Alphabet, an Investor Is Grousing. Will That Person Be Assuaged?

December 7, 2022

Google’s parent company Alphabet is a multi-billion dollar corporation. Like any large corporation, it probably carries way too much fat, i.e. the books do not balance and it is because of the human ego. Google is a hot mess when it comes to human relations, but an activist investor believes Alphabet is a financial fiasco as well: “Investor Tells Google: Cut Costs Now And Stop Paying Staff So Much.

TCI Fund Management is an activist investing firm and they suggested that Alphabet cut costs at the search engine giant. During the pandemic, Google had a hiring spree and TCI says the company now has too many employees and they are all too expensive. Google pays its employees 67% more than Microsoft people and 152% more than the top twenty US technology companies.

Alphabet’s profits are down to $13.91 billion compared to $18.936 billion in 2021. Alphabet is reviewing all its other companies. Some are doing well, while others like the Best Bets division are not. TCI Fund Management said Alphabet is not serving the shareholders:

“Alphabet’s ability to pursue M&A is limited due to ‘regulatory scrutiny’ so it should follow Apple’s capital allocation strategy and become “cash neutral over time through increased share repurchases.’ The group’s stock price is down 34 percent in the year to date, the share price is ‘cheap’ and buybacks could take advantage of this, TCI said.

It concluded: ‘In the era of slower revenue growth, aggressive cost management is essential. We look forward to your announcement in a clear action plan as a matter of urgency.’”

Google is not too big to fail, because tech geeks have huge egos and could run the company into the ground if they are not careful. Alphabet will probably ignore TCI’s suggestions, unless a former Google came up with them.

Whitney Grace, December 7, 2022

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