SAS 99 Memo for Google

Contained herein is the SAS 99 for Google (GOOG). Several footsteps of immanent pseudo in the company will be discussed in subsequent sections of this memo. Fist will be a comp atomic number 18 of income information with that of competition, especially Yahoo and Microsoft.The second measure to be investigated is that of allowance of company executives using stress options. Third measure will read the connection between senior management and circuit card of directors, whereas the fourth measure intends to answer the question whether the companys gunstock is overvalued.Google is the youngest of the three major Inter clams attempt engine and online communication providers. However, this rude(a) entrant to the industry is rapidly get a trend setter for its older rivals. the same is happening with net income, although it may take few more years before Google reaches Microsofts multimillion one dollar bill profits.According to EDGAR reports by the Securities and Exchange Comm ission (SEC), Googles 2007 profits stood at $ 4.2 gazillion compared to 3.1 billion in 2006 and 1.5 billion in 2005.As this report indicates, the companys profits have been acclivity steadily since it was listed at the NYSE. The positiveness is echoed by the ever emanation popularity of Googles products. In the same period, Yahoos profits stood at 800 million in 2005, 1.9 billion in 2006 and 750 million in 2005.Yahoos profits have been cyclical despite the rising usage of Internet worldwide. Microsoft, the other market participant that competes with Google and Yahoo make $ 12.2 billion in 2005, 12.6 billion in 2006 and 10 billion in 2007.From the three companies, it is clear that only Googles profitability has been on rising outpouring compared to its competitors. The continuation of this trend, buoyed by ever increase demand for company products and services. Having illustrated profitability between Google and its competitors, the subsequent sections of the memo shall address investigates probability fraud in the company.With regard to the non financial measures, Google has been steadily increasing the round of employees to cater for the increasing demand for its products and services. Considering Google is a growth company, it has been undertaking aggressive development of new products, which increases the demand for more employees.This explains the rising employee expenses in the companys balance sheetthe expenses arise from 266 million in 2006 to 2007 million in 2007. Microsofts employee compensation expense increase from $ 1.9 billion in 2006 to $2.3 in 2007. The doubling of Googles employee compensation is due to the feature that the company on its growth stage whereas Microsoft seems to be reaching maturity date stage.Compared with profitability of the company, it is clear that increasing labour force has been paying absent in both short and great run life of the company. In addition to the regular salaries provided to employees, some members of the labour force, especially executives and members of the board of directors value from being compensated through stock options. In the 2007 financial year of $ 137.2 million stock options were exercised by respective employees and board members.At the same period, Yahoos stock options were valued at $ 108 million and that of Microsoft at $ 819 million. Microsofts large amount is occasioned by the large size of the company, which means that there is a greater effect of employees taking part. As for Google, the number is in no way exhibit fraud indications, compared to the rest.Most of Googles 1998 founders are still very much involved in the day to day running of company activities. Indeed, a good number of them serve in both executive positions and at the board of directors. For instance, Eric Scmidt has for long continued to serve as the Chief Executive Officer and chairman of the companys get along with of Director he has occupied both positions since 2001.The same happe ns with Sergy Brin who serves the executive position of Technology President and as member in the board of directors. The other founder is Larry Page who serves as President of Products and as a member in the Board of Directors.This is a far shift from the practise in rest of Googles competitors none between Microsofts and Yahoos executives serve in the Board of Directors. In this regard, Google executives are more likely to participate in fraud compared to those of Microsoft and Yahoo.Last is the measure on whether Googles shares are overvalued in the stock market. As of Friday, June 6, 2008, Googles stock was trading at $ 567, compared to Yahoos $ 26 and Microsofts $ 27. 49.The higher price paid on company stock develops from fact that Google is poised to in crease its agency in the industry and thus led to better return on investment. this is an indication the stock is not over valued at all. Investors are therefore eager and willing to make a bet on Googles shares. Considering the analysis above, it is hereby observer that Google far from being prone to internal fraud.Works CitedSEC. Securities Fillings and Forms. Securities and Exchange Commission. 8 June, 2008,