Is Google Inc (NASDAQ:GOOGL)’s incoming chief financial officer, Ruth Porat, really appropriate for the technology giant?
CNBC’s Joe Kernen and Welch Capital Partners’ Daniel Ernst may have differing ideas. In a discussion on Squawk Box’s Earnings Central, the duo argued whether the executive coming from Morgan Stanley (NYSE:MS) is the right choice for the next Google Inc (NASDAQ:GOOGL) CFO.
It all started with Ernst suggesting that the arrival of Porat may lead to better financial discipline at the Internet juggernaut. This may in turn lead to more shareholder returns, he adds.
“When you layer in that incoming CFO, Ruth Porat, coming from Morgan Stanley, and maybe the potential for increased financial discipline, we can always hope for shareholder returns,” Ernst says, adding that if all of these good news for the company are added together, people may see “an Apple-like rise in sentiment for the stock.”
Ernst says that a couple of years back, Google Inc (NASDAQ:GOOGL) was being praised as the innovative company while Apple Inc. (NASDAQ:AAPL) was expected to struggle after the death of Steve Jobs. All of a sudden, positive sentiment toward Apple returned and part of this is because of shareholder returns, Ernst says.
He notes that in the earnings call before the latest one, Google used the word “shareholder” for the first time and after this they hired Ruth Porat. Patrick Pichette, the current CFO at Google, is expected to leave the company this year or “until such time as Google determines that there has been a smooth transition to the new CFO.”
Kernen, however, made the point that an executive from one of the major financial institutions which nearly collapsed during the latest crisis may not be the best for Google Inc (NASDAQ:GOOGL).
“The financial acumen and the risk taking of the financial sector, which was so aptly demonstrated in the financial crisis, they are bringing that acumen now to Google from Morgan Stanley?” Kernen asks Ernst.
Ernst says that this is a fair point but Google does not have other people’s money. Furthermore, he says that Porat was not in charge of Morgan Stanley in the financial crisis.
Kernen notes, however, that usually, people would not call it a benefit to hire an executive from one of the banks that nearly folded in the recent crisis. He also says that the accounting at a Wall Street firm is different from the accounting inside a company like Google. Kernen even asks whether it is right to “taint” the accounting at Google, before backing off and retracting saying the word “taint” which he jokes is a banned word for the personalities at CNBC.
Boykin Curry’s Eagle Capital Management owned 774,750 Class A Google Inc (NASDAQ:GOOGL) shares by the end of 2014.
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