Google Down But Not Out

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The global economic crisis has investors so uptight that Thursday’s accidental early release of Google’s (NASDAQ:GOOG) 3rd quarter results stirred a frenzy among traders. The market reacted to the early report, which revealed a 20% decrease in profits year-on-year for the quarter, with the share price dropping 9% from $705.58 to $681.79.  Chicken Little was runny through the barnyard telling everyone that the sky was falling.  Bearded men in tattered rain coats were walking down Wall Street with signs that read “The End is Near”.  But here we are two days later and gravity still seems to be working and the toilets still flush.

It’s unfortunate that the numbers were released prematurely and gave the stock market world an upset stomach.  Perhaps this is a time to reflect upon what one mistake in one singular usually means.  It’s pretty profound, so you may want to take notes.  Ready?  Here it comes:  Not much.  The crystal ball gazers are going so far as to propose that Google will drop further until it goes below the $600.00 mark.  It always amuses me to hear people saying that what is going down must continue to go down or what is heading up is going to keep going up.  (I know.  I do it too.)  But trends are not made by the problems pursuant to a one time event.  Especially an event that did nothing to change the numbers.  The numbers are what they are.  And, although CEO and Chairman comments are often well-spun, that is exactly what was missing from a report and what desperately needed to be read.  Many times those comments are also very rational explanations of why what happened happened.

Given the gap of the weekend, perhaps clearer thinking will prevail on the NASDAQ today.  Google is going to look pretty good with its stand before the French government over the weekend.  This is not a weak or weakened company.  This is still a company on top of its game.  Google execs made it quite clear to the French that if they want to tax or otherwise charge Google to link to French sites, it was a deal-breaker for the company.  They are prepared to walk away.  That makes it possible to other internet search engines to do the same.  That, my friends, is leadership.  That’s where the value of a company lies.

A year from now, this glitch that grabbed the worlds attention for a single day will be meaningless. Three years from now people will try to recall when in happened in trivia contests.  Five years from now it will generally be forgot.  Ten years from now, no one will care.

Google is a well-run company.  It has strong leadership and vision.  Yes, it is a behemoth, but it is a behemoth in the technology sector where behemoths are much more agile and move much more quickly than they do in other sectors.  They will make it through the next day.  And they will make it through the next quarter and the next years.  They have what it takes to withstand a world economic storm or a storm of their commercial printer’s making.

If I were one of the head guys at Google, I’d see the 4th quarter as an opportunity to look better.  I’d be surprised if they see it any differently.


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