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Eric Schmidt To Sell Up To 42% of Stake In Google

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  • by G3ckoG33k (647276) on Sunday February 10, 2013 @09:35AM (#42849577)

    I doubt this has anything to do with any bad news
    for Google. It is my guess Schmidt just wants the
    money here and now. Totally understandable.

    • by msh104 (620136)

      It is part of a deal to have a more diverse group of stakeholders.
      So you are indeed right that this shows nothing about the performance of google.
      And i guess the money will always come in handy as well. :P

    • by fufufang (2603203) on Sunday February 10, 2013 @09:42AM (#42849603)

      Diversifying investment portfolio is something that all good investors tend to do. Eric Schmidt is a businessman too.

      • by guttentag (313541)

        Diversifying investment portfolio is something that all good investors tend to do.

        Agreed, but his Google assets were built by building up Google into one of the more diversified companies around. Sure they don't own any salt mines yet (depending on your definition of salt mine), but they went from building a search engine in Silicon Valley to laying fiber in Kansas, creating self-driving cars in Nevada, writing a cell-phone operating system used by manufacturers around the world, buying Motorola's cell phone business, operating stores for books, music and software, operating an email net

    • I doubt this has anything to do with any bad news for Google.

      Agreed. But it may also show that Schmidt doesn't expect huge growth in Google's share price...

      • Re: (Score:3, Interesting)

        by gniv (600835)
        That doesn't mean he's right. He sold a similar amount last year, and missed most of the growth in the stock price in the last month.
    • by drolli (522659)

      A likely possibility is that he wants to avoid conflicts of interest. E.g. when investing in other companies.

    • Re: (Score:2, Informative)

      by khoker (1028434)
      Is it "totally understandable"? Interest rates are basically zero, which means that taking money "here and now" doesn't gain him anything. He might want to invest elsewhere in order to diversify his portfolio but such a move would only make sense given an underlying principle that he a) suspects something may perform better than GOOG or b) has uncertainties about the future of GOOG (to the point where cashing out now and stuffing cash in his mattress is better than holding onto GOOG). It isn't to say eit
      • Re: (Score:3, Insightful)

        by Anonymous Coward

        Did you do the math? If it sold at the current share price, that's over $2,500,000,000.00. I don't think I'd worry about interest with that kind of scratch. Even at 0% that's enough money for 500 people to live well for a lifetime. Stock can't normally be used to buy stuff.

      • The only things which are certain are death and taxes. That he wants to diversify his holdings is pretty understandable given how much of his wealth is all in one basket. Single stocks can rise and fall dramatically on a whim (see the iPrecious). And as chairman he will not be their forever and it is certainly better to lighten the stake while still remaining at the company and holding a good share than after leaving it.

        By the way... there's a Red under your bed....

      • by Shavano (2541114)

        Is it "totally understandable"? Interest rates are basically zero, which means that taking money "here and now" doesn't gain him anything. He might want to invest elsewhere in order to diversify his portfolio but such a move would only make sense given an underlying principle that he a) suspects something may perform better than GOOG or b) has uncertainties about the future of GOOG (to the point where cashing out now and stuffing cash in his mattress is better than holding onto GOOG). It isn't to say either of those reasons are "bad" from a savvy-businessman point of view, but it also doesn't mean you can simply dismiss the action as "totally understandable" either.

        It gains him not having all his money in one basket, and not tying all of his fortune to a company whose stock is at an all-time high and may be overvalued based on its possibly saturated growth potential.

      • by tibit (1762298)

        He'd probably quadruple his money if he began short-selling construction stocks in Turkey right now :) They're setting themselves up for a big construction bust in a couple of years at most.

      • One possibility is that he has some plan with the money besides diversifying - probably something charitable, or something idealistic that he couldn't get the two other on board with.

    • by eexaa (1252378)

      Moreover, I'm kindof expecting something like "Eric Schmidt buys SpaceX and travels to Mars" in following weeks.

    • It has to do with bad news in general ...

      Equities, banks, bonds ... it will all blow up. Own physical stuff ... and be sure some of it is in places out of reach of governments you don't outright own (ie. on an Island) in case the plan for neo-feudalism doesn't pan out and there is a socialist revolution instead.

      • Ownership is just a notation in a book somewhere.

        When the revolution comes that will be erased too.

