Google’s “Don’t Ask, Don’t Tell” Policy

By Paul Kedrosky · July 20, 2007 · ·

Reuters is now out with a story that Google’s miss last night was a function of the company’s “irascible” policy of giving no guidance. Yup, which was pretty much my take here earlier today.

While giving no guidance might seem like a fine idea in Herb Greenberg-ian utopian principle, in the real world of investing it creates communications messes, like last night’s Google results.

Related posts:

  1. The Google “No Guidance Policy” Drinking Game
  2. Herb Greenberg Gets Some Link Love
  3. Wal-mart, Dell, Greenberg & Gates
  4. Fear & Greed: Greenberg and Kedrosky
  5. The Google Guidance Myth

Comments

  1. Marc Hedlund says:
    July 20, 2007 at 1:56 pm

    I’m going to disagree on that — I think that hype about Google’s earnings was strong enough that the price drop was inevitable, whether they gave guidance or not. I think positioning for the long-term approach is the right move, and that letting a few of these significant drops occur will only ensure the long-term health of the stock. A few shocks will keep people realistic.

  2. zz says:
    July 20, 2007 at 2:11 pm

    companies that give guidance don’t suffer from communication messes regarding earnings? news to me. i applaud goog for not providing guidance. it’s ridiculous to think that most companies can actually forecast anything 3-12 months out.

  3. worth says:
    July 20, 2007 at 2:40 pm

    I agree with Marc and probably will with Herb after I read him (I usually see eye-to-eye with that negative/realistic wet blanket). In a perfect world for GOOG, and one of the reasons they delayed going public for so long, they would never have to answer to anyone about short term ops and blips up or down. They appear to only operate with the long view (as every company should but usually cannot due to short-sighted analysts destroying their market caps), and eventually the “pros” looking for “guidance” will just shut up and let the performance and management results speak for themselves. They’ve earned that, and until they demonstrate otherwise in a severe or extended manner, your money’s safer there than just about anyplace else.

  4. sean says:
    July 20, 2007 at 5:28 pm

    The best reason for not giving guidance is that it reduces the incentive for executives to game the system via backdated options or playing non-value added financial engineering games to beat the number by one penny. Hello GE!
    Think how much better performing Berkshire’s stock would be if they gave guidance. Not!
    Time for a schmoke and a pancake…

  5. zz says:
    July 23, 2007 at 4:51 am

    article in today’s wsj that it doesn’t make any difference with regard to beats/misses