Below-Expected Earnings For Google Posted Early, Trading Halted 275
An anonymous reader writes with this snippet from the BBC: "Trading in Google shares has been suspended after the internet giant released its third-quarter results early by mistake. Google blames financial printing firm RR Donnelley for filing an early draft of the results, which had been expected after the closing bell. Shares in Google were down 9% when trading in the stock was suspended. Shares had fallen as much as 10.5% at one stage. In a statement, Google said: 'Earlier this morning RR Donnelley, the financial printer, informed us that they had filed our draft 8K earnings statement without authorisation... We have ceased trading on Nasdaq while we work to finalise the document. Once it's finalised we will release our earnings, resume trading on Nasdaq and hold our earnings call as normal at 1:30 PST.'"
im no trader but.... (Score:2)
Re:im no trader but.... (Score:5, Insightful)
The big deal is announcing during the day. You're supposed to announce when its closed, so people can react at the same time the next morning. That's a big fuck up that could bring the SEC down with fines.
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So, what they're saying is the stock market should use a large quantum of time rather than the HF bull? Sounds good, but they need to generalize the policy.
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Have you ever heard of after-hours trading? Stock prices react immediately after earnings release even when earnings are released at the closing bell. The next morning the market opens lower, so releasing after the close doesn't make any difference w/r allowing people to react at the same time.
The big deal isn't that it was announced during the day, the big deal is that it was announced before it was scheduled, so anyone who was planning to get out before the earnings release wasn't able to do so.
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THe market opening lower the next morning has nothing to do with after hour trading. The market opens lower the next morning if the bid and ask prices are lower. What it sold for overnight has no effect on that, unless people looked at those prices and adjusted theirs accordingly. But the "open" is no more than the first purchase made at whatever people had previously ordered.
Re:im no trader but.... (Score:5, Informative)
True. But the big exchanges don't allow that, you do that by trading off exchange. Basically, the government never made selling stock off the exchanges illegal, so people use that as a workaround. So the only after hours rule doesn't stop everything. However, after hours trading is a fraction of what happens during the day. So the rule isn't perfect, but does help. Also, after hours trading doesn't always predict what will happen correctly- after Jobs died, APL was down after hours, but went up on open.
Re:im no trader but.... (Score:5, Insightful)
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Re:im no trader but.... (Score:5, Insightful)
Everyone expects reports after the bell. That way, there's time to actually read and reflect, and everyone starts on a similar footing when trading resumes in the morning. Just as importantly, everyone knows and expects that they'll start on a similar footing in the morning.
If it were released during the trading day, there'd be pressure to analyse the document (and I use the phrase loosely here) as quickly as possible, so you can sell while it's still high or buy when it's still low, before most people have had a chance to process the new information. Most of the time, this means jumping on a single factor and reacting strongly.
Of course, then other people wouldn't actually need read the document. They would just see the line trending, say, up and then figure that someone who can analyse better and more quickly than they has seen a value increase and is now buying. So they would buy. And why not? As long as they're on the rising edge, and can recognize a peak/plateau, they can sell at the peak and still make money. So this compressed window leads to panicked decisions based on incomplete information which is multiplied across the market. Very disruptive.
Now, imagine if the report were not only released during trading, but _unexpectedly_ so. Not only would you have information, you would have information that the majority of actors don't have. You would have an advantage over them, one that will evaporate in a matter of minutes or hours. Once the trading halted for the day, the advantage would be lost. So they would move even more quickly and panicked than if they had been expecting the report during trading (which, of course, no one was).
The phenomenon you describe -- trying to profit off of the correction when the initial trend is proven to be based on incorrect assumptions -- would then drag the trading artificially in the opposite direction. It's like kicking and oscillator. And, of course, there's no reason that a smaller group of investors couldn't capitalize on the over-correction, and another group on the re-correction, and so on. Maybe the price "rings" for a long, long time before it settles to a more representative value. Maybe it gets so low or high that non-linear effects ("buy at ..."/"sell at ..." directives) come into play and either dampen or excite the oscillation further. Maybe the stock just bottoms out -- that is to say, the investors buying or selling lose enough money at once that they can't make call, even though the stock they hold may have value.
