By Ron Coates, 23 August 2004 14:00
NEWS Millions of Google shares are poised to hit the market in the next six months and hammer its share price, according to top financial journal Barron's.
The warning comes after the company has been hammered for the low quality of its corporate governance by an influential funds advisor.
Barron's points out that ten times the 25 million shares sold in Google's IPO are held by venture capitalists, which are currently locked in to the shares and unable to sell them. However, the lock-ins typically last only 180 days after an IPO.
Barron's quotes a New York analyst as saying: "There's going to be a big potential to flood the market in Google stock over the next six months right up to Valentine's Day. Common sense tells you that it doesn't bode well for price stability."
This shock may still be in the future but funds adviser Institutional Shareholder Services (ISS) hasn't waited to hammer Google for 21 separate weaknesses in its corporate governance. The advisor says that this gives it a rating of 0.2 out a possible 100 and is the lowest score of any company in the Standard & Poor's 500.
ISS' main complaints are that Google has too few outside directors and a capital structure that gives control to insiders. The advisor is also not keen on the compensation plan that allows the company to re-price stock options if the price falls or the absence of guidelines for stock ownership for executives and independent directors.
In order to post a comment you need to be registered and logged in.
Log in or create your silicon.com account below