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Showing posts with label wall street news. Show all posts
Showing posts with label wall street news. Show all posts

April 18, 2011

Why Google is Making Wall Street Nervous

It took fewer than 400 words for  Google Inc CEO Larry Page to set the tone for a strained relationship with Wall Street that could  perhaps have huge repercussions when Google will need that Money from Wall street


The 38-year-old tech visionary - who with Sergey Brin created the algorithm that today powers the world's most-used search engine - risks alienating a powerful investor constituency that will be crucial to his efforts to ensure Google remains at the top of its game, say some industry observers.

Investors had hoped to hear Page sketch out his vision during a Thursday post-earnings conference call. Instead, Page came on the line for a few minutes, expressed his optimism in the company, then signed off without entertaining questions on a stunning 54 per cent cost spike.

Wall Street promptly responded by selling the stock down more than 8 per cent on Friday, wiping out $15 billion in value -- devaluing Page's own holdings in the company -- and setting a record for the biggest single-day decline since December 2008. 
 
As Google  gets ready to  fend off growing threats from Facebook and Apple, critics say he will need to get along better with Wall Street. In a rare downgrade of Google's stock, Citi analyst Mark Mahaney cited the "token appearance" by Page as being among the negative points from the company's quarter.

Of course, there are plenty of CEOs who do not pander to Wall Street, including Apple Inc's Steve Jobs. But RCM Capital Management portfolio manager Walt Price said even the Silicon Valley icon tackles shareholder concerns head on.

"He hits them head on and he hits them on a competitive basis. He talks about why he's superior to Android and other tablets," Price said. "That's probably a better model than saying I'm enthusiastic about the outlook and departing."

"Maybe (Google) doesn't want to talk about it, but their multiple is going to go down until they do," Price said. "Larry Page's vision would be a good place to start, and I think people are worried that Facebook is a giant sucking sound on the valuation of Google and the future of Google." 


source : ET