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Subpoena Resistance Hurts Google Stock 407

Posted by Zonk
from the fight-for-your-right dept.
imrec writes "Google stock sees a record 8% decline shortly after news concerning the government's request for Google's search logs broke earlier this week." From the article: "'There are potentially concerns that Google could be in the cross-hairs of the Justice Department,' Kessler said. 'Investors are worried about interest rates and inflation and they felt technology stocks like Google, Apple, Yahoo and others were able to withstand these kinds of pressure. But now that ability is in doubt,'"
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Subpoena Resistance Hurts Google Stock

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  • Two Words . . . (Score:5, Interesting)

    by Newt-dog (528340) <newt-dog@ p h a n t o m c o w .com> on Saturday January 21, 2006 @09:27AM (#14525858) Homepage
    Buy Now!
    • Re:Two Words . . . (Score:2, Insightful)

      by Anonymous Coward
      Buy Now!

      Have you taken a look at what Googles PE multiple still is, and what that means?

      With apologies:
      Those who don't understand the DotCom bubble are condemned to repeat it. Badly.

      • Re:Two Words . . . (Score:2, Interesting)

        by Ireneo Funes (886273)
        Google's PE is not nearly as high as the average PE for a tech stock during the dotcom bubble was... the fact that GOOG has a reliable business model with sales growing more than 100% per year is what's driving the stock price this high, not pure speculation as was the case by the end of the 90's
        • A stock can be half the price/revenues or price/book ratio of dot.bombs and still be rediculously overvalued. Google looks like it should be garnering a lower P/E this year than last as mounting competition and market saturation are set to sharply curtail earnings and revenue growth in the future. A P/E of 30 would be the top end of what I'd consider sane, with a P/E of 10 being the bottom end of the range.
          • Re:Two Words . . . (Score:4, Interesting)

            by MikeURL (890801) on Saturday January 21, 2006 @11:34AM (#14526293) Journal
            What I have seen happen over and over again is that people look at current growth rates and project them WAY out into the future. In the dot-com era, before the crash, stocks were valued "based" on the idea that they'd grow 50% a year for the next 25 years (and become larger than the entire US economy in the process). It was insane in a way that only Mr. Market can be. However, as any student of history knows, Mr. Market also puts the smack down without mercy.

            Is Google in la-la land? I dunno, I quit looking at it a while ago. Back when I DID evaluate it I determined that to justify its PE it would eventually have to become as large and profitable as Microsoft. My determination, at the time, is that you don't see more than one Microsoft per paradigm shift. Now i am not saying it isn't a cool company, it is, but I just don't want to make a donation to the traders at this time (Wall Street has enough money already!).

            Now, since Google's share price has maybe doubles since I did my analysis I'd go out on a limb and suggest that this pricing is unreasonable. I don't post on this often on /. because it just gets people all defensive. However, I do have a Finance degree and I do know how to do fundamental analysis and for those of you who have bought on emotion and been very lucky so far please do consider if it may be time to take some profits on this stock.
    • by ceeam (39911) on Saturday January 21, 2006 @10:02AM (#14525984)
      Yeah, using /. for stock market advise is about as insightful as using it for pickup/sex tips... In other words it's on par with asking a blonde whore about Linux configuration, yeah.
      • One word: Redhat
      • Re:Two Words . . . (Score:3, Informative)

        by timeOday (582209)
        And your reliable source for stock market tips is...?

        I have a relative who works at Merrill Lynch telling people what stocks to buy. I asked him whether his most successful co-workers made their money following their own advice, or on commissions. The answer was "commissions."

        In other words, I agree slashdot investments tips are probably worthless, but so are everyone else's, unless of course they're insiders.

    • Re:Two Words . . . (Score:2, Insightful)

      by daigu (111684)
      You forgot the ending: Buy Now...if you want to lose a lot of money. There's a reason a stock drops that much on news like this - it is widely overvalued due to speculation. While I agree with a contrarian approach, there's better ways to do it than buying Google stock.
      • At the same time, I am going to buy some stock, I won't mortgage my house to do so, but...

        I think if Google stay hard on their edge on this one, I think this will become a big case, widely looked upon by the tech industry. Another MS vs DOJ case. In some cases, it's quite worth it to buy stock when it's tanking.

