Google Inc. (NASDAQ: GOOG) is down almost 15% since the start of the year, and some investors may be eyeing this as a buying opportunity to get into one of the hottest companies out there, but I don’t think Google stock is hot at all.
GOOG creates a lot of buzz for itself, but as far as making money for shareholders — which is the job of a company — it has failed recently. What’s worse, it hasn’t been investing very well in its future.
For example, Google created the Android operating system for hand-held devices and gave it away for free, which would be nice if it was a non-profit. Here is a company with a great operating system, yet it has not figured out how to monetize it. The Android operating system may be the best for accepting ads on the mobile Internet, and they may have seen a lot of growth in hand-held devices, but they’re not translating it into money for shareholders.
In my opinion, one of Google’s downfalls is that it is a company run by scientists, which is problematic because they treat everything like a science experiment. They talk a lot about doing research for research’s sake, and that’s not why people give money to a company. They invest in a company so it will grow.
Google is not meshing well with Wall Street, and management may be proud of that fact, but it does not help shareholders. Their self-righteous iconoclasm may make Google look good in the media, but I say it’s time for the Internet search giant to put up the numbers or shut up.
Management has been very standoffish toward investors. For example, when Google co-founder Larry Page became CEO last month after taking over from Eric Schmidt, he was expected to give a speech about his new tenureship on the last conference call, but he only stayed on the call a moment, said goodbye, and was off.
And I have my doubts about Page. Some founders do incredibly well as CEO of their companies. Take Steve Jobs and Apple (NASDAQ: AAPL), Larry Ellison and Oracle (NASDAQ: ORCL), and even Bill Gates and Microsoft (NASDAQ: MSFT). But other founders are just not capable of running a very large company, and I am afraid that Page may be one of them.
I buy Google products and love them, but I would not buy the Google stock at the current price.