        • As I said, be sure to stash some stuff on islands (ie. yachts, precious metals, lots of equipments including a bio-fuel plant etc etc). The revolution might confiscate wealth inside developed nations, but it's unlikely to come to more primitive island states with smaller legislatures and populations which are more easily controlled.

          The plan is austerity, economic collapse and neo-feudalism though ... not revolution.

          • Primitive island states are unstable.

            Plus it gets real boring to live on a place that you can circumnavigate in a couple of hours.

            You are much better off in a small nation-state like Monaco or Jersey.

            • That's what I meant, if it doesn't have sovereignty it's not really interesting ... although Monaco seems a much better idea than Jersey, too many plebs on Jersey with much more political power. Monaco is primitive in some ways.

    • If it was me I'd be getting into either the new space economy or the new energy economy. Elon Musk is in the sweet spot for the next decade or so. The information economy is net a plateau. Too many players.

    • by mrmeval (662166)

      104 billion dollars? How much cultural impact can you have with that amount of cash? Diversifying to other investments would be part of it but with that level of wealth I suspect he'll be having a large cultural impact considering some of his statements.

    • Bill Gates did something like this too in the late 1990's. Again the reason was portfolio diversification. He then left as CEO within 2 years after that. So it was clear he was planning for his life after Microsoft at that point. I'm not sure what Schmidt's age is, but it could be something very similar.

    • by steelfood (895457)

      He's cashing out when he has the chance. I'd too. After all, owning too much Google stock prevents me from investing in or working on other things, especially stuff that might compete or be perceived to compete with Google.

  • He'd be an idiot not to, just look at the price.
  • by hessian (467078) on Sunday February 10, 2013 @10:02AM (#42849699) Homepage Journal

    Here's a hypothesis:

    Google beat the last challenge from the antitrust attorneys from Texas, but it can't count on the future.

    Specifically, other states or federal entities could attack it, and then there's all of the EU, which traditionally takes a harder line on privacy violation and monopoly.

    Schmidt is no dummy and so he's divesting a reasonable amount (less than half) of his stock to hedge against a potential catastrophic future decline.

    Remember what happened to Microsoft. They basically floundered hard after an assault by the department of justice. If the same happens to Google, they'll have to put most of their plans on hold for a decade as well.

  • by rmdingler (1955220) on Sunday February 10, 2013 @10:03AM (#42849707)
    It's news for a reason. It seems unlikely he is strapped for cash, and as he's acting Executive Chairman of Google, a significant stock sale has to mean he's convinced the market capitalization for his Outfit has peaked. Often, if you look way up ahead in the distance, you can just make out the Captain running ahead of all those rats.
    • Re: (Score:2, Insightful)

      by Anonymous Coward

      Um, almost $800 per share. Anyone who thinks it hasn't peaked can just look at Apple, who is now a litle more than half that - when they were equal just a matter of months ago. Hell yes now is the time to sell. The bump will happen to Google, too, and its stock will drop and that much of a shit is huge money when talking about millions of shares. Not scary news, just smart money keeping smart money.

      • by dnaumov (453672)

        Except, of course, that nominal price doesnt say ANYTHING about whether a stock is cheap or expensive. A 1000$ stock can be cheap and a 5$ stock can be outrageously expensive.

    • by dkf (304284)

      It's news for a reason. It seems unlikely he is strapped for cash, and as he's acting Executive Chairman of Google, a significant stock sale has to mean he's convinced the market capitalization for his Outfit has peaked.

      Or it might just be that he's planning to do a substantial investment in something else and thinks this is a tax-advantageous way to raise the capital. (I've no idea what his acquisition price was, but you can bet it was a lot lower than now. It's not real profit until you sell.) There's no way to work it out for sure at the moment, since he's under no obligation to tell you what he'll be doing with the proceeds.

      On the other hand, if he was truly worried he'd be actually looking to sell a larger fraction of

    • You are assuming that he wants to maximize his personal return. The amount of money is so huge usually they don't worry about maximizing their returns. They usually start thinking about leaving a lasting legacy so they cash out to fund a charity or political organization. Everyone has exactly 24 hours a day. He might decide to spend more time on a cause that is dear to his heart than managing a tough highly competitive business that keeps everyone on their toes.
      • I like most of your post, but I think you are wrong on this point.

