Thu, Oct. 22, 5:37 PM
Thu, Oct. 22, 5:18 PM
- Seven months after naming Ruth Porat its CFO, Google/Alphabet (GOOG, GOOGL) is ready to begin returning capital. A $5B buyback, good for repurchasing ~1% of shares, has been launched. The buyback covers the non-voting Class C shares (NASDAQ:GOOG).
- Google had $72.8B in cash/marketable securities at the end of Q3, and just $5.2B in debt. However, much of the cash is offshore.
- On the earnings call (live blog), management has talked up YouTube ad growth, and suggested it has much to do with both Google's strong paid click growth and declining cost per click. The remarks come a day after a $10/month ad-free YouTube/Google Music service was unveiled.
- New Google CEO Sundar Pichai states Google has indexed over 100B deep links within 3rd-party apps, as it tries to head off the threat posed by mobile users bypassing search in favor of going directly to apps. 40% of mobile searches now have in-app results within their top 5 results.
- Pichai reiterates mobile now accounts for over 50% of searches. He also notes over 20M Chromecast devices have been sold to date.
- GOOG +11.1% after hours. GOOGL +9.6%. Both share classes have made fresh highs.
- Q3 results, details
Thu, Oct. 22, 4:27 PM
- Google/Alphabet's (GOOG, GOOGL) paid clicks rose 6% Q/Q and 23% Y/Y in Q3, after having grown 18% in Q2 and 13% in Q1. Clicks on Google sites (boosted by YouTube and mobile search) rose 7% Q/Q and 35% Y/Y. Clicks on partner sites (hurt by quality control efforts and competition) were flat Q/Q and down 5% Y/Y.
- Ad prices: Cost per click (CPC - hurt by relatively low smartphone ad prices and YouTube growth) remained under pressure, dropping 1% Q/Q and 11% Y/Y. Google site CPC -2% Q/Q and -16% Y/Y; partner CPC +1% Q/Q and -4% Y/Y.
- Segment/regional performance: Ad revenue from Google sites +6% Q/Q and +16% Y/Y to $13.1B. Partner site ad revenue +2% Q/Q and +4% Y/Y to $3.7B. Other revenue (Google Play, Nexus hardware, Nest, Fiber, etc.) +11% Q/Q and Y/Y to $1.9B. The U.S. was 47% of revenue, up from 44% a year ago; the U.K. remained 10% of revenue.
- Forex/TAC: A strong dollar had an 8% impact on revenue growth (+13% vs. +21%). $286M worth of forex hedging gains were recorded. Traffic acquisition costs were 21.3% of revenue vs. 21.1% in Q2 and 22.6% a year ago.
- Financials: Non-GAAP cost of revenue fell to 36% of revenue from 37% a year ago. Operating expenses remained 31% of revenue - R&D was 13%, sales/marketing 11%, and G&A 7%. Capex fell slightly Y/Y to $2.37B, and free cash flow totaled $3.63B (below net income of $5.1B). The effective tax rate was only 19%, down from 24% a year ago.
- GOOG +9.9% after hours to $716.00. GOOGL +8.2% to $737.07.
- Q3 results, PR, slides (.pdf)
Thu, Oct. 22, 4:05 PM
Wed, Oct. 21, 5:35 PM
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Wed, Oct. 21, 1:27 PM
- YouTube Red, the online video giant's anticipated subscription service, provides ad-free access to YouTube's video library (including music videos), as well as offline downloads. It also includes a subscription to the Google Play Music streaming/offline download service, and supports the newly-launched YouTube Gaming service. The service becomes available on Oct. 28 in the U.S., and will soon afterwards launch globally
- Red's pricing is bound to draw attention - it's on par with what Spotify, Apple, and others charge for standalone music streaming services - and raises the question of whether Google (GOOG -0.7%) is choosing to absorb near-term losses on the service for the sake of subscriber growth. Google is giving content providers a 55% aggregate subscription revenue cut (on par with their standard ad revenue cut), and also has to pay music licensing fees.
- YouTube has 1B+ monthly active users to cross-sell the service to. Over half the platform's video views now come from mobile devices, and the average mobile viewing session has grown to more than 40 minutes. 80% of views come from outside the U.S.
- Re/code has reported YouTube plans to make some of the original content it has financed available only to subscribers. No word yet on whether YouTube will also begin providing licensed material from 3rd-party studios - a move that would put Red into more direct competition with the likes of Netflix, Amazon, and Hulu.
- Update: In remarks to The Verge, YouTube exec Robert Kyncl suggests his company won't go after the same premium content as Netflix or Hulu. "To us what is important is we are not doing what everyone else is doing, competing for the same sources of material, the same creative elements. We are looking for people who are proven to work really well on our platform."
- Update 2: YouTube has provided a list of original series' exclusive to Red.
Tue, Oct. 20, 4:27 PM
- Google (NASDAQ:GOOG) will provide Yahoo (NASDAQ:YHOO) with Web and image search services, as well as search ads via its AdSense for Search (AFS) platform (allows a custom Google-powered search engine to be provided). The deal covers both PCs and mobile devices, and will apply to Yahoo proprieties and affiliate sites in the U.S., Canada, and various Asian, African, and Latin American markets (but apparently not Europe, where regulators have been closely probing Google). (8-K filing)
- Google will "pay Yahoo a percentage of the gross revenues from AFS ads displayed on Yahoo Properties or Affiliate Sites," with the exact figure varying based on geography and platform. Yahoo will pay fees for Web and image search results. Yahoo "has discretion to select which search queries to send to Google and is not obligated to send any minimum number of search queries."
- The deal, which could raise some eyebrows among regulators given Google's search dominance, follows an April restructuring of Yahoo's search pact with Microsoft/Bing (NASDAQ:MSFT) that made the alliance non-exclusive on both PCs and mobile. The revised deal still requires 51% of Yahoo's PC search traffic to carry Bing results and ads.
- comScore estimates Yahoo had a 12.7% September PC search share in the U.S. (still by far the world's biggest ad market). Google's share is pegged at 63.8%, and Microsoft's at 20.6%. StatCounter estimates Yahoo's U.S. mobile/tablet search share is at 6.8%, and Google's at 88.4%.
- YHOO -0.6% after hours after disclosing the deal in tandem with a Q3 miss. GOOG is flat. There was already speculation a deal could happen, given Yahoo has been testing Google-powered results.
- Update: Some more details: The deal lasts through 2018, and Yahoo and Google are delaying its U.S. implementation to give the DOJ time to review.
Mon, Oct. 19, 7:01 PM
- Johnson & Johnson chairman Sandra Peterson and former Cisco CTO/chief strategy officer Padmasree Warrior will stand for election to Microsoft's (NASDAQ:MSFT) board at the company's Dec. 2 annual meeting. Concurrently, Microsoft states Harvey Mudd College president Maria Klawe won't stand for re-election.
- Assuming they're elected, Peterson and Warrior will increase the board's size to 11. In addition to Klawe, Bill Gates, and Satya Nadella, current members include John Thompson (chairman), Dick's Sporting Goods CFO Teri List-Stoll, former BofA vice chairman Charles Noski, former BMW chairman Helmut Panke, Visa CEO Charles Scharf, Trilogy Equity chairman John Stanton, and ValueAct Capital president G. Mason Morfit.
- In other news, Google (GOOG, GOOGL) is making a fresh attempt to get Microsoft Office subs to defect to Google Apps. The Web giant promises not to charge subscription fees to business clients until their existing enterprise agreement for Office or another rival solution runs out, and to pay up to $25 per user to help cover deployment costs.
- Microsoft, aided by its support for on-premise apps to go with cloud and mobile apps, has thus far done a decent job of keeping Google Apps at bay in spite of Apps' aggressive pricing ($50-$120 per user per year). Office 365 consumer subs totaled 15.2M at the end of the June quarter; commercial subs haven't been broken out.
- FQ1 results arrive on Thursday afternoon.
Mon, Oct. 19, 5:52 PM
- Deutsche Telekom (OTCQX:DTEGY) is said to be close to filing a formal complaint against Google (GOOG, GOOGL) in Europe's antitrust investigation into the Android OS, The New York Times reports.
