Kai Ryssdal: The money factory that is Google reported earnings late yesterday. Almost $2.9 billion in profits.
Admit it: you'd love to get a piece of that action. Own shares of a company whose stock price closed somewhere north of $620 in New York today. Truth is, that's a tad rich for many investors' blood. Which is one reason Google's going to split its stock this summer, in a 2 for 1 deal. That share price will come down.
But Marketplace's Stacey Vanek Smith reports that's not why Google management -- also known as the founders -- decided to do it.
Stacey Vanek Smith: Google’s new shares would be known as "Class C" shares. People who own Google stock would get one additional Class C share for every Class A share they own. But the shares are not created equal.
James Angel teaches finance at Georgetown’s McDonough School of Business.
James Angel: The new shares don’t have any voting rights. So you’re concentrating the voting power even more in the hands of the founders.
Right now, three people at Google control 70 percent of the company’s voting power: founders Sergey Brin and Larry Page and executive chairman Eric Schmidt. They own special shares that have 10 times the voting rights of everybody else’s.
Still, Google has been hiring thousands of people each year and they been getting voting shares. Investors have been buying them -- and all of those votes start to add up.
Danny Sullivan is editor in chief of SearchEngineLand.
Danny Sullivan: If anybody had bought Google stock and didn’t realize that these founders want to do whatever they want with their company, they got a wake-up call.
Welcome to Silicon Valley, says tech analyst Tim Bajarin.
Tim Bajarin: These type of entrepreneurs who have watched their companies grow from zero to these massive forces, feel that they have the best understanding of how to drive the company forward.
Bajarin says we may see the same thing when Facebook goes public later this year. Founder Mark Zuckerberg is expected to remain all-powerful. Google will vote on the measure at a shareholder meeting in June. Though, it’s probably safe to say it’s in the bag.
In New York, I’m Stacey Vanek Smith for Marketplace.