Public Google and the Analysts

April 14, 2011

Short honk: I don’t want to start covering financial information. We have a new blog coming, sponsored for sure, and it will dig into financial angles for investors. Irreverent? Sure. Newsy? Nah, we are going to identify important stories and offer some comments about what was scintillating and what was more of a black hole.

However, we have to say that we read “Google’s First Quarter Earnings Miss Projections as Expenses Spike; Page Makes Brief Appearance.” Not much to say because this is a good search engine optimized headline.

What we want to do is point out that the new Google CEO has to beat analyst estimates, projections, pixie dust, whatever. What happens if the Google cannot pump up revenues and generate the profits as in days of yore? Good question. Let’s do a 1950s’ style Iowa Test. (Anyone remember those?)

Here’s the question. Select the best answer.

What happens if the CEO of a publicly traded company does not meet or beat analysts’ earnings estimates?

[a] Wall Street shrugs its shoulders and says, “Hey, no problemo. Thanks for the nifty coffee mug.”

[b] The investment outfits ignore the misstep and go home before the market closes.

[c] Major shareholders ignore legal challenges, the misunderstanding with the world’s largest market, and rising expenses because the magic ad machine is unbreakable.

[d] The CFAs want the company to change or socially-inclined MBAs and art history majors with CFA certification will become feisty.

Maybe none of the above?

Stephen E Arnold, April 15, 2011


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