Peter Kafka

Recent Posts by Peter Kafka

Wall Street Gives Google a Mild Thumbs Down

Was it something Larry Page said? Something he didn’t say?

We don’t know, and we should be wary of people who say they understand why the market moves in any particular direction, on any particular day. That said: The day after Google announced its Q1 earnings, Google is trading down about 4 percent. Meanwhile, the Nasdaq is down about 1 percent.

To recap: Google’s Q1 came in around where Wall Street thought it would — revenues were just under consensus, and earnings were a bit above.

The company’s cost-per-click trend continued to decline, dropping 12 percent year over year, and I’ve seen some reports where analysts are wringing their hands over that. But the stock-watchers I follow don’t seem overly concerned about that — they assume that as long as Google’s overall ad volume increases, it can afford to sell its stuff for less.

The other news item, of course, was that Google is creating a new, non-voting class of stock that effectively creates a 2-1 split. This has no bearing on the way the company does business — it will still run, effectively, as a privately controlled company whose shares happen to trade on the open market. Hard to see investors getting excited one way or another about it. But you never know.

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Just as the atom bomb was the weapon that was supposed to render war obsolete, the Internet seems like capitalism’s ultimate feat of self-destructive genius, an economic doomsday device rendering it impossible for anyone to ever make a profit off anything again. It’s especially hopeless for those whose work is easily digitized and accessed free of charge.

— Author Tim Kreider on not getting paid for one’s work