        I bought MCI Worldcom stock about 3 hours before they were delisted, one of the best stock moves I have ever made.

        Google has widely been known as they cause for the "brain drain" in Silicon Valley ri
        • I'm just curious. How did you go about calculating the parameters of the potential gain loss on such a move. You knew MCI had huge assets, they weren't going away. You knew there was serious, serious accounting fraud, and could not be sure as to the extent of the financial damage. Do you work as a professional analyst?

          Also, did you jump onto the Enron bandwagon before they went under?
    • Re:Two Words . . . (Score:3, Insightful)

      by squidguy (846256)
      Here's two other words (echoing an excellent investment tome): Irrational Exuberance
    • Two other words.. (Score:5, Insightful)

      by nurb432 (527695) on Saturday January 21, 2006 @12:59PM (#14526700) Homepage Journal
      "Stop Searching"

      Forget the stock price, do you approve of the government looking into your searching habits? I dont.

      Remember when it was said ' they would never do that' just a couple of years ago when echelon was all the talk? Welp, welcome to 'never'.
  • by Ckwop (707653) * <Simon.Johnson@gmail.com> on Saturday January 21, 2006 @09:29AM (#14525866) Homepage

    Ahhh, now we'll really see whether they can really live up their "Don't be evil" policy! Does Google prefer stock price over ethics? While my instinct tells me the answer is firmly "no" I think we are all interested in the result.

    I think Google did the right thing. In the western democracies we all have strict rules governing the powers of the various investigative authorities. There are very good reasons for this. The Police and Justice Department have incredible powers granted to them by the state. However, the same power that allows them to catch criminals can also be used for less noble purposes.

    In any organisation of considerable size there is always a rogue element. An element that is deceitful, unethical and motivated by influences orthogonal to the goals of the institution. Sometimes these are fairly benign: David Blunket trying to get a quick visa so he and his bit on the side have a nanny to look after their child. Sometimes these can be very malicious: Robbers breaking in to the Democrat headquarters and planting bugs so Nixon could spy on their election campaign. (I'm British so they may be inaccuracies in this account)

    The law is there not only to protect us from criminals but to protect us from the people who catch them too. In many ways, the protection from the people who catch criminals is vastly more important than protection from criminals. What criminal can get state sanctioned approval to search your home? Impound your possessions? Wrongfully impression you?

    All over the western world, governments are granting their Police more and more powers in the name of combating terrorism. The chance of being killed by a terrorist is approximately zero. For comparison, in Britain 0.03% of us will die[1] in ALL possible mishaps this year. That takes account of murder, car crashes, being eaten by ferocious llamas and so on and so forth.

    I would therefore venture that the threat posed by increasing Police power is vastly greater than the threat of terrorism. In Britain, we saw this illustrated for us nicely when an octogenarian, life-time member of the Labour party was escorted from the annual conference and arrested under anti-terrorism legislation. Here was a man saying that war in Iraq was unjust and he gets arrested under anti-terrorism legislation. This war on terror is becoming a war, conducted by ourselves, against ourselves to remove the democratic values we cherish so dearly. Shakespeare himself could not write such a dark tragedy.

    Getting back to point. Just because the Justice Department says Google should jump it does not mean Google should meekly reply: "How High, Officer?". Just because the government asks you to do something does not mean that they have the proper authority to ask for it. Let them prove in a court of law that they have the proper authority to make such a claim. If they're right, they'll win and Google will have to capitulate. If they're wrong, then a precedent is set and the complicated system of checks and balances has once again protected liberty.

    Simon

    [1] - The Independent, Yesterday, in the Editorial section. Feel free to correct this figure if it is incorrect.
    • Ahhh, now we'll really see whether they can really live up their "Don't be evil" policy!

      Google lost me with that when they announced plans to release DRM'd content. Some people might claim DRM isn't evil, but I simply disagree (although I do make one exception, but don't plan to make anymore in the forseeable future, not even for Google). Good to see they aren't evil all the time, although they are more then willing to help the government keep down it's citizens (see China).
    • For christs sake (Score:5, Insightful)

      by Darkman, Walkin Dude (707389) on Saturday January 21, 2006 @09:53AM (#14525949) Homepage

      I think Google did the right thing.