It's hard to say. But considering that it's all an artifact of traders trying to capitalize on the stupidity of other traders, and not at all a matter of the real price of the stock, it sounds like the kind of thing you want to discourage as much as possible.
On a related note: based on the chaos caused by automated trading routines of late, I think we can expect more limits and delays on trading to be mandated in the future.
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No, the problem is that if other people are selling, your optimal way to make money is to sell first but slightly before they do.
The real problem with the markets is that the way you make money on them is to do the same as everyone else, just faster
Re:im no trader but.... (Score:5, Interesting)
That's why a useful strategy with fundamentally sound stocks is to play the counter-cyclical game: When the market is going "SELLSELLSELLOHGODSELLIT", that's your signal to start looking for a price that you will buy at. When the market is saying "This is the best company to ever exist!", start selling.
Of course, the risk in this strategy is that the reason the market is going SELLSELLSELL is because the stock is no longer sound. But that's unlikely if it's a company that actually makes something.
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When the market is saying "This is the best company to ever exist!", start selling.
There's a risk to that, too. I did exactly what you describe and sold most of my Apple shares back when I started thinking that investors were overhyping the stock. That was at around $185/share. It seems I missed out on just a little bit of money that way [yahoo.com].
The bottom line of the stock market is that professional investors will throw money at anything that is growing its revenues/profit, and run away from anything that's shrinking - regardless of the health of their balance sheet. If you can pick who's going
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A useful strategy to prevent that is to sell enough to make back the original investment, and let the rest just go for the ride. Because you're in pure profit territory, you're less likely to sell into a panic like a lot of people just did.
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"But that's unlikely if it's a company that actually makes something."
Yes, but we're talking about Google.
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Note the risk part.
Those two are headed for bankruptcy. If Nokia is very lucky MS will buy them out for a pittance. Likely it will not as killing them is just as good.
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Note the risk part.
Those two are headed for bankruptcy. If Nokia is very lucky MS will buy them out for a pittance. Likely it will not as killing them is just as good.
Nokia owns Navteq. If only there was another company out there which had over $10B in the bank and could benefit from better mapping data.
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Yeah, but if they considered than an option why did they not go that route already?
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Why buy Nokia for $10 billion when you can pick up the bits you want for next to nothing if you just wait a little?
RIM? heading for bankruptcy? (Score:2)
How can you declare bankruptcy when you have ZERO debt?
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How long do you think that will last?
They have enough cash in the bank to keep making devices that don't sell?
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The market didn't go "SELLSELLSELLOHGODSELLIT" with Nokia and RIM. Both of those companies have been in downward spirals for quite a while. If anything, the markets have reacted very slowly to those two. I imagine plenty of people with a clue have made lots of money shorting them.
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Heck yes it does: It makes targeted advertising using the information provided by their users.
The "actually make something" part was to exclude companies like Goldman Sachs and AIG, which make nothing and make their money by shuffling around the ownership of what was made.
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Traders are panicky sheep.
Was that augmented by panicky algorithms doing an impression of the robot scared by Chewbacca? Rawr! Squeeeeeee..... zip.
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They got confused, they meant to emulate a robot, but ended up with Dr. Smith.
Re:im no trader but.... (Score:4, Insightful)
The main thing you have to remember about aggressive traders is that they're actually both smarter and dumber than you'd expect. That is, they're smart enough to recognize that most of their money is not made by spotting winners or losers early enough to get on the winning team. No, most of their money is stolen in fits by outracing other investors when things suddenly change. If we're lucky, they usually have a counterpart somewhere who is responsible for shepherding a reserve of cash, slowly built up by investing in solid companies as they build, so that the life and death of the aggressive portfolio is not also the life and death of the company.
The aggressive traders know a lot of their job comes down to timing, that the value they gain and trade is temporary, and that eventually the whole thing will melt down around them. Eventually, they will be the slow guy getting beat by faster guys. The large scale and small scale objectives are similar: get in on the rising edge, get yours, and get out before the whole thing goes to hell. Collapse is not an "if", it's a "when". The first thing they look for is always "when do I pull out?"
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Traders are panicky sheep.
I would put it differently. People are panicky sheep. Traders are gamblers. Nothing more. Traders are gambling on how other people are going to respond.
In the absence of dividends, what's a stock?
Of course this is somewhat less than true now with all of the algorithmic trading and high-frequency trading that goes on. Nonetheless, at its core, the market is about emotion. Traders make--and lose--money based on emotions, not facts and fundamentals.
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how are they going to report drastically different earnings a few hours later? the quarter ended over a month ago, it's not like they can just push some business into the release to meet the numbers.
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how are they going to report drastically different earnings a few hours later? the quarter ended over a month ago, it's not like they can just push some business into the release to meet the numbers.
It's not that the numbers will change. It's that you don't just surprise people with numbers, period. Release it after the markets are closed so everyone effectively gets full information at the same point in time. As for "finishing" the document, it may just be a matter of editing, etc. I highly doubt there would be material changes made this late.
Why halt trading? (Score:3, Insightful)
This seems really silly to halt trading. If people are dumping their stock due to speculation or accidental reports, let them do it! This just means that others can buy the stock while it's down and should the actual report come in that and everything be ok, well those early speculators just lost out.
It just seems like by having trades be halted if things get too crazy or even backing out trades if they were due to HFT bugs, you're removing all the risk and just enabling dumber and bolder investment strategies.
Re:Why halt trading? (Score:5, Interesting)
They have to halt trading to prevent automated trading programs from selling it down to zero.
Once there's a fast enough and large enough movement, you start getting more selling from automatic stop-loss orders, automatic short selling, and all kinds of nasty things.
The idea of a trading halt is to prevent computer programs from destroying the economy in milliseconds. Garbage in, garbage out, you know.
if the algorithms are that fragile (Score:5, Insightful)
perhaps they shouldn't be allowed to trade.
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Can't do that. Corporations are people too. Preventing them from trading would be violating their rights to freedom of speech, assembly, etc. /me removes tongue from cheek.
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This seems like an instance of human traders being smarter than the bots.
I think it's unfair to long-term investors, and humans in general, to halt trading just because the automated traders are overreacting. It looks just like another instance of the market being managed to give Wall Street institutions and HF traders an advantage over retail traders. Can somebody explain to me why this is legal?
Wall Street, read this: if you continue to stack the deck against retail traders, mom-and-pop investors are g
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The irony is that it's NOT the algo traders that are typically dumping the stock "at any price". It's entirely possible for bad algorithms to exist that will continue selling any stock without any lower bound, but there's also a lot of algorithms that will note the movement of the stock price and start buying up the stock at those panic-depressed prices. You'd be hard-pressed to find a lot of humans willing to do the same - this means that the panicking humans are going to be taken advantage of by the big
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Re:Why halt trading? (Score:5, Informative)
In this case Google requested that the Nasdaq halt trading for a "news-pending" reason. The general theory behind allowing a company to halt it's own stock is so to give time for investors to evalute potentially material financial information (or in this case accidential financial information).
There is also a regulatory pause (called a circuit-breaker) if a stock moves more than 10% in five minute window. The primary reason for this type of halt trading is that there is a large imbalance between buyers and sellers (much larger than the market makers can absorb). In these types of situations, it is essentially impossible to fairly price (and thus report) a stock trade which can cause the instability in automated trading programs that you are referring to.
I believe that the erroneous report was released @12:30EDT and by the time GOOG was halted @12:50, it was only down about 9%, and it resumed trading @3:20 and finished only about 8% down. I don't think that was enough to trigger an automatic circuit-breaker. The stock was halted because GOOG requested it (when it realized what had happened).
