The Case for a Google Split
"That's a pretty powerful number," he says. "If we could outperform the market by 9% a year, we could end up in the same retirement home as Warren Buffett."
Recent aspects of the company's strategy also could make a split -- and a quick boost in share price -- more compelling. Google made its first large, all-stock acquisition in October this year, handing over shares worth $1.65 billion for the online video start-up YouTube. As the company seeks to expand beyond its core online advertising market, a higher stock price would mean that the price of new stock-based acquisitions would be cheaper.
While Google says it doesn't care about where its stock is on a quarterly basis, its share price equates to real money when making acquisitions.
But with its supposed concern for the little guy, Google's resistance to share splits has been especially puzzling. Google even took the unusual step of going around big Wall Street investment banks and selling its stock on an even footing to individual investors during its high-profile IPO.And other tech companies without any particular admiration for individual investors, such as Microsoft (MSFT), Yahoo! (YHOO) and eBay (EBAY) -- which split its stock six months after its IPO -- have been quick to split their stocks. But as it transforms from a start-up on a mission to a corporate behemoth, Google may be focusing less on the little guy and more on its own interests.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV