You would have thought it was the Titanic all over again – in fact, the imagery is apt….
I am referring to the October 18 earnings release of Google that temporarily caused them to halt trading of their stock and lowered their price per share by as much as 11% on that fateful day.
There are so many levels to this story….
For a while Google’s value fell below that of Microsoft, after having passed them earlier in the month – a shocker, no doubt, to the analysts who think MSFT is old and worn.
One reason for the drop is that the market doesn’t like “surprises,” and analysts consider anything that doesn’t track with their dart-throwing predictions to be a surprise.
Of course the real surprise here is that a computer glitch (how ironic) caused the earnings release to be distributed early, without warning, and it was in draft form as well – no doubt adding to the feeling of OIY.
The acquisition of Motorola is a current drain – at a $12.4 billion buying price the market expected more of a return and, of course, was counting on a magic Harry Potter bounce for Google Mobile.
But let’s be clear…surprise or not – early or not – the numbers are the numbers and the panic that ensued, with all of its resident hoopla and expert punditry, is what’s wrong with the market – short-term thinking driven by short-term profit takers with short-term memories and a short-term commitment to anything.
Had they really understood the dynamics, they would have known that “search” is under siege – not that it’s going away – far from it. It’s just that certain information can be found more easily in other places and through other means, including Amazon and soon, maybe, Facebook. And at the end of the day – as the true value of clicks becomes more and more clear – prices will be going more and more down.
Bottom line – Google is just getting going. Its value to you and me is no less or more than it was before October 18. The financial community will no doubt wring their hands for a bit, but so what – to those of us who are users, it is they who are the issue – not Google. Do not limit the ability of this company or any company to innovate, evolve and develop by demanding results that have no basis in reality other than your own spreadsheets.
Mark Zuckerberg is no stranger to this kind of activity – he constantly talks about being in the game for the long term and had this to say in an interview in Forbes:
“We go through these waves. At times everyone thinks what we’re doing is awesome and I think it’s too optimistic. At times when people are super pessimistic, I personally – maybe it’s a perverse thing – I’d rather be in a cycle where people underestimate us. It gives us latitude to go out and make big bets and excite and amaze people.”
So if you lost value in your Google holdings I am sorry – but if you are a Google user or a Microsoft fan or a Facebook junkie – take heart: it’s just starting to get interesting….
“We need to see our work on innovation as involving disciplined practice, not the quest for short-term wins. This is an obvious problem in our instant-gratification, quarterly-earnings-based culture in which corporate managers (and politicians) are evaluated and rewarded based on their success at maintaining a continuous upward trend that produces immediate results. At times, it seems like the question ‘What have you done for me lately’ approaches the status of a business model. If resource allocation, decision-making processes, and career-path planning all obey a short-term logic, while the important challenges facing both organizations and society are mostly long term, isn’t the disconnect obvious?” John Kao
A final thought – listen:
“When you feel the impossibility of really thinking about the ten thousand year horizon, you’ve got to access that part in each of us which knows that the rational calculation is not the only reason we do things. We celebrate doing things that are plainly irrational—loving our children, loving our country, loving our planet—even though we’ll never see any of those things come to the perfection we imagine.” Larry Lessig
And that to me is the key – who knows where Google will end up? Who knows if we will all be shopping only at Amazon, making friends only through Facebook and talking to each other only through Skype – chances are we won’t, but who cares? The ride is amazing and the view gets better and better – short-term thinking is pursuit of some rational rationale by short-term thinkers – never by real innovators.
Celebrate your irrationality and enjoy what you experience – it gets better and better.
What do you think?