How quickly we fall from grace. As Google’s stock continues to fall, its problems continue to mount:
* Concerns about recession exposure
* Concerns about dependence on a single product whose growth cycle is coming to an end.
* Concerns about lack of focus, lack of spending discipline.
* Concerns about senior executives cashing out and jumping ship (see Sheryl Sandberg)And now…
* Concerns that underwater stock options and a falling or flat stock price will force an increase in cash and/or restricted stock compensation, putting additional pressure on margins.
One of the reasons Google’s stock multiple is compressing (in addition to all of the above) is that the company’s operating margin has declined steadily over the past year. If the company is forced to provide higher cash comp or more restricted stock to reward and retain employees, this will put even more pressure on margins.
[Via Jim]
3 responses so far ↓
Google’s New Problem: Paying Its People · SmokeSignalz // March 5, 2008 at 6:37 pm
[...] Read the rest of this great post here [...]
Brian Free // March 6, 2008 at 1:43 pm
That’s where you are wrong about Google … they have more than 1 product. Look at all of their applications. Google will be making money for a long time coming. A couple of bad quarters are not the end of the world
Jeff Ventura // March 6, 2008 at 2:41 pm
Brian: they have many products, but one revenue channel. They don’t charge for the vast majority of their online services.
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