Google's New Problem: Paying Its People

Silicon Alley Insider:

How quickly we fall from grace. As Google's stock continues to fall, its problems continue to mount:

* Concerns about recession exposure
* Concerns about dependence on a single product whose growth cycle is coming to an end.
* Concerns about lack of focus, lack of spending discipline.
* Concerns about senior executives cashing out and jumping ship (see Sheryl Sandberg)

And now...

* Concerns that underwater stock options and a falling or flat stock price will force an increase in cash and/or restricted stock compensation, putting additional pressure on margins.

One of the reasons Google's stock multiple is compressing (in addition to all of the above) is that the company's operating margin has declined steadily over the past year. If the company is forced to provide higher cash comp or more restricted stock to reward and retain employees, this will put even more pressure on margins.

Read the whole story: Silicon Alley Insider

Comments

[nisha]

It's not like they're selling bottled sugar water-- this growth cycle is far from over, and Google's beginning plenty of new services, if you know where to look (see Toolbar http://www.google.com/tools/firefox/toolbar/FT3/intl/en/index.html )

If people never left, there would be no growth of any kind. Why not worry about who's going to own CitiGroup instead?

[mrcontinental]

Has predicted right here in the business section at HuffPo.

[Rule Of Law]

They didn't cut the same deals with the devil that Bill Gates did that made him the wealthiest CIA agent in the world. They should have sold out sooner and gone back to school.