      Google is a marketing and advertising company. First, foremost, and mostly only. The don't be evil thing is superb marketing that gained them a groundswell of grassroots support, good for them. But their stock in trade, the tins of beans on their shelves, is consumer data. This information is their livelihood. the only reason they are resisted government requests for this information is because they don't want to give up their hard won and very valuable data. Plain and simple. Once it gets into govt hands, who knows where else it will go?

      This is not ethics or morals, its like asking walmart to give up their entire inventory of shop-brand cola forever, while still buying it in. That's google's position, so spare us the hero stuff. (Shakespeare?!?) I fully expect this to be modded into the topsoil by the cleansed of brain, but honestly, this is slashdot. Three strangers disagree with you and you're meant to feel bad?

      • So what is better for Google in the long run:

        1. Give out the data and make share holders happy
        2. Withhold the data and make customers happy.

        We know now that 2 will lead to unhappy share holders.

        If google select 1 then the customers will go away and the shareholders will be unhappy. So 1 leads to unhappy share holders.

        Both actions lead to unhappy shareholders. So the better option is option 2 - since they at least dont make their customers unhappy.

        • If Google caves in and gives out data, the Slashdot crowd, the vocal message-board-and-blog minority, will cry foul. Most people will still use Google because it's hard-wired into their brain and their web browser*. Slashdot will be one of many web sites advocating a freer web search engine, and the geek torch will pass once again. It's not going to kill Google's business -- after all, Yahoo! and AltaVista are still around, right?

          * Ever try to change Safari's search engine association? How many people ou
        • You are creating a false dichotemy here. There is no choice that will make the share-holders happy. The reason that Google gave for withholding the information was that the request was overly broad and would affect their trade secrets. If they give too wide a sample of search requests / results it will leak information about the way that page rank is tuned. This would benefit their competitors, and the spam marketers who try and abuse the system. This would damage their stock more in the long run than a sma
      • Re:For christs sake (Score:5, Interesting)

        by segfault_0 (181690) on Saturday January 21, 2006 @11:22AM (#14526248)
        Sounds to me like you dont believe a company can be good under any circumstances if they make money. I think the real question is does capitalism really want "nice" companies. I guess our reactions when we see one, (i.e. supporting them when the government makes ridiculous requests of them), will answer that question wont it? Im waiting to see what we will do, not google.
      • If that's true, though, why did ALL of the other search engine companies roll over? Following your logic, they should've fought the request tooth and claw as well - for financial/market reasons even if not for ethical ones.

        But they didn't.
      • by NickFortune (613926) on Saturday January 21, 2006 @11:34AM (#14526294) Homepage Journal
        The don't be evil thing is superb marketing that gained them a groundswell of grassroots support, good for them.

        Speaking as a grassroot, I thought the thing they did was to offer efficient, reliable and honest search results with a minimum of annoyances for the user. I'd been using Google for years before I heard about the "don't be evil" thing.

        And, you know, long as I find Google's search results useful, I expect I'll carry on using them.

      • This is not ethics or morals, its like asking walmart to give up their entire inventory of shop-brand cola forever, while still buying it in.

        Except that in this case, google would still have their data of course. They may lose some of their competitive advantage, but they wouldn't just be throwing money into a hole.

        Drawing analogies between data and physical goods is bound to fail; they simply are not the same.
      • I think Google's good conduct is an essential component of their role within their industry. I think there was actually a surprisingly large untapped market for a "reputable" search service - one that wouldn't do payola results, sell your "video rental history" [epic.org] to the highest bidder, and be frightened into censoring you at the drop of a legal hat.

        I think providing good results in a clean interface was absolutely key to Google's success, but I also think their technique is not earth-shattering and has alread
      • They're a marketing and advertising company that's been picking up the best CS researchers in serveral fields for years. I'm sure that their moral high-ground has some cash value, but, there's a lot more to Google than sticking AdSense into search results. I know several of their people, and they're damn talented.

        You're right, they market themselves well... but free pizza to the computer science students at my university, around midnight during cram times, and at discussion group meetings attended mainly

    • Ahhh, now we'll really see whether they can really live up their "Don't be evil" policy!


