FuckedGoogle

Google jumps the shark: Mad Money interview with Jim Cramer today

Remeber back in February of 2000, when Jim Cramer told everyone on thestreet.com that they MUST own 10 specific dot.com stocks, and nothing else?  They've finally taken down the original article from the site, but you can find plenty of copies all over the interwebs. Like this one.

Basically, that call from Cramer marked the exact top of the entire dot com bubble, and shortly thereafter most of his picks either went bankrupt or fell to penny stock status.

Let's fast forward to today, August 13, 2008.  Eric Schmidt, the guy who rarely if ever gives interviews to anyone, and who has refused since the IPO to give any guidance to the financial community, has decided that today is the day that he will pimp himself and his company on the CNBC show "Mad Money" at 1:30pm eastern.

I haven't seen the show yet, but I'll give you a hint- you'll be able to tell the precise moment when Eric tells a blatant lie: his lips will move.

BTW- I'm sure this desperation move has nothing to do with the fact that Google's stock has lost 39 percent of its value in the last 6 months, and is fast losing engineers and salespeople that were hired in the last 2 years who now realize their GOOG options will never, ever, ever, make them rich like they had dreamed.

That free gourmet cafeteria food just doesn't ease the pain of not being able to unload million dollars worth of stock options you guys were promised when you were hired, does it?

Time for Wall Street's romance with Google to finally end.

My prediction for Google's earnings after the bell today?

A big fat bomb. Why?  Let me count the ways.

1) Last quarter Google's profit growth rate screeched to a near-zero halt, for the first time in its history.

2) If it weren't for a huge collapse in the value of the US dollar, Google's income would have actually SHRUNK by over 200 million dollars, which would have actually been negative growth.

3) The US dollar didn't fall much at all this quarter, so that extra 200 million dollars of currency conversion largesse simply isn't there anymore for Google to goose the books with.

4) USA Today and every other media outlet in the country are reporting advertising sales are down 25 percent or more, with no sign of any recovery.  Just like in the online ad world, the biggest dollar players for print ads are related to housing, cars, and finance- all of which are industries that are taking their worst beating in 70 years.

5) A month or so ago, Google decided to do away with subsidized daycare for their Mountain View employees, about 600 folks, after stringing them along promising that they would never raise the price.  Well, they raised the price to 70 thousand dollars a year, which is more than most of those people make in a year.  The total amount saved by Google wasn't more than 45 million dollars, but apparently Google decided they'd rather kill morale for 600 of their headquarter-based employees with children, than spend that money this quarter.

6) Sergey Brin was quoted on news.com and other sources a few weeks ago as telling several people in a large meeting that he was "Getting fucking tired of people around here thinking they are entitled to free M&Ms and bottled water."

The number one rule that employers learned during the dot.com boom was this: when your company decides they can't afford the free soda in the break room anymore, start polishing up your résumé.

I realize I called for an earnings miss last quarter, but I didn't count on the US dollar conversion helping them beat the numbers.  Unless they've got some new accounting trick up their sleeve, this time they're going down in flames.

Oh, and I almost forgot the most important bullet on that list:

7) George Reyes is no longer the CFO at Google.  He "retired" just days after his uncle at Broadcom was convincted of securities fraud and earnings manipulation.  All the lovely stock market chicanery that George used to help Google beat the street is now gone- this is the first quarter that will be without the guiding hand of his financial engineering prowess.  The new CFO, Patrick Pichette, is extremely unlikely to be willing to put his ass on the line right out of the gate with similar tactics.

Before my big Yahoo post, some more insider gossip:

Not earth shattering, but interesting anyway. To quote an email I recently received:

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Ann Mather is one of the grown-ups associated with Google. They put her on the board to help babysit George Reyes.

That's Google's way of doing things. They use their bizarre, navel-gazing, algorithm-driven and inhumane staffing decisions, then when that inevitably fails (because maybe the person used the wrong word or flow chart in front of the founders when they were in a bad mood) they bring in some super-accomplished, way over-qualified subject matter expert who is supposed to clean up the other person's mess, or to keep that project or area in line. But that never happens fast enough for anyone (like, within two weeks). Then all you have is a massive mound of festering, demoralized Googlers waiting to vest.

You'd be hard-pressed to find anyone at Google, mainly below the VP level, who's been there for more than two years and isn't just waiting to vest and figure out their next move.

SEC files securities fraud charges against Google Board of Directors member

Not that it matters in our current rigged markets, but shortly after this news broke today, Google's stock shot up 20 dollars a share. A week ago Google announced they actually lost money compared to a year ago if not for currency translation, and the stock shot up 100 dollars. I can only imagine how high the stock will go if Larry or Sergey get pulled over for drunk driving in their Tesla roadsters with a dead hooker in the passenger seat. 200 dollars more per share? 300?

Anyway, here's today's news. It turns out that a member of Google's current Board of Directors used to work as the chief financial officer at Pixar, and she's finally getting busted for the outrageous stock-option backdating fraud that she orchestrated during her tenure there. Google sure knows how to hire the right executives for the job! Criminal experience and fraud, that's all we need to hear- you're hired!

Read the full news story here.

The funny part is that Eric Schmidt was doing an entire day-long interview on CNBC today, and not once was this mentioned. All Maria Bartiromo could do was toss softball questions at him and try to contain her orgasms whenever he spoke.

No deal! Microsoft announces they may no longer want Yahoo

Looks like Microsoft has done a 180 degree turn and now say they might be leaning towards backing out of the Yahoo purchase. Here's the Wall Street Journal article.

Look forward to a massive collapse in Yahoo's stock- it was around 19 bucks a share before Microsoft gave them the 31 dollar a share offer.

Jerry Yang- you blew it.

BREAKING NEWS: Department of Justice investigating GOOG/YHOO collaboration:

Apparently the "test" that Google and Yahoo tried a few weeks ago where Google provided the advertising on all of Yahoo's properties has attracted the attention of anti-trust regulators.

More news to come as soon as it crosses the wires. Check back in a few minutes for more info.  GOOG's stock price is plunging as I type this, btw.

EDIT: Here's some more detail.

Without a 400 million dollar investment gain from Alibaba, YHOO was flat.

Yahoo threw the kitchen sink at their earnings, trying to put the best possible light on a bad situation. They even included 400 million dollars of "earnings" from their Alibaba investment, and without that gain they would actually have shown flat to slightly negative earnings growth.

I'm still digging through the wire reports to get more info, but things aren't looking good in Sunnyvale tonight.  It's kind of interesting that Google had the same sort of flat-to-negative earnings this quarter but their stock ran up 25 percent.  Where did Yahoo go wrong? Do they need to hire Frank Quattrone to help put a better spin on lousy earnings?

Even though Yahoo made an outrageous prediction that their yearly revenue was going to increase about 40 percent, it appears that Wall Street isn't buying it.  The stock is down slightly afterhours.

This pretty much ends Yahoo's last gasp to stop Microsoft from buying them in a hostile takeover.  Which is a good thing- because it will mean more competition for Google.

Can Frank Quattrone convince Yahoo to manipulate their earnings?

"Almost-felon" Frank Quattrone's strategy to stop Yahoo from being bought by Microsoft has two parts, or so I've been told:

1) Enact a poison-pill advertising deal between Google and Yahoo so that any purchase would hamstring Microsoft for years to come.

2) Coach Yahoo execs on how to "juice" their earnings numbers today so that they can get the stock to pop to around 40 dollars a share, which would then help them in a proxy fight against Microsoft with their current bid- Yahoo would be able to point to the new "juiced" stock price and tell current shareholders that Microsoft's offer is woefully low.

Considering Steve Ballmer came out today on the newswires to announce that no matter what earnings Yahoo reports today, Microsoft is not going to raise their bid- it's pretty clear that Quattrone's step #2 is already a given and Microsoft knows it.

Jerry Yang had a decision to make- give up and meekly accept the invevitable, or try a last chance manipulation of today's earnings and hope he can get away with it.  I'm betting he's going take the stock manipulation choice.

As a result, I'm buying a boatload of Yahoo calls right now- I think Yahoo's stock is going to have a 10 to 20 percent jump after hours.  They're going to torture their earnings statement, and they're going to proclaim that business has never been better and the company's outlook has never been brighter.  This script has already been written. Jerry Yang really doesn't have any other choice.

There's also the outside chance that Yahoo will announce that Google has offered to buy their company in an all-stock transaction, considering that Quattrone's stock manipulation has added over 40 billion dollars to Google's market cap in the last two days, which amounts to quite a bit more than Microsoft's offer. So they could technically "afford" it.

Even though such a purchase would never pass government scrutiny because of the obvious monopoly implications, the fact is that throwing a higher offer on the table will even further juice Yahoo's stock.  After all, Google recently admitted that they gamed the FCC 700mhz spectrum auction by putting in a shill bid that they never intended to follow through on, just to raise the price that Verizon had to eventually pay and trigger the covenants that would force open access to the spectrum.

Here's what I missed on my short call- Frank Quattrone

So all my insider info about how Google was going to miss this quarter's numbers were rendered worthless at the last moment by the guy pictured on the left.

Frank Quattrone, the man who was behind about 70 percent of the dot.com IPOs in the late 1990s, was recently hired by Google as an advisor to come up with a solution to stop Microsoft's purchase of Yahoo- at any cost. Let me repeat- at ANY COST.

Quattrone was convicted after a series of damaging emails exposing him as a massive criminal were published, and he faced a lengthy prison sentence for his misdeeds.  However, the U.S. Court of Appeals for the Second Circuit overturned his conviction on a technicality related to a mistake made during the trial regarding information presented to jurors.   

This is the guy behind nearly all the 8 trillion dollars of investor money lost in the dot.com collapse, and he made around 150 million dollars per year for his effort. Nice work if you can get it, eh?

BTW- not a single person has ever gone to jail for any fraud committed during the dot.com mania. Zero. Even though criminal activity among CEOs, brokers, analysts, and bankers was widely known and exposed, amazingly there has never been a single conviction.  Every case was settled out of court without ever admitting guilt, even when the evidence was glaringly obvious.  Quattrone came the closest of anyone to actually getting the handcuffs, but his estimated 1.2 billion dollar net net worth managed to "buy" his freedom.   Now that his prison risk has passed, he started a new "banking advisory" firm called Qatalyst Group less than one month ago.

My tipsters have told me that he has been given basically absolute power at Google for any matters relating to Microsoft or Yahoo, on an "off the books" basis.  The recent accounting shenanigans with Google's quarterly earnings were under his direction. Quattrone practically invented creative accounting during the dot.com boom.

And here's the kicker- Yahoo has been given the same advice from him, according to my sources.  Look for Yahoo to "beat" their estimates by reducing their tax rates and slinging everything possible into the "one time expense" column that they can.

All of which is upsetting, since my old company actually did business with Yahoo a decade ago and Jerry Yang seemed like an upright guy when I spoke with him.  I guess desperation will make anyone do crazy things.  I would recommend going long YHOO calls before earnings because I've been told Quattrone's strategy consists of two things: pumping Yahoo's stock up far above Microsoft's offer price, hopefully in a dramatic 20 percent way like he did with Google, and the previously announced poison-pill deal for Google to take over Yahoo's search business thus making Microsoft's acquisition pointless no matter what the price.

More news sources dig into Google's bogus quarterly results

My assertion abut Google's fraud is being picked up by more and more news sources. You may dismiss my opinion as pure anti-Google sentiment, but the truth is getting out there and other "mainstream" media is reporting on it. You can't stop the signal, Mal.

Joining the party is today's story from TheStreet.com.  Read it for yourself.

Google was at 450 the day they announced their "earnings" and promptly skyrocketed up 90 dollars a share.  The only problem is that the earnings were entirely ficticious, based on currency translation and Google's arbitrary adjustment of their tax rate. To simplify the tax rate issue, Google is basically free to pick and choose whatever income tax rate they want, as long as they average out the number over the course of a year to come to the actual legal rate.  Google decided to slash their reported tax rate in the first quarter in order to avoid showing a first-ever yearly decline in profit.  The only problem is that the trick can't work all year- eventually they have to raise that tax rate unless they want to be prosecuted for tax fraud. Considering Google's growth has now literally STOPPED, we should see the stock below its Friday 450 level once enough people realize what is really going on.

Here's the blurb from TheStreet.com:

Consider the euphoric reaction to   Google's earnings after the market closed on Thursday, which seemed to be the proximate cause of Friday's market celebration. If I remember correctly, Google missed the previous quarter, estimates were cut several times during the most recently reported quarter, and the company only delivered on the original forecast. On top of which, Google's results showed another deceleration in its growth rate (especially of a domestic kind), and the company's earnings quality, as chronicled by Bill Fleckenstein below, might be an issue for analytical discussion in the weeks ahead:

"Google helped ignite an explosive party as it managed to win at 'beat the number,' as expectations had been lowered. And then, Google dropped its tax rate about 4 points, which wound up creating the illusion that the company experienced a spectacular quarter.... Google's earnings results, even with the tax-rate fiddle, were about where expectations had been set initially. Meanwhile, Google experienced a total collapse in its revenue growth rate. So, all in all, it was really much ado about not much."

