Mon, Nov. 23, 1:22 PM
- Down on Friday after providing soft FQ4 sales guidance and an FY16 subscription/billings guidance cut to go with an FQ3 beat, Autodesk (ADSK +3.9%) has more than recovered its losses today.
- A weekend report from The Information may or may not be playing a role: The site states Autodesk CEO Carl Bass recently talked with Larry Page about becoming the head of Google parent Alphabet's (GOOG, GOOGL) robotics unit. The talks are said to have fallen through "for a mix of reasons," including the amount of control Bass would have over the unit.
- Sources talking with The Information argue rejections such as Bass' point to an "inherent weakness" in Alphabet's structure: The company still isn't providing its non-Google operating units (they include Nest Labs, Calico, Google Ventures, Google Capital, and A.I. unit DeepMind) the kind of autonomy sought by many entrepreneurs.
- Andy Rubin, the former head of Google/Alphabet's robotics unit and before that its Android chief, left last year. The WSJ reported at the time Rubin was "facing constraints on his activities at Google." Google/Alphabet has made a string of robotics acquisitions in recent years.
Thu, Nov. 19, 5:21 PM
- Google (GOOG, GOOGL) has bought Bebop Technologies, a stealth-mode startup that has been working on an enterprise cloud app development platform, and which was founded by VMware co-founder and Google board member Diane Greene.
- Greene will now lead a new unit containing all of Google's cloud businesses, including Google Apps (productivity apps), Google for Work (custom versions of Google products for enterprises), and the Google Cloud Platform (cloud infrastructure and app platform services). CEO Sundar Pichai declares the move will "bring together product, engineering, marketing and sales and allow us to operate in a much more integrated, coordinated fashion."
- Pichai provides some vague details regarding Bebop: "[B]ebop is a new development platform that makes it easy to build and maintain enterprise applications ... bebop and its stellar team will help us provide integrated cloud products at every level: end-user platforms like Android and Chromebooks, infrastructure and services in Google Cloud Platform, developer frameworks for mobile and enterprise users, and end-user applications like Gmail and Docs."
- The move comes shortly after Google SVP Urs Hölze proclaimed (in remarks that may or may not have been blessed by Google's brass) the company's Cloud Platform revenue could surpass its ad revenue in five years. With 90% of Google's Q3 revenue coming from ads (and much of the rest from hardware, Google Play, etc.), that could prove a tall order.
- Rackspace (NYSE:RAX) fell 6.1% in regular trading, with Hölze's remarks having been mentioned as a potential culprit. Stifel defended Rackspace, arguing the remarks were misunderstood and that Rackspace will eventually strike a deal to provide managed services for Google's cloud offerings, much as it has with Amazon and Microsoft.
- Synergy Research estimates Google is the 4th-largest player in the in the broader market for public, private, and hybrid cloud services, trailing IBM, Microsoft, and 800-lb. gorilla Amazon. The company has tried to differentiate its cloud offerings by emphasizing developer needs; the Bebop acquisition fits with that effort.
Tue, Nov. 17, 12:41 PM
- Morgan Stanley has upgraded Yandex (YNDX +5.9%) to Overweight, and hiked its target by $2 to $20. Shares are close to a 5-month high of $16.61.
- Separately, Google (GOOG, GOOGL) says it will contest in court a September ruling from Russian regulators declaring the company's Android app/service bundling requirements violate antitrust law. Yandex, which has been losing Russian search share to Google thanks in part to the latter's strong mobile share, soared when the ruling was announced.
- Google has until Dec. 18 to amend its deals with smartphone OEMs to comply with the Russian ruling. Meanwhile, Yandex recently disclosed it's among the long list of firms to have asked EU regulators to probe Google's Android policies.
- Last month: Yandex gains after Q3 beat, revenue guidance hike
Fri, Oct. 23, 9:14 AM
Fri, Oct. 23, 8:58 AM
- "This is the second straight quarter where Google introduced some more investor friendly policies," says Piper Jaffray's Gene Munster, reiterating his Overweight rating on Alphabet (GOOG, GOOGL) and boosting the price target to $812 from $723. The $5.1B buyback was a surprise, he says, and follow's last quarter's talk about expense cuts. Next quarter, the trend will continue as Google is broken out from the company's other bets.
- Munster boosts his FY16 EPS estimate to $34.42 from $33.82.
- Other price target hikes come from Jefferies ($900), Credit Suisse ($850), Cowen ($880), and Mizuho ($850).
- The stock's higher by 11.5% to $726.89 in premarket trade.
- Previously: More on Google: $5B buyback launched, YouTube/mobile discussed on call (Oct. 22)
- Previously: Alphabet beats by $0.14, beats on revenue (Oct. 22)
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. 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.
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, 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.
Mon, Sep. 14, 11:12 AM
- Russia's competition watchdog has ruled Google (GOOG -0.5%, GOOGL -0.5%) violated competition rules, and has ordered the company to stop abusing its "dominant" market position.
- Against a backdrop of high political tensions, Russian regulators have been probing Google's required bundling of its apps/services on Android devices, and its alleged exclusion of rival offerings. EU regulators have been carrying out a similar probe. Google's bundling requirements are a core part of its strategy to monetize Android and keep mobile revenue-sharing payments down.
