Why is Google so tone-deaf to the interests of Wall Street?
The company’s latest quarterly earnings look good, and are enough to warrant Eric Schmidt declaring the search advertising recession well and truly over. All segments of advertising are improving again, he said, and pricing recovered from the second quarter (cost-per-click up 5 per cent.)
The earnings call that is currently underway, however, once again reveals the company’s lack of sensitivity to the way analysts work, and its over-enthusiasm for using technology to replace human interaction.
Rather than take questions from analysts directly, Google has asked Wall Street’s finest to submit their questions through a service called Google Moderator, and is only responding to questions that receive the most votes from other analysts. The selected questions are then read out in a studious monotone by a moderator. There is no chance for analysts to put executives on the spot directly or – most importantly – ask follow-up questions when answers are less than complete.
In contrast, Intel bent over backwards to give analysts more time for thoughtful questions this week, by issuing its CFO’s prepared remarks before the conference call and reducing the usual scripted blather to give more time for questions and answers.
But then again, maybe Google’s disregard for the immediate interests of Wall Street was apparent even before the call got underway. In the company’s earnings release, Mr Schmidt said Google was now ready to start “investing heavily” again in its future. Hang on to your seats: after the surprisingly effective cost discipline of recent quarters, expenses could be set to soar again.