      I was thinking the same thing, until someone pointed out that Google has been keeping tabs on searching activity for individual users for quite some time now. Think you've been doing searches without them keeping a history of what you've been searching and invading your privacy? Nope.
    • by freedom_india (780002) on Saturday January 21, 2006 @10:04AM (#14525992) Homepage Journal
      On the point.

      There is HUGE difference between the Government and the Law.

      Law is NOT made by Justice Department.
      Google is right in standing up the Republican Justice Dept and saying: "Here's my middle finger. You can lick it or you can screw yourselves with it."

      Obviously, the request was made by justice dept. not for fighting terrorists, but just to "help" other campaign corporates like MSFT to learn Google secrets.

      This government is for criminals, by criminals (DeLay, Jack Abr.., etc). and for the criminals.
      Since when do we start listening to criminals and reveal our business secrets to them.

      Just TWO more years Google. Hold On !!!
       
      • Actually the apparently request for the information was because the current administration wants to look at search queries for information regarding porn.

        Now I am neutral on the whole "porn on the internet" industry and I see both sides, I personally see it as an abuse of power by the current administration for the purposes of campaigning, essentially to try to get re-elected, and I think that's a complete and utter bullshit reason to get the larger aggregate of information that they would be getting back.

        T
      • "Just TWO more years Google, Hold On !!!"

        We have't gone to a three year presidential term. The President was innagurated for a second term on 1/2005. He won't leave office until 1/2009. He has three more years in office.

    • Does Google prefer stock price over ethics?


      The fact that the situation exists is your answer. Corporations do not go into these things without thinking them through.
    • At some point the government will just reqire them to hand over the data, under threat of jail time for contempt. So this is all just for show. " see we fought for your privacy".

      What they are not thinking about is the ramifications later of pissing off the man. The government has a long memory. ( espcially since once you elect someone they tend to stay for life..
  • Easy Fix (Score:5, Funny)

    by Heliode (856187) on Saturday January 21, 2006 @09:29AM (#14525867)
    All Google needs to do is rename itself to Freedom Search, and all will be well...
  • Nonsense. (Score:5, Informative)

    by jcr (53032) <[jcr] [at] [mac.com]> on Saturday January 21, 2006 @09:30AM (#14525869) Journal
    The whole market's taking a hit from the Nikkei scare, and the oil prices. I doubt that most of GOOG's investors even know that there's any issue with the DoJ's unreasonable demands on Google.

    -jcr
  • This is FUD (Score:5, Interesting)

    by SpaceLifeForm (228190) on Saturday January 21, 2006 @09:32AM (#14525877)
    The entire market was down. Granted, not 8%, but to attribute
    the decline in the Google shareprice because of the DOJ action
    is silly.
    • by undeadly (941339)
      The entire market was down. Granted, not 8%, but to attribute the decline in the Google shareprice because of the DOJ action is silly.

      "Defy us and we'll plant false stories to punish you." Actually, this is common practice with the current administration.

    • Re:This is FUD (Score:2, Informative)

      by zfractal (170078)
      Exactly. This has much less to do with the DOJ subpoena, and a lot more to do with how the rest of the market is performing. More specifically, I think it has a lot to do with Yahoo's lower than expected earnings for the last quarter. Just looking up YHOO on Yahoo itself, you'll see most of the related news headlines are about Google [yahoo.com] and are not related to the DOJ subpoena.
  • by Bloodwine77 (913355) on Saturday January 21, 2006 @09:33AM (#14525879)
    Going public was a double-edged sword for Google. While Google performs and the stock performs, the shareholders aren't an issue (pretty much up until now). Google's "Do No Evil" is really out of their control now. A bunch of short-sighted bottom-line investors are in control of it now. Google can manage to take a hit here and there, but if this thing of the DoJ gets out of hand, Google's whole culture may take a change for the worse when the shareholders want their pound of flesh.
  • Google stock down (Score:5, Informative)

