Google Ain’t So Hot

05/18/2011 11:00 am EST

Focus: STOCKS

Jon Markman

Editor, Trader's Advantage

Management’s self-righteous iconoclasm may make Google look good in the media, but it’s time for the Internet search giant to put up the numbers or shut up, says Jon Markman of Trader’s Advantage in this exclusive interview with MoneyShow.com.

Jon, Google is one of the hottest companies out there, doing really, really well—but the stock is off significantly recently. Is it a good time to get in?

Well, it's funny you should say it's one of the hottest companies out there. I don't think it's so hot at all. It creates a lot of buzz for itself, but as far as making money for shareholders—which is the job of a company—it really hasn't been doing very well at all.

And it hasn't been investing very well in its future. Google created the Android operating system for hand-held devices and gives it away for free, which is nice if it was a nonprofit...but it really has not figured out how to monetize its really very nice operating system for mobiles.

What they say is that their Android system is the best for accepting ads on the mobile Internet, which is true, but it hasn't really worked out that way. They may have a lot of growth in hand-held devices, but they're not translating it into money for shareholders.

So why is it that they're not translating it into money for shareholders? What are they not doing?

You know, I think that it's a company that is run by scientists, which is always a problem. Everything looks to them like a science experiment.

They're kind of do-gooders, which is nice if you're investing in a nonprofit, but they talk a lot about doing research for research’s sake, and that's not the reason that people give money to a company. They invest in a company so that it will grow.

Furthermore, the management has been very standoffish toward investors. The new CEO was expected to give a speech to say something about his new tenureship (after taking over from Eric Schmidt) at the last conference call. He got on the call for about 30 seconds, said goodbye, and was off.

They're not really meshing well with Wall Street, and that may make them feel good and it may make them feel as if they're contributing to the world. But, they're not really doing it for shareholders.

You know there's always a lot of talk about Founder's Syndrome, and when they step down or they get too close to their company, you bring in someone like Eric Schmidt. That Eric Schmidt left that position of CEO and Page is back, do you think that that may be part of the problem over there?

Well, you know some founders do incredibly well with their companies. Steve Jobs is a great example with Apple, or Ellison with Oracle. Even Bill Gates with Microsoft. But some founders are just not capable of running a very large company, and I am afraid that Page may be one of them.

Is it because they're too close to it, do you think, or is it just not in their experience?

It may not be in their mental makeup to take the money that's been given to them, trusted with them, by shareholders and use it in a profitable way.

So you would not be a buyer of shares of Google, right now?

I love Google's products. I use a lot of them, but I would not buy the stock at the current price.

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