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May 10, 2006

Google's Executives Sell Stocks. A Lot

San Francisco Chronicle found out that Google's executives sold a lot of stocks:
California took in a record $11.3 billion in personal income tax receipts in April, $4.3 billion more than it collected last April. It's almost certain that a significant chunk of April's haul came from Google employees -- perhaps one-eighth or more of the tax receipt gain.

Fourteen of Google's top executives and directors sold $4.4 billion worth of stock last year, according to Thomson Financial. That includes founders Sergey Brin and Larry Page, each of whom sold about $1.3 billion worth of stock.

In 2005, officers, directors and other insiders at the largest 200 publicly held companies in the Bay Area sold a total of $9.6 billion in stock, up from $7 billion in 2004, according to Thomson Financial. Google alone accounted for almost half of the 2005 total.

Rondam Ramblings, an ex-Google employee, made an interesting point some time ago about Google stocks:

"Nonetheless, it has always been a bit of a mystery to me why anyone bought Google's stock, let alone paid $470 a share for it not so long ago. [...] Google has explicitly stated that it will never pay dividends. They have explicitly said that they will offer no guidance to investors. Their stock structure is such that even if you bought every single publicly traded share of Google stock, Larry and Sergey would still control the company because their privately held stock has ten times as many votes as your publicly traded shares. So there is no hope that your shares will ever be of value to someone attempting a hostile takeover of Google."

Is this a sign that GOOG's value is inflated and that will soon fall?