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In other words, gotta protect the big HF traders from themselves, we can't have them losing money to the peons, now can we?
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I wholeheartedly agree. If a machine does something stupid and causes a flash crash, well too bad for whoever owned those machines, let some long-term investors rake in the cash at the stupid machines' expense.
I just backed up the truck. (Score:2, Interesting)
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Good luck. Hope you don't get run over.
News sources (Score:4, Interesting)
A pet peeve of mine (and one of my biggest gripes with Google News) is promoting news sources that are nationally or geographically far removed from the event in question. In this case, I noticed the British spelling of "finalise", which directed my attention to the fact that the linked article is from the BBC. So then I assumed this was in some way related to the London Stock Exchange, or it was the UK division of Google that prematurely released the figures. However that is not the case as this was indeed suspended on NASDAQ and involved the parent Google company.
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A pet peeve of mine (and one of my biggest gripes with Google News) is promoting news sources that are nationally or geographically far removed from the event in question. In this case, I noticed the British spelling of "finalise", which directed my attention to the fact that the linked article is from the BBC. So then I assumed this was in some way related to the London Stock Exchange, or it was the UK division of Google that prematurely released the figures. However that is not the case as this was indeed suspended on NASDAQ and involved the parent Google company.
I'm not sure why we are subjected to a journalists biased view, rather than post the financial statements. http://investor.google.com/financial/tables.html [google.com].
Re:News sources (Score:4, Informative)
Re:News sources (Score:5, Informative)
I'm the American who submitted it. Born and raised, lightly educated by comparison.
I realize how flawed the BBC is as a British Commonwealth Corporation, in your eyes.
I found the summary contained the most timely and pertinent information in a concise blob...
of any major media reporting body that was running the story at the time.
I could give two shits about 'finalise' v 'finalize', potato/potahto or other musket v. rifle instances.
It took roughly 15 or 20 for Timothy to massage the href and post it up.
The trading resumed 8 minutes ago.
Time was of the fucking essence, in a sense.
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I could give two shits about 'finalise' v 'finalize', potato/potahto or other musket v. rifle instances.
I agree 100%, except for "I could give two shits". It makes no sense! It ought to be "I couldn't give..."
Okay, done with my daily pissing-into-the-wind ritual.
Cheers
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Ah, I see the problem.. right there:
I assumed
Now why would you do that?
Strange Anniversary (Score:4, Informative)
Just in time for the 25th anniversary of Black Monday [wikipedia.org] crash, where the Dow lost 22% in one day.
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Re:Strange Anniversary or Black Monday (Score:5, Interesting)
Strange story, that. I've been investing since I was a teen, and did paper trading in grade school from stock tables.
On Black Monday, after having just written an Economics paper for Capilano University on ethical investing, for which I'd researched true and tax book value for corporations, I realized that Apple was selling at such a low rate you couldn't lose if you bought it.
I phoned my grandmother and told her not to panic, and to put $10,000 in Apple stock. She did. Later she gifted part of it to me. I later sold parts of that and bought and sold Microsoft stock from the proceeds, which became the 20 percent downpayment on my first house.
Best stock day ever.
This led me to a later decision to buy 600 shares of Ford on what turned out to be the absolute bottom of the market. Made a killing on that.
From risk, comes opportunity.
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There is nothing to prevent trading on a stock from becoming so irrational that it goes outside of the fundamentals floor, crashing below the book value of the company, particularly in a panic. Stocks whose price drops enough to start tripping stop loss orders can easily accelerate right below that for some amount of time, with fun stuff like margin calls joining the party too. Value investing based on fundamentals can work very well. But the idea that it must bound the movement of a stock's price, which
Doh! (Score:2)
Some analyst somewhere just got canned. Hard core canned to like "You don't even get to keep the stuff on your desk GTFO"... like thrown from a window canned.
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How droll. He was shot.
Out of a cannon.
Into the sun.
Google not a hardware company (Score:3)
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Mobile phones and tablets are sucking the profit out of them. They dont have a vertical supply chain of factories and stores like Apple.
