Water Cooler Finance: Google Shakes Things Up

By Erin Joyce | January 24, 2011 AAA
Water Cooler Finance: Google Shakes Things Up

If you're the CEO of a major tech company, you've probably had a lot of things change for you this week. And even if you're not, you'll want to keep an eye on the tech sector, as major changes are happening. In news that affects nearly everyone, Google revealed why your search results might be lacking. (Find out how to protect your personal information from phishers, scammers and thieves. See Tips For Keeping Your Financial Data Safe Online.)

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It's Earnings Time Again
It's earnings season and many companies are coming in with strong growth, even beating analysts' estimates. General Electric (NYSE:GE) reported an earnings beat despite weakness in the energy sector. Continuing operations generated $1 billion in the fourth quarter. Google also reported strong earnings, while Bank of America reported a loss of $1.6 billion, which it blamed on bad mortgages, according to Business Week.

Despite the bank's disappointing news, the markets reacted well to the strong earnings from other players. On Friday morning, the Dow rose 0.6%, as did the Nasdaq composite index. The S&P 500 rose 0.8% to 1,290.

One Gets Sick and Another Steps Aside
It has been an interesting week for some very powerful CEOs, their companies and their shareholders. Apple CEO Steve Jobs has taken a medical leave of absence – not his first one in recent years - but continues to act as CEO when it comes to major decisions. The figurehead of all things Apple underwent surgery in 2004 to remove a cancerous tumor and in 2009, he had a liver transplant.

Turning to another major tech force, Google CEO Eric Schmidt announced on Thursday that he would be stepping aside as CEO, and according to the Wall Street Journal, has filed paperwork to sell 6% of his shares in the company – currently worth about $335 million. This is the first time Schmidt has sold any of his shares in three years.

Schmidt will be replaced by co-founder Larry Page, and Schmidt will assume the position of Executive Chairman. (The successes of these three CEOs can be linked back to one common factor: Customer service. Check out The CEO Dream Team - Walton, Schwab, Marcus And Blank.)

The War on Spam
Speaking of Google, you may have noticed lately that your old search standby isn't turning up the results you're used to. While the search giant remains at the top of the game, the issue of content farms continues to plague the company and its users. Content aggregators are sites which, instead of producing original content themselves, republish content from other sources in the hopes of directing traffic to their own URL.

The goal of Google, and all search engines, is to bring the most relevant content to the user based on their search terms. The better the results, the more users will want to use that search engine, which means more users looking at ads on the site, which of course, translates to dollars for that search company. However, websites want their ranking to be as high as possible on search engines for exactly the same reason – to attract visitors. Unfortunately, there are ways for websites to "trick" search engines into thinking they have the relevant content when they don't.

Google has been at the forefront of weeding out what the Wall Street Journal calls "search spam," which is one of the reasons it is as popular as it is. Of course, it isn't a perfect system, and Google continues to modify its algorithm in an effort to award rankings to the sites that are trustworthy – without leaving out smaller sites which may have relevant content, but lack the depth and optimization for Google to recognize the information.

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The Bottom Line
This time of year is a busy one in the financial sector, so make sure you're watching as earnings beats and misses will be affecting the major indexes and the markets overall. You never know if a correction is looming. As for Google, despite the first drastic change in management since it was a small startup and the criticism for its search engine capabilities, we certainly won't stop relying on the company's products any time soon. (Find out what this winning manager did to grow one of the biggest companies in the world. To learn more, refer to Management Strategies From A Top CEO.)

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