free html hit counter Alan Murray Groks The Google Stock Sale | John Battelle's Search Blog

Alan Murray Groks The Google Stock Sale

By - August 24, 2005

A free link in the Journal. The guts of the piece:

In recent months, the top Googlers have sold off nearly $3 billion of their own holdings. These insider sales all have been on the up and up, conducted under a so-called 10b5-1 plan that allows them to sell a predetermined number of shares over a given period. Diversifying their riches in this way would be a wise strategy for the Google boys under any circumstances. But it is particularly wise if you suspect your stock has a touch of hot air.

They also have been changing their compensation plans, moving away from reliance on stock options, which become worthless if the stock drops. Instead, they have started using Google stock units, or GSUs. That is Googlespeak for restricted stock that takes four years to vest, but will continue to hold value even if the share price swoons. The company issued 61 million GSUs in its second quarter.

If that isn’t evidence enough that Google is preparing for the bubble to burst — or at least deflate a bit — then the new stock offering should be. The company says it has no specific plans for the cash. “The principal purpose of this offering is to obtain additional capital,” Google lawyers wrote in their registration statement with the Securities and Exchange Commission. “We have no current agreements or commitments with respect to any material acquisitions.”

Like George Mallory and Mount Everest, they are taking the money “because it’s there.”

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5 thoughts on “Alan Murray Groks The Google Stock Sale

  1. with Yahoo coming (Publishers network) i would expect the major moneymaker AdSense to sense some competition on the way…which reminds me of a question i still haven’t really figured out (John mentioned it earlier ia a different context i believe):

    Is the Paid Listing market indeed a winner-take-all market?

    The system with the most advertisers generates best incomes for publishers, the system with most publishers generates most traffic for advertisers…so there’s the postive feedback loop.
    Wouldn’t this be a winner-take-all scenario? Anybody?

  2. Joe says:

    Nils,

    It might seem that way, but it doesn’t work out that way. Publisher networks can be unique and there for offer various value propositions.

    The key is not necessarily having the most advertisers, but have advertisers willing to pay the most for clicks from your network. This allows niche players with ten key advertisers and only a handful of very specific and highly vetted sites to play with the big boys.

    Also if more publishers join one network or the other competition for top paying advertisements grows. As long as there are advertisers using both search engines (and I don’t think anyone sees this going away) then there will always be those publishers for whom it is a better option to go with the smaller network and avoid competing for dollars in the massive network.

    Ex.
    CompanyA– Monetizes 3 “Home Loans

  3. Annette says:

    Finally… the media’s getting rational with google. When will investors? Unconventional companies do not justify unconventiional valuation approaches – GOOG is a textbook case of management incentive misalignmnet; shareholder’s interests are being exploited –

    When the momentum breaks, GOOG’s stock will fall through the roof and there will be many casualties. I love GOOG’s products, but won’t pay a premium for obscurity and eccentricity.

  4. I think google is one of the smarter web searching companies. Take the latest sandbox google is using to keep new sites out of their searches. It helps them sell additional advertising space. If a hot new keyword comes along it will take over a year for a new site to list well in the search results. Therefore, google sells a lot more advertising targeting that keyword. But this also comes at a cost to relevancy. Have you seen the results when you search a relatively new keyword? It’s pitiful. Will this hurt google in the long run? I don’t know but certainly a Yahoo search or MSN search for the same keyword will produce much better relevancy.

  5. tercüme says:

    The system with the most advertisers generates best incomes for publishers, the system with most publishers generates most traffic for advertisers…so there’s the postive feedback loop.