On Thursday after the bell Google stunned the Street with a 2 for 1 stock split, but a split that was by no means conventional. The new shares have no voting rights.
“The move says to me founders Larry Page and Sergey Brin control this company and if you don’t like that as a shareholder you can only vote with your feet,” says top BGC analyst Colin Gillis on Fast Money."
“I don’t know why they just don’t take the company private,” adds the obviously aggravated trader Mike Murphy. “If I were a shareholder – this would be my exit point.”
That's because Murphy feels strongly that shareholders, as owners of the company, should have a voice. And he says this development suggests Google doesn't care about that. Murphy wouldn't be surprised if the stock-split triggers selling as investors re-think whether they want Google in their portfolios at all.
Google, however, insists the move was not intended to harm investors but rather accommodate them; Google says investors had been asking for a development such as this to make the stock price more accessible.
Trader Karen Finerman also bemoans the move. She says it confirms that owning Google will continue to involve investing in niche areas that fancy the whims of the founders, such as Google’s space program.
“I don’t want to own a company with search and space but these developments tell me the company will continue to spend on whatever it wants. If I want Google, I have to take the space with the search.”
However it seems Finerman is willing to take the bad with the good. She intends to remain a shareholder.
“It’s an extraordinary business that controls a formidable market share. And the valuation seems reasonable considering the growth they likely have.” She goes on to say, “the value is there."
Looking at the company’s earnings, net revenue, excluding fees paid to partner websites, totaled $8.14 billion in the three months ended March 31, compared with $6.54 billion in the year-ago period and analysts' average estimate of $8.15 billion according to Thomson Reuters I/B/E/S.
Net income was $2.89 billion, or $8.75 per share, compared with $1.80 billion, or $5.51 a share, in the year-ago period when Google took a $500 million charge to settle a government probe into its advertising practices.
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Trader disclosure: On Apr 12, 2012, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Keith Mccullough is long GLD; Keith Mccullough is long XLU; Keith Mccullough is long XLF; Mike Murphy is long AKS; Mike Murphy is long MS; Mike Murphy is long INTC; Mike Murphy is long ANF; Mike Murphy is long FCX; Mike Murphy is long PHM; Karen Finerman is long AAPL; Karen Finerman is short AAPL CALLS; Karen Finerman is long BAC; Karen Finerman is long JPM; Karen Finerman is long WMT; Karen Finerman is long TGT; Karen Finerman is long RIMM; Karen Finerman is long HPQ; Karen Finerman is short SPY; Karen Finerman is short IWM; Karen Finerman is short MDY; Jon Najarian is long call spreads in AAPL; Jon Najarian is long call spreads in JPM; Jon Najarian is long call spreads in GDX; Jon Najarian is long call spreads in XLF; Jon Najarian is long call spreads in INTC; Jon Najarian is long call spreads in IBM; Jon Najarian is long call spreads in HFC; Jon Najarian is long call spreads in WNR; Jon Najarian is long call spreads in SBUX; Jon Najarian is long call spreads in FCX; Jon Najarian is long SD SEP 8 CALLS; Jon Najarian is long call spreads in UPS; Jon Najarian is long CIGX; Jon Najarian is long CME; Jon Najarian is long CBOE
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Analysts' compensation is determined based upon activities and services intended to benefit the investor clients of Citigroup Global Markets Inc. and its affiliates ("the Firm"). Like all Firm employees, analysts receive compensation that is impacted by overall firm profitability which includes investment banking revenues.
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