Good News for Stock Holders
While Google has lost control of the message in the past couple of weeks, one thing remains firm: The tech industry is set to grow, and Google still looks to be a major player.
For one, the company was able to win approval of a 50 percent stock split of the company's shares. Essentially, if you had $565.21 per share, you would now have $282.60 a share. The move is designed to marginalize voting power of shareholders. Most shareholders currently own Class A shares which allow shareholders to vote on certain company decisions. By Google splitting shares, half now being C shares, the company's leaders, Sergey Brin and Larry Page, have complete control of voting decisions. The move is not expected to go into effect until October.
This should come as positive news for some investors as the company is seeking to give their founders control of the company. Often times, in my view, when a company is directed by shareholders, many short-term decisions become a primary focus for the company, pushing risky investments to the side. I have no doubt that if Steve Jobs requested approval to ban flash from the iPad, he would have been met with a backlash of anger. Technology leaders have to scare investors and create new technology, so giving company founders and key executive control over the company is typically a good thing.
With Google now having lost 4 percent of its market cap since Page took control of the company, while Apple rose 86 percent and Microsoft rose 18 percent, it's time to take off the gloves.
As Google maintains its lead as a major industry player in the mobile arena, Microsoft recently announced a radically different approach to its mobile platform. Microsoft opted to include multi-core processing support, Internet Explorer 10, shared Windows 8 Code, wallet and NFC support. The new phone also looks to re-engage consumers with a new start screen with large tiles, and live updates.
My take is that this new phone will provide a new dent in technology and improve the Microsoft brand. Outside of that there is no potential imminent threat to Google's core business. Like I've said before that the company needs hobbies and if they work hard, these hobbies can become full-time jobs. Remember the iPhone?
Google is in no way in immediate danger on my market cap guide because they hold a steady 16 percent stake in the industry. I have said often that they are isolating themselves from the rest of the industry and have failed to create any meaningful partnerships. Apple has been able to work with Facebook, and Microsoft with Nokia, so why is Google so paranoid?
Again, the company is in solid financial shape and its profits per earnings are right in line. Android also remains very popular with 50.1 percent of the U.S. market. The main issue is exciting consumers and developing new competitive offerings. A conference is scheduled on June 27, where Google is expected to announce some new products or cloud offerings. Hold.