- The German telecom had filed a complaint more than a year ago when the EC was looking into Google's Web search; now, a formal complaint in this second probe could bring a wealth of data covering which services tens of millions of users access on their smartphones, and steer an EC decision on formal charges.
- Deutsche Telekom's complaint could be filed by early November, sources said, and it focuses on whether Google is unfairly promoting its own service, like Maps or Search, via Android.
- Separately, Russia has given Google until Nov. 18 to stop what it calls unfair bundling of its mobile service with Android or face fines.
- The European probe into Google's Web search is also likely to move forward this week.
Fri, Oct. 16, 7:19 PM
- Despite some initial hesitation, media companies are starting to sign on to a planned YouTube service that lets consumers watch videos ad-free.
- Firms including Turner Broadcasting (NYSE:TWX), Fox Sports (FOX, FOXA), A&E (NYSE:DIS), and NBCUniversal (NASDAQ:CMCSA) are going along, The Wall Street Journal reports. They stand to gain about 55% of overall subscription revenue for their agreement, apportioned by time spent on the videos.
- YouTube is hoping to launch the service soon at around $10/month. Google (GOOG, GOOGL) had confirmed in the spring that it was bringing an ad-free YouTube out, likely before year-end.
- Some of the companies kicked at first, arguing for disproportionate share compared to smaller YouTube creators, but YouTube is managing to keep the revenue split terms intact so far. Other companies continue to negotiate the terms of joining up.
Thu, Oct. 15, 12:26 PM
- Looking to halt ongoing share losses to Gmail (or at least slow them), Yahoo (NASDAQ:YHOO) has overhauled its iOS/Android Mail apps. New features include a smarter search engine that makes suggestions based on queries and message content, the ability to fully manage Hotmail, Outlook.com, and AOL.com e-mail accounts, and social media content integration for contact profiles.
- Getting the most attention is Yahoo Account Key, a feature that lets users login without a password by linking their Yahoo account to a mobile device, and approving/denying logins via push notifications sent to the device. Yahoo argues Account Key is more secure than passwords, and eliminates the possibility of a user being unable to logic due to forgetting his/her password.
- comScore estimates Yahoo Mail had 71M U.S. users as of August, down from 96M two years earlier. Over the same time, Gmail's (GOOG, GOOGL) U.S. base, strengthened by the pre-installing of a Gmail app on devices using Google's version of Android, is believed to have grown to 135M from 96M.
- Yahoo is up strongly thanks to Alibaba, which is up 3.9%. Q3 results are due on Oct. 20.
Wed, Oct. 14, 9:11 AM
- Omid Kordestani, Google's (GOOG, GOOGL) chief business officer until the recent Alphabet restructuring, has been named Twitter's (NYSE:TWTR) executive chairman.
- Kordestani replaces Jack Dorsey, who is 9 days removed from being officially named permanent CEO. Shortly after the Dorsey announcement, lead independent director Peter Currie disclosed Twitter plans to separate the chairman and CEO positions.
- TWTR +1.2% premarket to $29.34, perhaps aided by hopes Kordestani's appointment will spell closer ties between Twitter and Google. Earlier this year, Twitter struck search and ad integration deals with Google. M&A speculation regarding the companies has been around for some time.
- Yesterday: Twitter announces job cuts, forecasts strong Q3
- Update: Twitter tells CNBC Kordestani is no longer affiliated with Google. His LinkedIn page still lists him as a Senior Advisor.
- Update 2 (10:43AM ET): Twitter tells Bloomberg Kordestani will have an operational role at the company, assisting with recruiting and strategy. Shares have given back their premarket gains, and are now down 1.4%.
- Update 3 (2:13PM ET): The see-saw continues: Twitter is now up 2%. Shares have brushed off a downgrade to Market Perform from JMP's Ronald Josey. "While we continue to believe Twitter is the real-time web, that its ‘#’ and product are firmly ingrained in our culture, and that new management should bring stability to the organization, we feel engagement growth is likely to remain below that of industry peers as it will likely take time for Moments and newer products to gain traction,"
Tue, Oct. 13, 12:24 PM
- The enemy of my enemy is my friend: Yandex (NASDAQ:YNDX) has struck a deal with Microsoft (NASDAQ:MSFT) to act as the default home page and search engine for the Edge and Internet Explorer browsers on Windows 10 devices in Russia, Turkey, and Ukraine. The agreement follows a similar deal between Microsoft and Baidu for China.
