Wed, Jul. 22, 7:33 PM
- Another ding to MTV (VIA, VIAB) after a year of ratings challenges, as programming chief Susanne Daniels is leaving the network after nearly three years there to join YouTube (NASDAQ:GOOG).
- Mina Lefevre will take over as an executive VP in charge of all scripted development and programming, and report directly to network president Stephen Friedman.
- Daniels was charged in 2012 with refocusing the network, but has faced double-digit ratings declines for the past two years -- a problem afflicting all Viacom's networks to varying degrees.
- At Google-owned YouTube, she'll be VP of the company's original-content pipeline. YouTube detailed its investments in original content in April, including work with Smosh, the Fine Bros. and AwesomenessTV.
- Elsewhere, VH1 named Chris McCarthy its new general manager. McCarthy held the same position at MTV2 and Logo.
- Previously: Viacom takes $785M writedown for restructuring (Apr. 06 2015)
- Previously: CEO: Viacom restructuring to wrap this month, save $250M (Mar. 09 2015)
- Previously: Viacom reportedly prepping companywide layoffs (Feb. 23 2015)
Fri, Jul. 17, 12:44 PM
Fri, Jul. 17, 10:42 AM
- Axiom Securities has upgraded Google (GOOG +13.4%, GOOGL +14.8%) to Buy following the company's Q2 beat and investor-pleasing comments about spending discipline, potential capital returns, and YouTube/mobile growth. MKM has launched coverage at Buy, and plenty of other firms have hiked their targets. Google's market cap is now above $450B.
- Deutsche's Ross Sandler: "We think this could be the dawn of a new era for shareholders. Google is showing investors that its management team (even pre-Ruth Porat) cares deeply about its stock price and talent retention. We've long held that innovation is alive and well, and the narratives around irrelevance in mobile or share loss to Facebook that weighed on the multiple were somewhat misguided ... We have increased our 2016 EPS by 7%, and we expect the multiple to expand..."
- Credit Suisse's Stephen Ju: "YouTube is starting to contribute more meaningfully to revenue as it helped to drive acceleration in paid click growth to +30% (vs. 1Q15 25%) as well as U.S. revenue growth to 16%. Google Play was in-line with our estimate, suggesting it continues to grow at ~35% on an FX-neutral basis. As we have noted earlier, we continue to see clear indications of these two emerging business lines exerting greater impact..."
- MKM's Rob Sanderson: "The growth story is very much alive. However, we think that solid expense control and discussion of disciplined capital allocation going forward were the more material drivers of the stock gains." His list of potential long-term growth drivers includes "mobile's ability to influence the 90% of retail transactions not online, video ad dollars migrating online, monetization of mobile apps, and new ad products."
- BMO's Daniel Salmon, who upgraded ahead of earnings yesterday: "[W]e felt the most important elements were: 1) investor interest was piqued by comments about potential capital return when considering financing options; 2) the acceleration of YouTube metrics across the board ... 3) CBO Kordestani’s emphasis of the billion+ user bases for YouTube, Chrome, Android, Search, Maps, etc. sounded very much like the 'portfolio of apps' strategy/messaging that has served Facebook so well. While we tepidly stepped into this recommendation yesterday, our conviction is now much stronger..."
- Prior Google coverage, CC transcript
Fri, Jul. 17, 9:22 AM
Thu, Jul. 16, 6:26 PM
- Google's Class A shares (NASDAQ:GOOGL) are now up 11.5% AH, and its Class C shares (NASDAQ:GOOG) up 10.7%, following the Web giant's Q2 beat. Both share classes are making new 52-week highs.
- In the wake of a recent WSJ report about spending/hiring curbs, CFO Ruth Porat confirmed on the earnings call Google is now taking a more disciplined approached to spending, while adding she plans to work with Google business leaders to get more data. Google plans to direct roughly 70% of its spending towards its core business, 20% on adjacent areas, and 10% on big new ideas. (live blog)
- When asked about dividends/buybacks, Porat didn't make any promises, but didn't shut the door on them either, stating her review process is still at an early stage and that capital returns have to work for the medium/long-term.
- Porat and chief business officer Omid Kordestani provided plenty of positive remarks about mobile and YouTube growth. Among them: 1) YouTube "watch time" rose over 60% Y/Y in Q2 - its fastest growth rate in two years - with mobile viewing more than doubling. 2) The average YouTube mobile session lasts about 40 minutes, and the number of advertisers on YouTube is up 40% Y/Y. 3) Mobile searches now exceed PC searches in 10 countries, including the U.S. and Japan. 4) Google has indexed 50B search links within mobile apps.
- As was the case on the Q1 CC, Google argues ad prices (CPCs) are being pressured more by YouTube ad growth than mobile. Without giving specific numbers, Porat noted mobile ad prices continue rising, and that PC prices aren't declining.
- Q2 results, details
Thu, Jul. 16, 5:41 PM
Thu, Jul. 16, 4:26 PM
- While Google's (GOOG, GOOGL) Q2 revenue slightly missed estimates when factoring traffic acquisitions costs (TAC), its ex-TAC revenue of $14.35B was slightly above a $14.3B consensus. The reason: TAC fell to 21% of ad revenue from Q1's 22% and Q2 2014's 23%. That also, of course, helped EPS beat estimates.
