(By Paul Tracy) Google
(GOOG) is included on my list of the "10 Best Stocks to Hold Forever". It is one of the most dominant companies on the planet.
controls an estimated 45% share of the online advertising market -- in
addition to its dominant position in online search, email, and mapping
Google seemingly has its hands in every aspect of the web, but it's the
company's advertising platform that makes it one of the most profitable
firms I've ever seen.
In 2011, Google earned $37.9 billion in
revenue, of which $24.7 billion turned into gross profit, for a margin
of 65%. That profit is one reason the company now carries a cash
stockpile of more than $50 billion -- or a staggering $154 per share.
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quarterly results show just how much more growth there is in the future
for Google. Despite being a $200 billion company, it was able to grow
revenue 24% year-over-year and net income rose 61%.
Google also recently announced a 2-for-1 stock split... with a twist. It
plans to issue a new class of stock that will trade under a different
ticker symbol. Every investor will receive one share of this new class
of stock for every share of GOOG they currently own.
if you own Google's stock, then you can expect the share price to be
half as much after the split, but you'll own twice the number of shares
(as of now, no date for the split has been set).
But there is a
big difference with this new class of shares -- they carry no voting
rights like the traditional common shares do.
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Google is not
hiding the reason behind this. In a statement, the company's founders
made it clear they want to ensure they maintain power over the company's
voting rights, effectively removing themselves from the outside
influence of activist shareholders.
I believe public companies
have an obligation to put their investors first. At first glance,
Google's stock split appears to go against that belief.
Google's co-founders, Larry Page and Sergey Brin, and its Executive
Chairman Eric Schmidt, already control a majority of the company's
voting. In effect, the split will change nothing right now in respect to
Action to Take --> Google continues to dominate
the fast-growing Internet advertising field and continues to grow
quickly despite its size.
Given that the unusual share split
doesn't change the fact that company leadership already holds a majority
of the voting power, I still believe the stock is a great long-term