        If you donate stock you can deduct the full market price from your tax returns. If he sells the stock first he has to pay capital gains first. So it is always better to gift Google stock to a charity then to sell the stock and gift the money - i.e. the charity will always end up with more money. (Now, the first thing most charities will do is to sell the stock).

        • by tibit (1762298)

          But those charities don't pay any taxes on such stock sales, right? :)

          • And how/why would they?

            Case #1: I donate $100 in cash to a charity.

            Case #2: I donate $100 in stock to a charity. That stock has some unrealized capital gain.

            From the charity viewpoint, how would they know what tax they should pay? For the gifter's standpoint – they are donating exactly the same value – right?

        • by deek (22697)

          That is, of course, unless the charity is the US Govt. I hear they need some money to pay off a few debts. Eric may be doing it this way to give them a helping hand.

    • by alen (225700)

      Last earnings announcement the gross margins fell which is a precursor to a falling stock price a lot of times

      Revenue and earnings went up but falling gross margins is a bad long term thing

    • It seems unlikely he is strapped for cash

      That all depends on what level you set 'strapped' at. It seems likely that he won't be sitting on this money - it's much more likely that he has an investment in mind, probably a new company, with a faster growth rate potential than Google. Google can be completely financially sound and still have a slower growth rate than a risky startup.

  • I am not exactly sure what insider trading is, but since he not only knows the inner workings of Google but controls them, how is this not insider trading?

    It would be pretty simple for him to influence stock price right before he sells, and theoretically influence it down right before he buys back stock. Hell, it would be simple enough to lower the stock price or rise the stock price of other companies. Just announce that Google plans on competing with company X; Stock falls and he can quietly buy up a big

    • by sunderland56 (621843) on Sunday February 10, 2013 @12:27PM (#42850441)

      I am not exactly sure what insider trading is, but since he not only knows the inner workings of Google but controls them, how is this not insider trading?

      It *IS* insider trading. Any CEO selling their own stock is insider trading. That is why the SEC requires documentation and a public disclosure of any potential transaction before the sale happens, which is what the linked document is. [sec.gov] The SEC cannot prohibit such sales, but they do put them under extremely tight restrictions - such as preventing such sales near the end of a quarter, when financial results are known internally but not yet released.

      It is important to note that this does not mean that Eric *is* going to sell 42% of his stake, it means that he is now *allowed* to sell *up to* 42% of the stock. Many such filings end up with a smaller amount sold.

      • Excellent post.

        For finer detail you notice that Schmidt has file a “plan” to sell 2.4b over the next year. That plan gets handed over to a 3rd outside party so Schmidt is removed from the timing and execution of said plan. So, at this point everybody on a level playing field.

        • by TubeSteak (669689)

          For finer detail you notice that Schmidt has file a âoeplanâ to sell 2.4b over the next year. That plan gets handed over to a 3rd outside party so Schmidt is removed from the timing and execution of said plan. So, at this point everybody on a level playing field.

          One game executives can play is to have several "plans" at any one time.
          These plans can be suspended and resumed as needed, in order to match actions to the stock price.

          It lets them use their insider knowledge and deflect scrutiny by saying "look, I have a plan approved by the SEC!"

    • by Shompol (1690084)
      ...and that is exactly why company management is required to declare all such things publicly in advance. This way all investors can see what's cooking.
    • by _Ludwig (86077)

      All trades of stock by that corporation's officers are "insider trading;" the question would be whether it's illegal insider trading. In a nutshell, if he knows about something that the public doesn't and trades based on that knowledge, it's illegal. (Although the Zynga guys seem to be getting away with it so far.) Since he's such a large shareholder, anything he does is going to have some effect on the price, so it's hard to say whether he sold because he knew it was about to drop or it dropped because he

  • "42% of stake" (Score:5, Informative)

    by Arancaytar (966377) <arancaytar.ilyaran@gmail.com> on Sunday February 10, 2013 @11:29AM (#42850119) Homepage

    Careful with the vagueness there. That's 42% of his stake in Google, not to be confused with 42% of the company's stock.

    • by giorgist (1208992)
      Much like bidding $Pi Billion dollars, is selling the meaning of life in shares something to worry about ?
  • Wasn't that long ago, and certainly cut into his spare cash. Also, Planetary Resources, Inc probably needs cash soon.

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