Google’s Eric Schmidt to dump 3.2 million shares, roughly 42% of GOOG stake

“Google Inc Executive Chairman Eric Schmidt is selling roughly 42 percent of his stake in the Internet search company, a move that could potentially net the former chief executive a $2.51 billion windfall,” Alexei Oreskovic reports for Reuters.

“Schmidt, 57, will sell 3.2 million shares of Class A common stock through a stock trading plan, Google said in a filing with the U.S. Securities and Exchange Commission on Friday.,” Oreskovic reports. “The plan, which Google said would give Schmidt ‘individual asset diversification and liquidity,’ allows Schmidt to spread trades out over a period of one year to reduce the market impact.”

Oreskovic reports, “A Google spokeswoman would not comment on why Schmidt is selling the shares at this time. Wedbush Securities analyst James Dix said Schmidt’s stock sales did not worry him or signal a loss of confidence in the company by Schmidt. ‘I’d be more worried if the current CEO or CFO sold a lot of their stake,’ said Dix.”

“The fact that Schmidt will still own a significant amount of shares after the sales means he’ll have a good deal of ‘skin in the Google game,’ said Needham & Co analyst Kerry Rice. But he said it could hint at Schmidt playing a less central role within the company going forward,” Oreskovic reports. “‘My speculation is that Eric’s relationship with Google is evolving,’ said Rice. ‘I would assume that as he decides he wants to diversify away from Google – both his career and financially – he’s got ideas of what he would like to do with some of his funds.'”

Read more in the full article here.

MacDailyNews Take: Tunnel building?

[Thanks to MacDailyNews Reader “Arline M.” for the heads up.]

50 Comments

  1. “Wedbush Securities analyst James Dix said Schmidt’s stock sales did not worry him or signal a loss of confidence in the company by Schmidt. ‘I’d be more worried if the current CEO or CFO sold a lot of their stake,’ said Dix.”

    “The fact that Schmidt will still own a significant amount of shares after the sales means he’ll have a good deal of ‘skin in the Google game,’ said Needham & Co analyst Kerry Rice.”

    Whistling past the graveyard? Both these statements sound like damage control to me. This is not a routine portfolio management sale, as has occurred with some Apple execs in the past. Schmidt is bailing. Google’s numbers have been softening and they avoid talking about the precipitous drop in advertising rates as the search business goes mobile. This may signal the beginning of the pending Google implosion, and it might take Amazon with it.

      1. Even Apple suffered in the last tech bubble, though it deserved no punishment at all at the time. I think if Google finally admits the true scope of its problems it will have a cascading effect, just like last time.

        1. I still don’t see how it could take Amazon down. Sure, it might affect their stock price, but if Google were to “implode”, Amazon has a considerable revenue stream that is not dependent on Amazon at all. Here are some reasons that Google may not implode at all (or, at least, why it would be a very slow implosion):

          1) Google Fiber – Google’s most intelligent foray into a new market since email. By laying the groundwork for the nation’s eventual fiber backbone, Google can guarantee profitability until the next high-speed networking revolution. By being the nation’s ISP, or by leasing the fiber to other ISPs, Google can make a decent penny (and probably gather a fair deal of marketing info, as well). However, this assumes that they can build out the network fast enough, as it’s expensive to build and the ROI is not immediate.

          2) Google’s got a LOT of services, but the only one that makes them any money at the moment is advertising. If they can survive long enough to turn a profit on their fiber initiative, they can continue to provide many of their services for free. However, they are also capable of monetizing some or all of their services to some extent to slow the implosion.

          As for Amazon, however, they are currently dependent on Google’s Android for the Kindle Fire line. If Google goes down, that will actually be a GOOD thing for Amazon. Amazon could simply fork Android (which is, essentially, what they’ve already done, though some argue that point) and continue developing it themselves. Amazon or Samsung could end up in a bidding war for it if Google decided to sell it, but they might both be better off forking it and letting it die on the vine, especially as they could both develop new features for it that wouldn’t have to be committed back due to the terms of the Android license.

          Plus, no matter what Amazon does, they can always stop trying to enter new markets for a time and build up cash. Their profit margins are thinner than Apple’s, but they can certainly stockpile some cash for a time before resuming their insane attempts at entering new markets and losing money like crazy (all while having money thrown at them by investors).

          1. Last time the bubble burst it was just a company or two that had major problems, but it forced selling of other stocks to cover losses, and the general mood of the market in tech changed from wild optimism to gloom and doom. This affected even companies that are alive and thriving today.

            As to Google’s fiber network investments, fiber will be obsolete within a few years, unless Google is successful in their attempts to freeze current technology through regulation and lobbying so that they can control the “pipes” nationwide.

            Google has Apple to contend with. I don’t believe that people at Apple didn’t understand Google’s intentions to control the internet and have a plan to thwart that aim. The biggest thorn in Apple’s side right now is not content providers, but the monopolies that have been allowed to develop on connectivity and ISP services. I believe Apple has a solution in mind, and I believe that is one reason for the current cash hoard.

            1. What will replace fiber? Even wireless data needs physical cabling to get from tower to server and back again. We’re running out of cabling options to increase speeds. Fiber is already the backbone of our entire Internet. It uses light. You can’t get faster than that.

              I agree that Apple likely has a plan to prevent Google from gaining control entirely, but I don’t believe they were prescient and predicted Google’s foray into the pipe-laying business. I would love to be proven wrong, but I think, if anything, Apple is betting on Google becoming the nation’s Internet skeleton and leasing pipe to other ISPs. They’ll collect a nice, safe profit for many years, but they won’t have anywhere else to go, and they won’t be competitive in emerging markets.

              Personally, I think that if Apple has a super-secret plan for that cash hoard, it’s to get in on the ground floor of the next major wireless technology so that they can cut out the carriers entirely and begin selling the iPhone directly to the people as their own carrier. Either that, or they’re hoping to use it to rapidly R&D, prototype, and deploy the next brilliant idea that comes to them.

            2. Oh, and as for the bubble burst, even if investors sold Amazon stock, it wouldn’t bring the company down. Amazon’s got the money to cover their losses for a time and they still have plenty of solidly profitable markets.

              The Kindle Fire line might die an ignoble death, and that’s all well and good, but Amazon will just continue selling you stuff you don’t want to drive to Wal-Mart to buy and operate as normal.

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