    by StarCharter (768335) on Saturday January 21, 2006 @09:33AM (#14525881)
    This is just flat wrong! Google's stock got clipped because the whole market went down. Investors are worried because the price of a barrel of oil went above $68 a barrel, the Nikei exchange tanked, and several Big Names reported shortfalls. Target buy prices from wall street analysts rangfe fromn $480 to $560. I wish I had a couple of million to put into this "flawed" stock! I expect to see Google at $500 before the end of 2006.
  • by kalidasa (577403) on Saturday January 21, 2006 @09:39AM (#14525905) Journal
    Google does something that is bound to endear them to their audience, and thus bound to increase their "ratings" (page views), and thus bound to increase click numbers for their customers, and so bound to increase their income - and their stock goes DOWN? Once they get a court order, they'll give up the data, sure, but the cost of fighting the supoena is nothing compared to the good will their resistance to releasing user data will garner. I don't think these investors really understand what Google is selling.
  • Don't be retarded (Score:5, Informative)

    by HangingChad (677530) on Saturday January 21, 2006 @09:39AM (#14525906) Homepage
    From the article: "'There are potentially concerns that Google could be in the cross-hairs of the Justice Department,' Kessler said.

    The whole market got slammed yesterday. Google is way out there in terms of valuation and 8% isn't that much considering.

    The "Justice" Dept. didn't just go after Google records, they asked all the major search engines. Google just had the nads to stand up and say no.

    That's not going to cause their stock to go down, being over-bought causes a sell off, especially when the rest of the market is taking a header. Google could be selling toxic waste and as long as their earnings stayed up the market would still buy their stock. This is nothing more than another example of an over-reaching administration trying to gather statistics to support the conclusion they started with.

    I can't wait 'till November.

    • The "Justice" Dept. didn't just go after Google records, they asked all the major search engines. Google just had the nads to stand up and say no.

      I'm glad I use google as my primary search engine (although being an Australian the privacy issue would be fairly minimal, I'm happy to support a company (even if they do occassionally do evil) that will protect American's privacy).
    • Re:Don't be retarded (Score:4, Informative)

      by Mattintosh (758112) on Saturday January 21, 2006 @11:57AM (#14526390)
      Google just had the nads to stand up and say no.

      So did AOL, apparently. AOL's response was something along the lines of "Here are our already publically-available usage stats. Enjoy." In other words, AOL also told the government to pound sand. At least, that's what I heard/saw on News Hour last night...
  • by xdesk (550151) on Saturday January 21, 2006 @09:48AM (#14525932)
    ... the stock was simply highly overpriced and the markets made a first adjustment!!!
  • by Grumpy Troll (790026) on Saturday January 21, 2006 @09:50AM (#14525941)
    If you feel that using Google is henceforth treason to your government then use Patriot Search [outer-court.com]!

    Thanks, your search has been recorded and will be shared with the governments of the world!
  • by cbull (63145)
    I think it's hard to say Google's decline was due solely to the DoJ inquiry and their refusal to cooperate. The market dropped 213 points yesterday on other fears.
    • But it has to be Bush's fault somehow! This is Slashdot after all.

      The fact that the whole market took the biggest fall since 2003 and tech stocks led the way couldn't have anything to do with Google's problem, it has to be Bush. Standard /. FUD.
  • Give Me a Break... (Score:5, Informative)

    by Comatose51 (687974) on Saturday January 21, 2006 @10:03AM (#14525989) Homepage
    The link between the subpena[sp?] and the drop in Google's price is pretty weak. A better answer might be the decline in LiveDoor over in Japan because of securities fraud. Major financial organizations don't buy just a few stocks. They tend to buy quite a few and some do so with heavy leveraging. The collapse of LiveDoor probably jeapardize the liquidity of some of those organizations. To stay afloat they sold off a bunch of other stocks, including Google with its previous $400 valuation. If anyone's interested, read "When Genius Failed" to see a similar scenario like this that happened when Russia defaulted.

    Combine that with the Nikkei's drop and higher oil prices, you can see why. Let's not forget people's knee jerk reaction. Also, some people got it on Google not because they believe in its financials or ideas but because they see the price go up and think that more people will pile on -- other people like themselves. They planned on selling as soon as the price start on a major move down. So perhaps the LiveDoor collapse triggered the move. Seeing this, they all tried to sell and thus magnified the change. This kind of thing is very common. Read "The Devil Takes the Hindmost" for some good examples. The phrase means that stock speculators all know that an overpriced stock will come down eventually but they all plan on selling out and handing it off to the next idiot and hopefully the last idiot is the devil. I'm not saying Google is pure speculation but I'm sure some of its buyers were speculators who only looked at the price and nothing else.