Look at it from another angle. Google is servicing the constantly growing mass of mobile devices, and at the same time it does not need to take risk with design, assembly, sales and service of those devices! Profit comes not from selling a phone once in two years but from charging an advertiser $0.001 each time one of those mindless phone users looks at an ad that Google
This is all deliberate (Score:2)
Buy low, sell high, eh? Isn't that capitalism 101? Convenient we can blame a scapegoat!!
Dumping?! (Score:5, Insightful)
What I'd do, is wait for all the panic selling, pick up some Nov or Dec calls, and when the panic ends, folks will probably buy back in and push the price up a little. Or you could just go long.
Panic selling always overshoots down past where the price will eventually settle.
Re:Dumping?! (Score:5, Funny)
What I'd do, is wait for all the panic selling, pick up some Nov or Dec calls, and when the panic ends, folks will probably buy back in and push the price up a little. Or you could just go long.
Panic selling always overshoots down past where the price will eventually settle.
The only thing more amazing than the fact that people manage time and time and time again to convince them selves that constantly increasing growth is sustainable, is the shock they get when it turns out not to be.
http://www.horace.org/blog/wp-content/uploads/2008/06/book-buy-sell-sell-sm.jpg [horace.org]
So much for the dispassionate never erring and invisible hand of the free market.
Re:Dumping?! (Score:5, Insightful)
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>
Panic selling always overshoots down past where the price will eventually settle.
I remember buying some RIM stock a few years ago (for > $100 / share) based on this philosophy. Ask me how that worked out.
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How did it work out?
Re:Dumping?! (Score:4, Interesting)
The difference here could be that RIMs products have always been shitty. They were first out the gates for mobile email, but their software has always been poorly designed (IMO), and they've barely improved their products let alone done anything innovative. Everyone else has overtaken them now.
Google on the other hand tend to create things that work well, and are still improving and innovating. If any tech giants are set to go downhill over the next few years, it's RIM, MS and Apple (the iPhone 5 reception was hardly stellar.. Apple are losing their cool factor without Jobs' guidance). Google should at least keep going steadily. Not that I even invest in the stock market anyway so I don't care that much :p
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Re:Dumping?! (Score:5, Informative)
Panic selling always overshoots down past where the price will eventually settle.
This word "always", it doesn't mean what you think it does. It's very common for moderate panic to be just the first stage of a major drop in a stock's price, in which case the price will accelerate downward instead of settling back again. There's a popular phrase for the idea of "oh, it dropped a bunch, that must have gone too far; let me buy some and profit when it corrects": catching a falling knife [investopedia.com]. If you do it right, you get some small profit as the price returns to the mean from its extreme point. But if you're wrong, you can lose a giant amount of money. The odds of a trade played against panic are reasonable, but the risk/reward ratio is terrible. You can correctly play short-term panics a dozen times successfully but lose all that profit with one serious loss, when the initial panic turns into only more panic.
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But if they know that we know that they know that we know.
BBC's news article is misleading (Score:3)
If you read this
Trading in Google shares was suspended for two-and-a-half hours after the internet giant released its third-quarter results early by mistake.
you would have thought that it was Google who had released its third-quarter result, mistake or not.
But if you read this
Google blamed financial printing firm RR Donnelley for filing an early draft of the results ...
or this, from http://www.guardian.co.uk/technology/2012/oct/18/google-shares-suspend-email-22bn [guardian.co.uk]
Company results circulate internally for several days as they are being prepared for public release to strict timetables, normally under strict secrecy. Leaks of the figures are extremely rare, but on this occasion Google tersely blamed financial printers RR Donnelly for filing its draft third quarter results "without authorisation".
you would be getting a much clearer picture of what had transpired.
I don't know why BBC chooses to word its news article in such a misleading manner.
The difference in interpretation might be "minor" but the consequences would be huge, if people only get pa
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The fact that releasing what (I assume) is the correct information a few hours early can result in a company's share price dropping 10% simply proves what a futile irrelevance the financial markets are.