- The deal gives Yandex a shot in the arm as it tries to halt Google's (GOOG, GOOGL) share gains: LiveInternet estimates Google's Russian search share has risen from 27% in Jan. 2014 to 35% last month, while Yandex's has fallen from 62% to 57%. Yandex jumped in September after Russian regulators declared Google's Android app/service bundling requirements (have done much to strengthen the company's mobile search position) violated competition rules.
Fri, Oct. 9, 6:51 PM
- Google (GOOG, GOOGL) ad exec Phillip Schindler has been named the company's SVP of Global Sales and Operations. Schindler is one of three execs taking over responsibilities previously held by chief business officer Omid Kordestani, who is moving to an advisory role as part of the Alphabet restructuring and Sundar Pichai's related promotion to CEO of core Google. The others are partnerships chief Daniel Alegre and marketing chief Lorraine Twohill.
- Hiroshi Lockheimer, formerly an Android engineering VP, is now SVP of Android, Chrome OS, and Chromecast. Meanwhile, Neal Mohan, formerly Google's VP of display and video advertising, is maintaining that role as an SVP.
- Re/code notes Lockheimer had already taken over more Android business responsibilities after Pichai was promoted from Android/Chrome chief to head of all of Google's core products last year. Mohan was reportedly given $100M in stock grants by Google in 2011 to keep him from defecting to Twitter, and was more recently courted by Dropbox.
- In other Google news, Google Docs and Drive suffered an afternoon outage. The services appear to be running normally again.
Fri, Oct. 9, 9:59 AM
- Twitter (TWTR +1%) has updated to Twitter's Amplify video ad platform to let advertisers buy pre-roll ads for various content categories, rather than having to set up a deal with a particular content publisher. The solution also lets advertisers target specific audience groups watching a type of content.
- Publishers currently supporting the service include Sports Illustrated, The Weather Channel, Fox, and AOL. They receive a cut of ad revenue via automated payments.
- The solution has much in common with how YouTube (still by far the biggest player in online video ads) monetizes its content. One notable difference: Twitter is taking a 30% cut on ad sales, less than YouTube's (GOOG, GOOGL) 45%. Facebook (NASDAQ:FB) has also been gradually rolling out new video ad buying options and formats. However, the company has said it's uninterested in pre-roll ads.
- Shares have rallied strongly during a week that has seen Jack Dorsey named permanent CEO, and the Moments (Project Lightning) curated event stream service roll out.
- Update: Some more Twitter video ad news: Glenn Otis Brown, the exec leading Twitter's video ad program, has left to join startup investor/builder Betaworks.
Thu, Oct. 8, 10:30 AM
- ChannelAdvisor (ECOM -5.7%) reports clients selling on eBay (EBAY -6.3%) saw their same-store sales rise 1.1% Y/Y in September. That's down from 3.4% in August, well below U.S. e-commerce growth of ~15% (per comScore), and the slowest rate of growth over the last 12 months.
- Only a 13.3% increase in Motors same-store sales (down from 20% in August) kept eBay's growth positive. Auctions were down 31%, and fixed-price sales 0.7%.
- Amazon (AMZN -1.9%) fared better, with same-store sales rising 19.2%. However, that's down from August's 24.7%, and also a 12-month low. 35.9% of Amazon-related GMV relied on Amazon's fulfillment services (FBA), up from 29.9% a year ago, with sellers using FBA seeing 30.1% same-store growth.
- Google Shopping/Product Listing Ads (indirectly competes with Amazon) were strong, registering 46.1% same-store growth with the help of higher conversion rates. Some of their growth came at the expense of search ads (dominated by Google), which saw a 9.5% same-store decline.
Alphabet Inc through its subsidiary Google Inc is engaged in improving the ways people connect with information & products including Search, Android, YouTube, Apps, Maps & Ads. It also produces internet-connected home devices & provides internet services.
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