Google Inc (NASDAQ:GOOG) Ends Below $600 mark, Buffett Not Buying
Google Inc (NASDAQ:GOOG) ended lower by 2.30% well below the $600 mark on Friday as the broader market ended sharply lower on lower than estimated jobs creating during latest month.
Shares of GOOG have been trading within a narrow range of $600-650 over the past three months. The stock made an intermediate high of $651 just before the earnings. However, the stock retreated sharply from recent highs following its first quarter earnings, after a decline in advertising rates and other worrisome business trends, over shadowing its stock spilt announcement.
The company posted a first quarter profit of $2.89 billion, or $8.75 a share, as compared to $1.8 billion, or $5.51 a share, in the year-ago period. Excluding stock-based compensation, per-share profit rose to $10.08 from $8.08, well above analyst estimate of $9.65. Total revenue was up 24% to about $8.14 billion, slightly lower than the $8.15 billion expected by analysts after meeting traffic-acquisition costs which represented 25% of advertising revenue.
Additionally, the company also announced a new stock structure that will keep the company firmly under the control of its co-founders. The company plans to introduce a new class of stock in a 2-for-1 stock split and the shares will be distributed through a stock dividend to existing shareholders. Google’s board of directors had approved the proposal, which would preserve the corporate structure that will help Google to remain focused on the long term.
Warren Buffett, billionaire investor and CEO of Berkshire Hathaway Inc, said that he would not buy shares of technology giant Google Inc but would not sell them short also. “I would not be at all surprised to see them be worth a lot more money 10 years from now but I would not buy either one of them,” Buffett said about Apple and Google at Berkshire’s annual shareholder meeting in Omaha, Nebraska. “I sure as hell wouldn’t short them either.” Buffett has never been a fan of investing in technology stocks like Apple and Google because as he said, “We couldn’t predict what would happen to Apple 10 years ago and we can’t predict what will happen to it 10 years from now.” He prefers more predictable and stable stocks like Coca Cola and IBM to name a couple.