Earlier this week, long-time Wall Streeter Ruth Porat ditched New York City for Silicon Valley, leaving her CFO spot at Morgan Stanley to take the same position at Google.
Bank of America Merrill Lynch analysts approved of the move in a new note this Wednesday.
“[She] seems well prepared for the job, although the cultural change at Google will be substantial (perhaps Google has incentive to cooperate more with the street),” analysts write.
They hope that having one of their kind within the tech giant will lead to some positive changes within Google.
From the note, here are all the changes Bank of America Merrill Lynch wants Google to consider:
- More forward guidance. “Providing forward guidance for non-operational items like tax rate and potential impact from FX”
- Tightening stock grants to employees. “Reversing the negative trend of growing stock based compensation as a per cent of revenue (yes, many companies have growing SBC expense, but SBC is a real cost and it seems odd that SBC is deleveraging at this stage in Google’s lifecycle)”
- More insight into products like YouTube. “Revisiting financial reporting lines and disclosures so investors have a better picture of the health of the search business (YouTube is not unknown to competitors and could be contributing close to 10% of gross revenues in 2015, we think it’s time to disclose)”
- More insight into returning money to shareholders. “Providing regular updates on Google capital return outlook.”
Analysts also said they were pleased to see the word “discipline” crop up in Google’s announcement of the news. In its press release, Google wrote that with Porat’s leadership it would “invest in a thoughtful, disciplined way in our next generation of big bets.”
As Google’s search growth has slowed, investors have been wary about Google’s big investments in futuristic technologies like internet-bearing balloon and glucose-sensing contacts that won’t be money-makers any time soon, if ever. Analysts hope that the continued emphasis on discipline (which Google also mentioned in its Q4 earnings call) means that the company won’t make quite as many investments in 2015 as it did in 2014, to “maintain at least 10% earnings growth.”
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