Originally Posted by Frood
I believe they do it because they want to change the world- and if you look at the projects they are doing most are consistent in that track and may not make Google a dime. Having that much control is what allows them to do the moonshot projects that would not be allowed at more traditional companies- and that's what I think they are concerned about losing the ability to do.
If not having a say in a company and knowing that they do far-fetched projects rubs you the wrong way- I definitely wouldn't recommend Google shares for you.
Google has about 665 million shares outstanding. Larry and Sergey only have about 47 million voting shares, but they can dominate any shareholder vote because those shares equate to about 470 million votes. It somewhat rubs me the wrong way that they have roughly 5-10% of the economic investment but 100% of the control.
Which equates to a lack of accountability. They could do whatever they want like moonshot projects or pet projects that don't make Google a dime and the other shareholders who economically own about 90% of the company will be picking up the tab to the tune of up to 90 cents of every dollar spent.
Still, they've been rather benevolent dictators so far and haven't wasted too much of their shareholder's money so far so this potential lack of accountability isn't a serious issue to me until either either Larry or Sergey dies. Or money/power corrupts them. Sure, they have a fleet of several private jets, a yacht and take expensive vacations, but yeah, I don't think they're primarily motivated by money either. Brin has a genetic mutation that is linked to Parkinson's disease so he's spent at least $50 million on that pet project personally.
Google has an incredible competitive moat which is a huge plus, but more importantly to me is that Google is overpriced - it would have to either double its earnings or plunge its share price by 50% to reach the same PE as Apple. That's the primary reason why I have Apple shares but not Google shares.
Originally Posted by shahhet2
1. What does class B shares have anything to do with current split between class a and class c?
It was there even before split.
2. What stops you or any investor from selling your class C shares without voting power with class A?
As he explained, this was done for employee stocks.
Try to understand the purpose before blinding bashing.
As far as Ownership % goes, this is very common Where company was invented by 1-2 person entity.
For eg. Microsoft with Bill gates before recent release of shares for charity or Google or Facebook.
They invented the company and keeping voting power, which is obvious. What is wrong with that?
1. Class A wasn't the only class that was split - Class B also got split, so each Class B share also got a Class C. On paper, Class A and Class B (and now the Class C) shares are all worth the same but see 2.
2. Class A is essentially Class C because since Sergey and Larry have about 470 million votes or about 55% of the votes, your vote will never amount to anything. Their share holdings doubled in count and they can sell half their shares (the C, not the B) without losing an iota of control.
"as he explained, this was done for employee stocks"
That's naive. Do you really need to hear it coming from Sergey or Larry's mouth that they want to be able to sell half of their Google stocks but still wield absolute control?
"What is wrong with that"
See my reply to Frood about lack of accountability and pet projects - selling shares to investors (to raise money for private jets, yachts, etc), not giving out a dividend, and not yielding control. And to add insult to injury, possibly getting those investors to subsidize your pet projects. It's called having your cake and eating it too.
No I'm not blind bashing. It doesn't look like you understand the situation clearly.
The bottom line is we actually don't know yet how shareholder friendly Larry and Sergey are. The stock has been on a tear as it is still in growth mode, and you can't tell in growth mode.
Coming back to Apple, Steve Jobs was actually not very shareholder friendly at all, but the stock was on a tear so no one cared. Cook is a million times more shareholder friendly what with his annually-raised dividends and the huge stock buybacks.
On salesmanship, Jobs has Cook beat, but other things like new product categories and stuff, 3 years is still too short to judge Cook on. 6 years total should be sufficient - that was how long it took apple from introducing the ipod to the iphone.
Edited by Bravadu - 4/30/14 at 1:03am