    In any case, there are much better explanations or theories for the drop than just a little subpena. Anaylsts are not all geniuses, especially the ones that speak to the news media. I mean, if I was a genius and knew what's going on, why would I let other people know? You make money trading because you know or think you know more than the other party.
  • Definately no evidence the DOJ thing has anything to do with this. I wonder at this point if the Bush admin and it's friends are planting this story to punish Google for resisting their hard line views.

    The whole market is down, and given how high prices Google's stock is, the drop looks all the more extreme.

    Now I'm not a financial guy nor do I know a whole lot about investing and the like, but I am wondering why Google has not split this stock long ago? Their current price is doing a lot to keep small inv
    • by dangitman (862676) on Saturday January 21, 2006 @10:32AM (#14526078)
      Their current price is doing a lot to keep small investors out of owning anything but a pittance of Google stock. Does anyone with market knowhow have an explanation for why a company would let it's stock go so high when it will suffer such extremes in value during currnent market fluctiations like right now?

      To stop small investors from owning more than a pittance of Google stock.

      • No true at all.

        Lets say company X has a share price of $100 and a market capitilization (total 'worth') of 1 billion dollars. The current shares outstanding is 10 million ($1,000,000,000 / $100).

        They decide to split. Now company X has a share price of $50 and 20 million shares outstanding. However, the market capitilization is unchanged. X is still worth 1 billion dollars overall.

        Lets suppose you can currently only afford 1 share of Google stock at $400. Now lets suppose Google where to split 3 times, takin
    • Does anyone with market knowhow have an explanation for why a company would let it's stock go so high when it will suffer such extremes in value during currnent market fluctiations like right now?

      Splitting stock has zero effect on the value of a company, and is mostly used as a marketing ploy. An 8% drop is still an 8% drop, whether the price is $100 or $10. It has nothing to do with keeping small investors out, if you can only afford to invest $1,000 in google, it makes no difference whatsoever if this is

  • Let's keep swamping Google with sex searches!!! (see .sig)
  • by geoffrobinson (109879) on Saturday January 21, 2006 @10:08AM (#14526003) Homepage
    So anything could prick a bubble.

    Last I checked it was around 400 a share: http://finance.yahoo.com/q?s=goog [yahoo.com]

    And its market capitalization was around 118 billion dollars. That gives them a P/E ratio of around 88 or 89.

    To put this in perspective, their market capitalization, which should be around how much money their business is worth, is about 40% of Microsoft's market cap. And Microsoft is a monopoly sitting on $40 billion of cash. Their P/E is in the low 20's.
  • One of the Mozilla related blogs I read suggested filling search logs with useless data [accettura.com] if everyone does this in the same query then both the search engines and the government will know we don't find this acceptable.
  • The boorishness and panache of the Bush administration knows no boundaries. This is one more straw on the camel's back of liberty. How far this administration will go is still unknown.

    As others have said: buy Google Stock. They need no "Google Defense Fund"....

    What madness. What All Star Weenies: MSN, Yahoo, and AOL-- who cave and cower and quiver in fealty to this adminstration. How mindlessly droll and insensitive....

    If Google caves to the subpoena, then the last shred of dignity and privacy from the Inte
  • GOOG is just following the market down. Every time the market moves, the analysts have to come up with an explanation, which is almost always bogus.

    It seems extraordinarily clumsy of the Justice Department to subpoena this information from the search engines. First and foremost, by what right can the US government require confidential information from a company or person when there is no criminal action contemplated? The fourth amendment protects against unreasonable search and seizure, and this seems to
  • In Other News (Score:2, Insightful)

    by Bibliographer (895450)
    • NASA Pluto mission launch hurts Google stock.
    • Thames River Whale Rescue hurts Google stock.
    • New Cell Phone Study Shows No Risk of Brain Cancer - Google Stock down.
    • 2 Miners Missing in West Virgina - Google stock drops.
    • America hostage Jill Carroll hurts Google stock.
    • New bin Laden message drops Google stock.
  • by beforewisdom (729725) on Saturday January 21, 2006 @11:25AM (#14526259)
    I think the bush administration has already lost.

