Wednesday, March 5, 2008

A few bumps on the road to Total World Domination

There were a couple of bumps today on Google’s drive towards Total World Domination.

Barely noticeable is the sound of being crushed as Google steamrollers over it. There’s talk of refocusing, but Danny Sullivan wrote their obituary this morning:

The truth is, you're dead. You're about to join the legion of other has-been search engines.
Perhaps more material to Google’s executives and shareholders is the recommendation by analyst Jonathan Moreland that it’s time to short Google stock. At 447, Google stock is 40% off its all-time high last November.

The argument (apparently only in this morning’s WSJ) is that internal stock sales are accelerating and stock buying has dried up. Moreland has already made money shorting Google stock, based on a combination of insider sentiment, economic conditions and the end to the company’s seemingly unstoppable momentum.
"So many of these insiders have been so anxious to sell or exercise their options, and so unwilling to hold much of anything long, and that's a particular red flag to me," he said....

Mr. Moreland said he believes it would take only a small crack in the bullish sentiment among analysts and institutional investors to send the shares down further.

"The near-religious fervor behind the stock is likely to wane a bit in the near future, and I thank insiders very much for showing their extreme lack of confidence," he said.
In the 1990s, Microsoft could do no wrong (at least with employees) as its stock options got every more valuable. In this decade, the ineffectiveness of option incentives has meant high attrition among veterans and (presumably) forcing it to pay market prices in straight salary for employees.

Barring some miraculous recovery in Google stock, a flat trend for share prices will crimp both its recruiting and acquisitions strategy.

No comments: