January 31, 2007
The actions of the stock market really baffle me.
More and more I'm coming to the conclusion that the people in the stock markets must be living in an alternative universe from the rest of us. For instance, today there's a
story in the NY times saying that Google has posted a "sharp rise" in profits. And yet the stock goes
down. Last week, there was a report that Ford Motor Company lost more money than any time in its entire history, yet the stock went
up. Very strange. I guess if I think about it there's some sense here. No matter how much money Google is making, if it's not as much as people expected, the stock will go down. And the fact that Ford is losing so much money must indicate that it's only a matter of time before it will be taken over by someone who's competent, which would make its stock a good bet in the long run. But it's still rather weird, and certainly indicates that stock prices are no longer at all directly related to how much money the companies are actually making or losing.
But investors were apparently hoping for even better results, and their initial reaction was negative. Google’s shares were off 2 to 3 percent in trading after regular hours.
Google said net income for the quarter nearly tripled to $1.03 billion, or $3.29 a share, up from $372.2 million, or $1.22 a share, in the fourth quarter of 2005. Excluding charges related to stock-based compensation and other adjustments, the company earned $997 million, or $3.18 a share, in the latest quarter.
Google’s quarterly revenue rose 67 percent. to $3.21 billion, from a year earlier. Google sells ads that are displayed on other sites and passes most of the revenue from those ads to the owners of those site. Excluding those payments, Google’s revenue totaled $2.23 billion in the fourth quarter.
As far as Ford and General Motors' problems go, I'm willing to bet that within ten years the Chinese, or at least a consortium of companies with major Chinese financing, will own one or the others' brands. Just a guess. :)