Even Valleywag now agrees- Google's earnings this quarter were a scam:

It's pretty sad that only three online blogs/newspapers have had the cojones to report on this, but the word is spreading nonetheless.  Besides Bloomberg yesterday, then FG, it seems Valleywag sniffed out the story today too. In a nutshell: Google would have missed even their lowered estimates if not for a last-minute collapse in the value of the US dollar.  Google literally had no growth in income last quarter. None. They had a decline- for the first time in the history of their company.

But Eric Schmidt and especially George Reyes (Google's Chief Financial Officer) managed to spin this quarter as the best in the company's history, and it resulted in the single largest one-day market cap increase of any company in the history of the Nasdaq or NYSE- over 29 billion dollars.  CNBC has mentioned the word "Google" roughly every 3 seconds today, saying it has single-handedly ended the recession, cured cancer, started world peace, and put a chicken in every pot. 

BTW- this is the last quarter that George Reyes will be at Google, he is leaving to "spend more time with his family" ..  I guess that doesn't include spending time with Gregory Reyes, his uncle who is now serving prison time for securities fraud after getting busted at Brocade for misleading Wall Street about earnings.  Hmm.. I'm sure there's no common theme in that family. Although I do predict George will be taking a flight to a country in Latin America with no extradition treaty to the USA in the very near future.

Google's entire net income gain due to one-time currency translations

Yep.  Read the news at Bloomberg. I wonder how long it'll take Squawk Box and the CNBC crowd to start reporting the actual news?

Net income at Google rose to 1.31 billion, from 1 billion a year earlier, the California-based company said today in a statement.  A rise in the value of overseas currencies helped boost international sales. Without the change in currency rates, net income would have been 202 million lower, Google said.

"I don't think that kind of foreign currency benefit was expected," said Jane Snorek, who helps manage more than $70 billion in assets at First American Funds in Minneapolis.

Google also announced that the number of clicks on advertisements had increased 20 percent this quarter, which is down from 52 percent growth last quarter- the steepest drop in the company's history.

Without the currency translation benefits (basically the US dollar collapsing) Google would have shown almost flat year-over-year income growth; hardly the kind of performance that warranted today's afterhours gain of 24 billion dollars in market cap.

Everybody short Google! (or buy puts)

Don't use rent or food money, but if you're in the markets at all and have some extra cash lying around you should be very happy by 5pm eastern today.

EDIT: A very interesting prediction was just made in the comment section.

Marissa Mayer inside dirt

I shall now quote from another anonymous contributor:

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Marissa Mayer is despised and feared by most people at Google, but people want to be invited to her parties, so they're not honest to her face.

She is incredibly smart and talented, but is blinded to distraction by her outrageous ambition and need for constant celebrity. It's amazing that she gets any Google work done for the amount of time she spends cultivating her personal image.

She's a shameless social climber who only gives the time of day to people who can get her somewhere. A person can go from being a nonentity to her best friend in a matter of moments if Marissa finds out that they are highly placed, or can help get her a higher social standing.

Though she's an extremely attractive woman, she has no sense of style, and recommendations from publicists and stylists to update her wardrobe, even for one photo shoot or TV appearance, go completely ignored (or not grasped).

In 2006, she appeared on the cover of Newsweek with Queen Latifah and Maria Menounos. She lobbied hard to get that cover and has frequently angered other female Google executives who are just as high up and have worked just as hard at the company.

The PR team at Google has given up on trying to control her, as they have no power over her and have no energy to fight against the leagues of senior executives like Larry, Sergey and Eric who are equally fearful of her.

Don't be surprised if you see Marissa leave Google some day and become CEO of her own company on the heels of all the publicity she's getting for herself.

Let the insider dirt-dishing begin!

Sorry if these posts are long- I'm just going to post them verbatim.  I cannot verify any of the info contained in these emails, but they sound sufficiently pissed off to be real. One thing I would mention, if you're leaking info to me, do it in a way that you cannot be identified and/or get fired over. Say a conversation happened between you and *one* other Google exec, and you post the details, they're gonna know who you are. Be careful with the identifiable tips unless you already found a new job, folks.

