Google's Long-Term Thinking

I just read a commentary on CBS Marketwatch about Google's IPO quiet period. First, Google shook up the investment world by going public through an auction, effectively shutting out the big institutions from their usual special IPO deals. Now, add another twist to the mix of Google's public life -- they are not going to provide any financial guidance. They will report their earnings and everything else that is required, but they are not going to speculate publicly about their future financial outlook.

The public auction thing was certainly an attention getter. It was rebellious and independent, fitting the Google profile very well. The guidance decision, however, is flat out brilliant. This is a huge step away from conventional wisdom. I always assumed that providing guidance was a legal requirement, not an option. Who knew!?

Refusing to provide future guidance allows Google to operate without much of the baggage that most high-profile public companies carry around. It helps them remain focused on the long term. Stock prices are all about expectations. By not creating them, Google is left to make sound management decisions without having to worry about the consequences of being poor fortune tellers. I love it.