- Russian search leader Yandex (YNDX +9.1%), which filed the complaint, has spiked higher. Google has been gradually taking share from Yandex: LiveInternet estimates Yandex had 57.3% of the Russian search market in Q2, down from 58.6% in Q1 and 59.7% in Q4.
Wed, Aug. 26, 10:47 AM
- Believing Google (GOOG +4.4%, GOOGL +4.2%) is in the early stages of a multi-year margin expansion cycle, Goldman's Heather Bellini has upgraded to Conviction Buy, and set an $800 target.
- Bellini: "Google is implementing greater transparency, and we believe the management team is signaling a greater focus on cost control given recent earnings call commentary and the new operating structure with Alphabet." Three firms upgraded after the Alphabet announcement, and BMO and Axiom respectively upgraded just before and after the Q2 report.
- Bellini adds talks with 20 Fortune 1000 marketing execs yielded positive commentary. "Google was cited as the vendor most likely to see the greatest increase in spend over the next three years, with mobile search and video advertising highlighted as key areas of growth. For mobile advertising, Google Search emerged as the ad format with the greatest ROI, ahead of Facebook. While we believe the shift of TV advertising budgets moving to video may take longer than many in the market anticipate, our checks ranked YouTube as the best online substitute for TV advertising dollars."
- Google is among the large-cap standouts as the Nasdaq posts a 1.9% gain. The Class A and C shares respectively go for 19x and 18x 2016E EPS.
Tue, Aug. 11, 10:27 AM
- Stifel, Mizuho, and Monness Crespi have upgraded Google (GOOG +5.5%, GOOGL +5.3%) to Buy after the Web giant announced it's creating a holding company structure under the Alphabet label, and is making Sundar Pichai the CEO of its core operations. Susquehanna launched coverage at Positive shortly before the announcement broke.
- BMO's Daniel Salmon (Outperform, $770 target) joins many others in praising the improved transparency expected to result from the shakeup: "The only complaint we heard from investors regarding last quarter’s earnings call was the lack of increased transparency into the business. Breaking out YouTube was a popular request and while Alphabet won’t do that, the move has certainly addressed the broader interest in better understanding the different components of Google..."
- RBC's Mark Mahaney (Outperform, $750 target): "We have long assumed that Google’s Core Advertising segment is very highly profitable – perhaps well north of 60% EBITDA margins. The new disclosure should confirm this ... the re-organization will likely lead to some efficiencies from a more focused management team. Finally, we believe Mr. Pichai is a logical, and strong, choice to lead the core Google platform."
- Deutsche's Ross Sandler (Buy, target hiked to $840): "We estimate Core Businesses (Search, YouTube and Apps) at $59B in revenue in 2015, growing 14% (+21% ex-FX). This would put the Emerging Businesses segment at $763m (Figure 1). If we were to assign a 55% EBITDA margin to Core (assuming near 70% for search, the remaining below the average), that business would generate $38B in 2016 EBITDA and likely fetch at 15x multiple once investors see the stronger financial profile. Emerging contains many loss making businesses and we believe EBITDA loss could be $3B in 2016."
- Om Malik suspects Alphabet is set to make large investments in other companies, and argues keeping some distance between those investments and core Google will lower regulatory scrutiny. Like others, he also sees parallels between the Alphabet structure and Berkshire Hathaway - Larry Page has long been a Warren Buffett fan.
Tue, Aug. 11, 9:16 AM
Mon, Aug. 10, 4:57 PM
- Google (GOOG, GOOGL) is forming a new parent company called Alphabet, Larry Page discloses in an eye-popping blog post. Alphabet will contain Google proper, as well as offshoot companies that are "pretty far afield of [Google's] main Internet products." The Google X lab, which has worked on products such as self-driving cars and drones, will be separate from Google proper, as will the Ventures and Capital investment arms.
- Larry Page will be the CEO of Alphabet, and fellow co-founder Sergey Brin its president. Sundar Pichai, who last fall was put in charge of Google's core products, is now the CEO of Google proper.
- Page: "Alphabet Inc. will replace Google Inc. as the publicly-traded entity and all shares of Google will automatically convert into the same number of shares of Alphabet, with all of the same rights. Google will become a wholly-owned subsidiary of Alphabet. Our two classes of shares will continue to trade on Nasdaq as GOOGL and GOOG ... we are not intending for this to be a big consumer brand with related products--the whole point is that Alphabet companies should have independence and develop their own brands."
- GOOG +3.8% AH to $657.80. GOOGL +4.1% to $690.00.
- Update: More details can be found in Google's 8-K filing for the shakeup. In addition to Google X, Ventures, and Capital, Nest (now responsible for Dropcam and Google Glass, in addition to smart thermostats/smoke alarms) will be outside core Google, as will Fiber. Core Google will include "search, ads, maps, apps, YouTube and Android and the related technical infrastructure."
- Update 2 (6:23PM ET): GOOG and GOOGL are now both up 6.2% AH.
- Update 3: Analysts praise the shakeup for providing more financial transparency regarding Google's operations and capital allocation. Meanwhile, there's speculation Google pulled the trigger on the move after Pichai received an offer to become Twitter's CEO.
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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