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Hi, I work at GOOG and thought the world should know the following:

All the press surrounding the amazing perks at GOOG is bullshit. Seriously, you can't really take advantage

of the free food, massages, etc. because it just looks bad (and no one who is taken seriously at the company

actually has any free time).

90% of the people eat at their desk and it's not an enjoyable experience.

The massages are booked months in advance and even then, you're likely to have something come up

last minute- meeting, etc, that interferes with it.

Management sucks. You have to worry when top flight execs start leaving- Sheryl Sandberg (Harvard MBA, amazing resume, etc) is amazing and talented. If GOOG was the #1 place to be, she wouldn't budge. She knows what she's doing and she got out. FAST. Because the place is going UNDERWATER.

Douglas Merrill also left the coup- Another bright, intelligent (PHd from Princeton) guy.

Things change so fast, there is no value invested in new hires, particularly in Product Management and AdWords....

it's so bad that they've started a DILBERT series...meetings every month of how we can avoid becoming a Dilbert like workplace.

DILBERT and GOOGLE shouldn't even be placed in the same sentence. Yet, they are.

How about that Fortune magazine?

It seems like Fortune magazine is more concerned with overall performance than what it's actually like to work there.

Also, Hilary Jensen, Mike Miller & Tracy Lee-Blumberg (managers in OSO) are evil.

Mike Miller- Plays favorites. Says 'hi' to only a select few people that he likes. He manages a team of 40 but actually only talks to 5 or 6 of them. His direct reports can't say anything because they can't afford to get on his bad side... (which would mean a bad performance review since Mike can't take criticism.)

He's also a little troll at about 5' 2" and a crazy receding hair line.

Hillary Jensen has no ethics or morals. She will ask someone to dish dirt on someone else just to find out information. In what business setting is this an appropriate method? Her direct reports loathe her. They don't trust her.

Hillary happened to learn everything she knows from Tracy Lee-Blumberg, another twisted manager in OSO that no one trusts. How she got to associate manager position is unimaginable. She stomped over many people and made a lot of enemies.

If you don't share her fake attitude of "cheerleaderism" (She's like one of the girls from the Hills- "Hi Hi Hi !!! Like OMG, Oh, i KNOOOW)... then she will cut you down.

GOOG was a cool place to work in 2004, even 2005. Now, management is leaving, perks are not being enjoyed, and people are looking for a way out.

Plus, it doesn't seem fair to lure lots of promising new grads to the west coast to start a new life in SF or Mountain View, commute to MV and work for a "great" organization, when the reality is so far from the truth.

Unless you're on the Exec. Committee, you're doing General Support- answering emails, on the phones, etc.

Because that's what Google is...a search engine that needs general support - clients with questions about their bloggers,adwords accounts, gmail, gcalendar, etc etc.

Google begins massive layoffs

The site has been down for a while, because there was't really any news that was different from what I've been reporting for the last four years.  Advertisers defecting, declining growth, etc, it was all pretty obvious to anyone who read the papers. Google's stock has fallen from 759 to 455 in just three months, which is a decline of 40 percent. Ouch.

There are now thousands of new hires at Google that have stock options that are completely underwater and will never be worth a dime. I'm sure it was just lucky timing that existing insiders have sold 19 billion dollars worth of GOOG shares already.

To rub salt in the wound, lately comScore has been reporting that Google's clickthrough rate has dropped about 10 percent year-over-year, while analysts are continuing to value the company as if their ad clickthrough rate is still going up 40 percent per year. Which it clearly isn't anymore.

And the coup de grace came out today: Google has started their first wave of layoffs.  According to SFGate, they're starting with 300 people from the DoubleClick merger. Additionally, for the first time in the company's history, they've stated they're going to have a freeze on all hiring- apparently 16,000 employees is just too much, especially when the advertising industry announced that sales are down over 50 percent in the last 2 months, due in large part to the collapse of the housing bubble.

In case you aren't a SEO specialist, you might not be aware that mortgage companies accounted for nearly 60 percent of Google's advertising revenue for the last four years.  The next quarter is going to be a disaster for Google.

With all this bullshit going on, I finally have a good stream of pissed-off Google employees feeding me information so you guys can look forward to lots of valleywag-style dirt in the coming days.

Yes, I'm back. I am become death, destroyer of worlds. (with regards to Oppenheimer)

There's nothing like a bunch of angry ex-employees to dish damaging dirt anonymously.