Investors and advertisers are curious,The LA Times has a story today "The One Bit of Info Google Withholds: How It Works". This is a feel good story about the mysteries of Google. My take? As long as everything is going great it remains just a curiosity. But, if something goes wrong, that curiosity will turn to fear and doubt. When that happens Google will be in a world of hurt. Investors will flee and advertisers will go elsewhere. See my earlier post on the importance of communication.
Investors and stock analysts are unsure where Google is going...but continue to bid the stock up. Read this excerpt from the LA Times article.
Google's unwillingness to disclose little more than the legally required basics of how it does what it does — and where it's headed — has left advertisers puzzled, partners confused, competitors nervous and investors frustrated. Even seasoned Wall Street analysts are left scratching their heads at precisely how Google posted $6.1 billion in revenue last year.
So far, Google's secrecy doesn't appear to have put too much of a damper on the leading search engine's financial or investment prospects. Google in March performed 49% of all U.S. Web searches, up from 47% the previous year and more than double its nearest competitor, Yahoo Inc., according to research firm Nielsen/NetRatings. Marketers continue to increase their ad spending, as evidenced by Google's 93% year-over-year revenue growth in 2005. And, even after a bit of a slump in the last month, its shares have risen 53% in the last year.
As long as Google exceeds analysts estimates the stock will continue to rise. One miss could spell disaster. The analysts are making these estimates based on very little information. If Google would communicate more clearly, like every other public company, the analysts might be even more confident and raise their estimates.
Google is doing great at the moment, and it's unusual communication policy is just a curiosity. But if there are any bad surprises...look out below.
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Oh come on. "if google would communicate more clearly"?
If they did that they'd be subject to attacks, endless copycats, and the stock would become worthless.
I hardly think they're at all concerned about their estimates. Every new feature they beta test scores through the roof. If hotmail would quit illegally blocking all gmail emails and invites googletalk would take over the messenger service and gmail would become the staple email client.
The message here seems pretty clear: microsoft would really like to know how you guys are able to offer a better service because a 32 billion market share loss is a pretty scary thing.
Posted by: mark | May 26, 2006 at 11:46 AM