Bigger not better (Score:5, Insightful)
Oh dear
Income this quarter is lower than the same quarter last year but overall revenues are up 45% from the same time last year. So that means that its income is less in proportion to how big it is, 19% of revenues last quarter against 37% last year. Google as a business is getting bigger but its profits are dwindling. Bigger but not better
Moto is loosing money (the rate does seem to have slowed) on top of the 12 Bn purchase price
Why in earth Google is releasing the new Nexus phone made by any one else other than Moto doesn't make any sense to me at all, apart from google not wishing to piss off other OEMs who aren't raking it either.
Othe contributing factors I'd imagine are people using apps instead of browsers, so there's less opportunity for google to place ads directly and ad rates aren't as lucrative a they once were.
As for the timing. Today or tomorrow? Wouldn't the stock have taken a dive anyway? Just off the top of my head thoughts
Re:Bigger not better (Score:5, Funny)
Basically, they have spent lots of money on growth rather than putting it into a bank account. Sounds like a terrible idea, really.
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Is it spending money in growth (investments) or are they in several low-margin businesses? Two different things.
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Their revenue went up and their profit simultaneously went down. Sounds like expansion to me...
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Now, as to whether the purchase of Motorola is a sign that Google's on the decline is an interesting question.
Re:Bigger not better (Score:5, Insightful)
Google as a business is getting bigger but its profits are dwindling. Bigger but not better
Businesses are just giant investing services. The question for google is what is it spending all this money on, and will it have any future return that justifies the reduced income right now. Also, I'd rather own a company that acquired 10 billion dollars in assets and made one billion dollars in profit than one that made 2 billion dollars in profit - so we'll have to see just what they justify this expense on.
Moto is loosing money (the rate does seem to have slowed) on top of the 12 Bn purchase price
This would be the question of an asset. I never really saw google buying moto as a good plan unless there's a patent licencing scheme in the works.
Why in earth Google is releasing the new Nexus phone made by any one else other than Moto doesn't make any sense to me at all, apart from google not wishing to piss off other OEMs who aren't raking it either.
You answered your own question. Samsung HTC, Sony etc. all have a choice: Google, Microsoft or go their own way. Google is trying got to the top of the smartphone business by being an open platform and they don't want to fuck that up. Especially not while Microsoft is working hard to close their platform, and have surface etc. If I was samsung or HTC or Sony or the like I would find google much more tempting a partner than MS.
As for the timing. Today or tomorrow? Wouldn't the stock have taken a dive anyway? Just off the top of my head thoughts
Depends on what they spent the money on. That's the problem. The reason these things are secret is because an unfinished document without context could be factually wrong to start (as in the numbers may simply not be correct) or they may have significant information that needs to be included.
From the sounds of the *final* document google views the whole thing as overall positive, they're re-investing in growth, and have seen hugely rocketing revenue overall, which is all in all good, and they suffered a bit from the USD being high relatively. So from *their* perspective this report seemed quite positive, which might be it.
As I said, I'd rather own a company that acquired 10 billion dollars in assets and made 1 billion dollars in profit than one that made 2 billion dollars in profit and acquired no assets, and that seems to have consistently been the approach a lot of growing companies are taking.
Re:Bigger not better (Score:5, Informative)
Great reply, thanks. I've been awake for a long time so it wasn't the best post I could have made.
Your point about not pissing off other OEMs is well made considering the history of MS and it's 'strategic partners'. It was what i was alluding to. Asymco had a great post about this but I can't find it right now.
Yoir reply is Thoughtful, directed and appreciated
Re:Bigger not better (Score:5, Interesting)
Re:Bigger not better (Score:4, Informative)
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Captialisation? Punctuation?
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I'm Australian, so technically i can only "authorise", but due to invasion by US forces through the idiot box, many of my fellow (particularly younger) countrymen (or "country people" for the political correctness trolls) are surrendering to ignorance and defecting.
At the end of the day it probably doesn't really matter anyway due to the impending "New World Order" and all...
