Baffled by this result, I attempted access through AOL (NYSE:AOL), using just the case number. There was the case docket, showing everything, including the recent activity. I next tried access using the name of one of the parties. Again, the docket appeared. So I went back to Google. After getting to the clerk's page, I tried again. Same result: Nothing. I pressed the refresh icon. That did no good either.
As I use Google extensively for internet searching, along with AOL, the Google non-result was very unsettling. Mostly I use Google as a highway to specific frequently visited sites, like the clerk's. I use AOL over Google primarily because I am more comfortable with its format, an old one which I decline to change every time AOL suggests I do so. I use Google over AOL when I want to upload documents more quickly than I can with AOL for a reason unknown to me. I hasten to add that this may just be my own unique experience. On the other hand, perhaps, it is as simple as a difference between broadband (NYSE:AOL) and cloud (Google).
Of what might this isolated disappointment of mine be a symptom, or harbinger of deeper concerns about Google? I checked.
A year ago Google co-founder Larry Page had reclaimed from Eric Schmidt the CEO-ship held previously by Larry from inception in 1998 until Schmidt assumed it in 2001. Schmidt has been kicked up or over to Executive Chairman. Is it possible that Eric had let the day-to-day slip so that search had ceased to be so good? Is it possible that his removal itself had caused the slippage in Google's operations? Not likely, as most of Google's search must be robotic.
Besides, Larry reported during the conference call on April 12 that since he retook the post he had pushed hard to increase Google's velocity, and improve its execution, as well as focusing on the big bets that would make a difference in the World with the "passion and the soul of a start-up," which, of course, Google is no longer.
Evidence of his efforts and also that Google is no up-start is Google's continuing incredible growth: Quarterly revenue growth up 24% year-on-year, caused by an incredible 200 million users for the newish Chrome, an even more incredible 800 million monthly You Tubers, and a not too shabby (except by Apple standards) 850 thousand Androids on the streets. Perhaps, Larry's push to get everyone to Google has resulted in blurred vision. But again, that should not affect the robot.
To be sure, Larry did cite Googlers' long-term focus in his segue into explaining the new stock configuration. Perhaps, that focus distorted near-term search.
Perhaps, short-term there was too much focus on that new stock configuration. It is as least confusing. It will be expressed as a dividend, but a stock dividend, not cash. Google's policy of no cash dividends remains inviolate.
Google's current cash retention is about $44.6 billion. Isn't that enough to manage expected increases in internet traffic, advertising transactions, and new products and services, to support overall global business expansion, and to make significant investments in Google's systems, data centers, corporate facilities, information technology infrastructure, and employees in 2012 and thereafter? Based on Google's Annual Report it is more than enough, much more. Isn't that enough to pay a cash dividend as well?
No cash, just stock, and as David Drummond, Google's Chief Legal Counsel, explained in the conference call:
"What we’re doing is creating a new class of stock, Class C. That new stock will have equivalent rights to our existing Class A and Class B stock, except it will have no voting rights. And it will also be issued through a stock dividend on all Class A and Class B shares. So, after the dividend, the stockholder who currently owns one share of Class A common stock with a single vote will continue to own that share plus one share of Class C capital stock that does not have a vote. Our existing Class A shares will continue to trade as they do now. And the new Class C shares will also be listed, so stockholders will be able to trade those shares, the Class C, just as they can with the Class A Shares today."
So, the difference between now and then—the shareholders will create the Class C at the June 2012 meeting—is that there will be no immediate change in anything. Eventually, however, holders who purchase Class C shares from those who got it as a dividend will have stock that pays no dividends and has no voting rights. Will that affect the market price? There will be no market until dividendees attempt to sell their Class C shares. Indeed, I am hard pressed to think of anyone who would be interested in purchasing the Class C shares. Presumably, however, that is the only obstacle, a formidable one, for the Class C, as Drummond must have cleared its issuance with NASDAQ before pressing it on the public, even though it appears to pass Rule 5640.
Were I a Class A shareholder, I would be hard pressed to know why the Class C was being created and distributed to me. What comes to mind is that Google has plans to use C-stock instead of C-notes for that global business and employee expansion in 2012 and beyond. It wants to lay the base for future valuations by creating a market for the C without causing future dilution of control. Control is now held ten to one per share in the Class B. Larry, Eric, and co-founder, Sergey Brin, now own about 92% of that.
This stock dividend tinkering should not explain Google's search slippage that prevented my examining that case docket on the Clerk of Court's website. So there must be another cause.
Perhaps, the failure lay not in Google but in its competitors. In his recent interview by The Guardian's David Farber, Sergey accuses "repressive governments trying to control access to the internet, entertainment industry crackdowns on piracy and so-called 'wall gardens' that maintain more strict control over what can be done on their technology platforms," [citing as culprits] "Facebook and Apple (NASDAQ:AAPL), which are stifling innovation and risk Balkanizing the Web." He accuses them all of undermining the universality that was internet founder Tim Berners-Lee's essential mantra.
Concluding my search, I found no macro-explanation for my single instance of search failure. What I did find was all positive, except for that darned stock dividend, which, since its announcement has caused the stock to drop more than 4% in a day. Since the Class B controls the vote at the Annual Meeting, it would appear that only Eric, Larry and Sergey could reverse what I and many other commentators regard as a bad idea.
Better to use some of that $44.6 billion, much of which is being invested in relatively low rate government instruments, to pay a cash dividend, one time if the Board is chary of creating a policy, than to hope for a future market in a C that can't hold water.
Perhaps Google will take a cue from Netflix (NASDAQ:NFLX), whose stock fell precipitously upon its decision to split DVD from streaming, and likewise reverse its decision before it's too late. Oops, its stock is falling as I write.