is for that stock to be worth more in the future It depends on what you're interested in. Warren Buffett buys shares in companies he never plans to sell, like Wrigley's, Heinz, Dairy Queen, See's Candies and Coca-Cola, because he's more interested in the annual return on investment than in increasing the capital itself. To Buffett, owning shares in a company means owning a share of the company in every sense of the word. He's often quoted saying "you should only buy shares in companies you're happy to own for 10 years should the stock market close tomorrow".
- DanBC 11y ago> Not necessarily. Firstly, the only reason people purchase a stock is for that stock to be worth more in the future There is the edge case of people buying a single stock so they get invited to AGM and get some kind of vote.
- eru 11y ago> Firstly, the only reason people purchase a stock is for that stock to be worth more in the future, they're taking a risk and making an investment. Investing for dividend income alone is fine, too.
- paulsutter 11y agoLarry and Sergei retain voting control through a special class of stock, so no, they are not held hostage by anyone. http://mobile.nytimes.com/blogs/dealbook/2012/04/13/new-share-class-gives-google-founders-tighter-control/ http://mobile.nytimes.com/blogs/dealbook/2012/04/13/new-shar...
- BurningFrog 11y agoIn other words, what Larry and Sergei care about is what the shareholders care about.
- TeMPOraL 11y agoAnd this is a thing that reassures me Google won't turn actually evil any time soon.