Re:It is authorization, not with an S (Score:5, Funny)
As long as they spell it with a zed and not with a zee all is not lost.
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Actually, authorisation with an s IS English. Authorization is American.
Re:It is authorization, not with an S (Score:4, Informative)
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He was. You're speaking it's bastard son, American.
Seriously Google you're in the information busi... (Score:2)
I'm pretty sure you mean 1:30 PDT, not 1:30 PST.
Re:finalise? (Score:5, Funny)
Is the BBC anglifying the spelling of a U.S. company's report, or are the people at Google huge anglophiles?
No, it's just that Americans don't speak proper English so some kind hearted soul took pity on Google and corrected their spelling.
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You do realize that the English spoken in the Appalachian Mtns. more closely resembles the English spoken in Great Brittan in the 1600's then the English that is spoken in Great Brittan today.
Thats right, you all sounded like a bunch of flipping hill billies.
Extensive research has been conducted since the 1930s to determine the origin of the Appalachian dialect. One theory is that the dialect is a remnant of Elizabethan (or Shakespearean) English that had been preserved by the region's isolation.[2][3]
http://en.wikipedia.org/wiki/Appalachian_English [wikipedia.org]
Don't even try... I'm a German, I just thought it would be fun to 'take the piss' out of you guys as my friends across the channel call it. It is nice to see that (most) Americans can still take a joke.
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Ain't capitalism grand?
Don't you mean "Ain't stock markets grand?"?
There is no requirement for capitalism to make use of stock markets.
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You have some other way of generating capital on a grand scale? Love 'em or hate 'em, if we didn't have stock markets, we would have to invent them.
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Oh, please (Score:2)
1 - Earn your own money working for others, without going into debt.
2 - Invest said monies in your business in a sensible fashion
3 - profit
4- goto 2
See how that doesn't involve stocks, investors, angels, debt, fake money, speculative markets? Nothing there but personal responsibility and effort. That's business with honor; that's also a business that can plan further than the next quarter.
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So where do I go when I want to build a factory? Open a branch in another state? I alone might take a thousand years to generate enough capital on my own. Or I can split my business up to into several pieces that I can than sell to investors. I take their money, they own a share of the company. I use their money to build sufficient capital to build my factory, and that increased capacity should generate profits and increased value of the shares held by others.
Again, how is it exactly do you propose to do th
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If I can't build a factory using my own money, I tend to think that perhaps I shouldn't build a factory. Just because I "want to" isn't much of a reason. Incurring huge debt and taking others along for a ride on my risks isn't fabulous either. I view debt as an extreme position, to be taken only when absolutely cornered.
Yes, under such a strategy I don't get to do things I cannot afford to do; I'm really ok with that. It's worked very well; I'm basically retired and pretty happy, though I maintain ownership
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What if your company produces more than one product? What if you have a company that owns a power plant AND sells Adwords?
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We would need either stock or some sort of bond, but a stock market in it's current form is not at all necessary.
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Shares in companies predated stock markets. Stock markets are really just a bunch of companies who already have public shares getting together to pool resources to allow easier and centralized trading and selling of shares. You ban stock markets, they will simply be reinvented under some other name.
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But it need not take it's current form. Ban the bad practices and it'll be re-invented in a more reasonable form.
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If you've got capitalism you need to have a way for the people with the capital to decide what to use it for. Any restrictions on how they do that are anti-capitalist.
The actual mechanism doesn't have to be a stock market, but the result is the same: if the people with the capital decide for some reason they don't like you, you're going to have less capital available.
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Agreed.
Microsoft's Surface? It will probably sell well; when MS does hardware, they typically do it better than even the established players. Windows 8? Ouch.
Ubuntu with Ads? That's the sound of a death knell for that company. Other linux distros have tried this before, it did not end well. The larger problem is that Ubuntu is lying to itself, essentially a servant with two masters: on one hand, without the OSS community, they're dead in the water, on the other hand, they feel they are owed something for th