    The kind of McCarthyesque trend that the bush administration has been promoting tends to fall apart when the people get tired of it and someone very publicly stands up against it.

    Gonzales might have gotten away with this in the post 9/11 hysteria.

    Now, years and broken promises later people are tired of it all.

    Gonzales already lost it for the bush administration by having Google tell him "No".

    If he pursues them in court he will just draw more public attention and outrage to the situation, worsening the bush administration image with every public word that is spoken about it.

  • by vettemph (540399) on Saturday January 21, 2006 @11:33AM (#14526291)
    "Subpoena Resistance Hurts Google Stock"
    should be:
    "Subpoena Hurts Google Stock"

    The Resistance is the only reason the stock didn't drop by 20%. Our federal PR machine would like you to believe that the resistance is the problem.
  • Bad logic. (Score:2, Informative)

    by danwesnor (896499)
    The NASDAQ got hit for 2.35%, S&P 500 for 1.8%. Big losses across the board, and I'd expect a young tech company with a high PE like Google to get slammed worse than the averages. So I doubt this has anything to do with the DoJ. Typical stock rag reporting. A happened. B happened later. Therefore, B was caused by A.
  • See this is why shares are so unpredicatable right now.

    The fact that an irrelavant mass-media news report which has absolutly nothing to do with profitability / performance can have a greater impact on a companies share price than a highly relevant future profitability / performance report shows something is not right.

    This is not the way business should be done. Regardless of the possilibities for corruption by media executives (who by the way are getting quite involved in tech companies) share prices (and
  • by dcollins (135727) on Saturday January 21, 2006 @11:50AM (#14526351) Homepage
    Google specifically warned shareholders when they went public that this sort of short-term action was expected in their stock price. And that's why they set up dual-shares such that public shareholders have practically no say over how the company gets run. So if anyone doesn't like it, tough -- go invest in a company that doesn't keep it's word.

    From the NY Times:

    Wall Street loves Google, but the feeling isn't mutual.

    That is the message permeating nearly every page of the public offering statement that Google Inc., the Web search engine company, filed yesterday. In a frank and provocative statement, the company's leaders argued that companies cannot manage for the long term unless investors and analysts have limited say in the way they are run.

    In this, they are responding to a widespread belief that investor pressure for predictable short-term earnings growth led many publicly traded companies to engage in accounting gimmickry and business improprieties in the 1990's. Google says that it will not offer quarterly earnings guidance and that it expects shareholders to understand even if it makes unprofitable short-term investments.

    "A management team distracted by a series of short-term targets is as pointless as a dieter stepping on a scale every half-hour," Larry Page, one of Google's co-founders, wrote in a "Letter From the Founders." The letter, which appeared at the front of the statement, was signed by Mr. Page and his fellow founder, Sergey Brin.

    Many institutional investors may cheer that attitude. But another part of the company's strategy will draw some criticism. Google aims to insulate its executives somewhat from shareholder demands. The company will have dual classes of stock that will give company insiders much more voting power than public investors to elect directors. The company's disdain for the traditional stock offering process is also evident. Instead of selling a small number of shares at a predetermined price, which often stokes demand for the stock when it begins trading, Google will auction its shares to the highest bidders. In that way, the windfall profits from the offering will go to the company and its private shareholders, not to favored customers chosen by Wall Street investment banks. In its registration statement, Google explicitly warns investors not to buy the offering in the hope of making a short-term profit by flipping their shares.

    http://www.uazuay.edu.ec/bibliotecas/conectividad/ Google%20Says%20to%20Investors%20Don't%20Think%20o f%20Flipping.htm [uazuay.edu.ec]
  • Do what now...? (Score:4, Informative)

    by faloi (738831) on Saturday January 21, 2006 @12:18PM (#14526481)
    Why not look at this part of the article:

    "The most obvious reason were the mixed earnings results from Yahoo," Standard & Poor's analyst Scott Kessler said of Tuesday's disappointing quarterly earnings report from Yahoo Inc

    It's not like Google was the only stock to take a dive, the market was hurting yesterday. The Tokyo stocks have been hurting for the past few days (or at least hurting badly). Sure, there could be fear about the Justice department scrutiny. It could also just be that everythings hurting right now. Correlation does not necessarily mean causation (to butcher a phrase).
  • All -

    This article really overstates things. Google - at over $400 a share - was significantly overvalued on a Discounted Cash Flow(1) basis. At just(!) $300 a share, Google would have to grow at its current rates for 5+ years to be fairly valued.

    Let's be clear here, I believe that Google is a great company (and living in Mountain View, am looking forward to their free WiFi for our community) and will continue to influence the business world, our society, and culture for a long time to come. But I also can see when a company is overvalued. At between $100-$200 a share, Google would be fairly valued.

    Google has been - and still is - in a bubble. As we say in 2000/2001, a small event can puncture a bubble and cause a stock to drop in value. The DOJs subpoenas may just be the event that puncture's Google's bubble.

    Yours,

    Jordan

    1. Discounted Cash Flow or DCF is the sum of all future cash flows discounted back to the present. It is the best way to get an intrinsic value for a stock.

    Ideally, you wish to purchase stocks of companies trading below their intrinsic value. Of course, buying below intrinsic value is as much art as science, but it is possible.
  • by xswl0931 (562013) on Saturday January 21, 2006 @01:21PM (#14526828)
    Slashdot should not report on things the do not understand (the stock market). Yahoo reported earnings that was lower than expected (they missed earnings estimates). The interpretation here is that the market for online advertising (although Yahoo doesn't rely on advertising as much as Google) has slowed. Google was affected as investors believe that rather than Google (who has not released earnings yet) will also be affected by this and also miss their estimates.
  • by TeachingMachines (519187) on Saturday January 21, 2006 @01:22PM (#14526834) Homepage Journal
    All of the news coverage of Google's "slide" is designed to punish Google for their refusal to comply with the wishes of the Republicans... "Release your search data to us or else bad things will happen to you[r stock]." Hopefully Google will hold on for the ride.
  • by KalvinB (205500) on Saturday January 21, 2006 @03:05PM (#14527416) Homepage
    I had a private eye contact me because a young runaway teen (~15 yo) was using my e-mail services. I had previously enabled all logging (another fun story) and so I checked the logs, verified the story (I also found the kid listed on the missing and exploited children website) and tracked down where the kid was. I call up the private eye and not too long later the kid was returned home.

    One could bitch about privacy but frankly the safety of child is a little more important. Nobody but me read any of the logs. All the PI got was an IP address that ended up verifying his hunch.

    I think Google should consider the consequences of NOT using it's resources to save children.

    If Google both refuses to offer up it's logs relevant to people searching for child porn AND refuses to do it's own investigations and reporting to the proper authorities then Google is allowing evil where they could easily do something about it.

    And that quite simply is pathetic and I wouldn't be surprised if their stock continued to plummet. Instead of "Do No Evil" their motto would degrade to "Be Apathetic To Evil"

    Sure the child porn people could do their searches elsewhere but with years of backlogs, it's a little late for a significant number of them. Google no doubt also has a cache of numerous child porn sites which could be used as evidence in trials.

    The other fun story I mentioned earlier resulted in a dead end because I traced the alledged criminal to an ISP in the UK which refused to do anything about them. Later their account at the ISP was disabled so the authorities may have knocked some sense into them. In the meantime I had to call people up myself (I bet you can guess what was being stolen) and let them know what happened.

    It would be pretty stupid of me to ignore the fact that people's information and SSN numbers were being stolen simply because of a privacy statement. I think people would rather not have their identity stolen when someone with a simple phone call could have prevented it or at least mitigated the damages.

    Imagine brick and mortar stores allowing customers to commit criminal activity within their walls and then hiding them behind a privacy statement or defending their blindness to it because of a privacy statement. That is exactly what Google is doing. And it is indefensible. If you try to develop child porn photos at a store you will be reported by the store to the authorities. What makes Google so special? Right now they sound like every other company that doesn't care two cents about its customers.

    Yes they have a lot more data making it more difficult to find the things I easily found but that's what the government is for.

Stupidity, like virtue, is its own reward.

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