- Paid clicks: With the help of mobile, YouTube, and product listing ads, paid clicks rose 7% Q/Q and 18% Y/Y; annual growth accelerated from Q1's 13%. Clicks on Google sites +30% Y/Y; clicks on other sites -9% (hurt by quality-control efforts and perhaps also Facebook).
- Ad prices: YouTube/smartphone ad growth and forex continue affecting cost per click (CPC): It fell 4% Q/Q and 11% Y/Y, after dropping 7% Y/Y in Q1. Google sites CPC -16% Y/Y; CPC on other sites -3%.
- Segment performance/forex: Google sites ad revenue +13% Y/Y to $12.4B. Ad revenue on other sites +2% to $3.6B. Other revenue (Google Play, Nexus hardware, etc.) +17% to $1.7B. Revenue growth would've been 18% Y/Y if not for forex, instead of the reported 11%. $471M worth of forex hedging gains were recorded.
- Spending/cash flow: Operating expenses were 36% of revenue vs. 35% in Q1 and a year ago. Cost of revenue (exc. TAC) was 18% of revenue vs. 17% in Q1 and 18% a year ago. Notably, capex fell to $2.52B from Q1's $2.93B and Q2 2014's $2.65B. That helped free cash flow rise 50% Y/Y to $4.47B.
- Google ended Q2 with 57,148 employees (+3% Q/Q), $69.8B in cash/investments (much of it offshore), and $5.2B in debt.
- GOOG +7.1% AH to $621.00. GOOGL +7.4% to $646.53. CC at 4:30PM ET (webcast). BMO's morning upgrade is looking good.
- Q2 results, PR, slides (.pdf)
Thu, Jul. 16, 4:03 PM
Thu, Jul. 16, 11:13 AM
- BMO's Daniel Salmon has upgraded Google (GOOG +1.5%, GOOGL +1.1%) to Outperform ahead of this afternoon's Q2 report, while setting a $670 target.
- Salmon insists his upgrade isn't a call on earnings, but about "increased confidence in upward estimate revisions in the coming quarters, anchored by stiffening margins." He forecasts stabilizing margins and steady revenue growth will drive multiple expansion. "That steady revenue view is underpinned by consistent (and lately underappreciated in our opinion) search growth and YouTube’s continued push for TV ad dollars, where we believe it still has a considerable lead over emerging competitors, in large part due to the Google Preferred program."
- Dividends/buybacks (though not expected) are seen driving potential upside, as are efforts to use Google's search data to deliver targeted ads on YouTube and other ad platforms. Regulatory probes and the potential margin impact of moonshot projects (self-driving cars, Glass, etc.) are viewed as risks.
- The upgrade comes a day after Google announced (confirming recent reports) it's rolling out a mobile buy button and on-site checkout option (referred to as Purchases on Google), along with other mobile search features meant to improve e-commerce ad conversions (and by doing so, increase mobile ad prices).
- Two days ago: Google up strongly after WSJ reports of spending/hiring curbs
Wed, Jul. 15, 5:35 PM
Tue, Jul. 14, 2:28 PM
- New Google (GOOG +3.3%, GOOGL +2.9%) CFO Ruth Porat is "involved in an internal audit examining costs, revenue and accounting systems," the WSJ reports ahead of the Web giant's Thursday Q2 report.
- The WSJ also states Google execs are now selecting which teams are allowed to hire new workers - in prior years, teams assumed they could add new staff each year. Moreover, travel, supplies, and events "all require more justification or approvals than in the past," according to two sources.
- Google's Q1 numbers already suggested the company is slowing down its oft-criticized spending pace: Operating expenses fell to 35% of revenue from 37% in Q4 and Q1 2014. Capex still rose 25% Y/Y to $2.93B.
- Also: Cowen's John Blackledge is out with a bullish note. He reports U.S. search marketing firm EliteSEM saw its clients' Google ad spend rise 15%-20% Y/Y in Q2, as strong mobile ad growth offset "flattish" PC spending. Blackledge: "Despite declining Desktop search volumes, paid clicks are still doing very well as Google continues to innovate and improve overall conversion." He predicts mobile ad prices will reach parity with PC prices "at some point in 2016."
- Google is one of the better large-cap tech performers on a day the Nasdaq is up 0.8%. Class A shares (NASDAQ:GOOGL) are up 11% YTD; Class C shares (NASDAQ:GOOG) are up 7%.
Fri, Jul. 10, 1:19 PM
- Believing YouTube and Google Play will make up 15% of the company's 2015 gross revenue (up from just 4% in 2010) and grow to 24% by 2020, Credit Suisse's Stephen Ju has hiked his Google (GOOG, GOOGL) target by $10 to $700, while reiterating an Outperform.
- Ju respectively forecasts 2015 YouTube and Play gross revenue of $6B and $5.1B in 2015, and ~$16B and ~$14B in 2020, with margins/profitability improving as sales grow. Of note: Net revenue is much lower than gross, given YouTube provides a 55% cut to content partners and Google Play a 70% cut to developers.
- He adds "extensive checks with industry sources" lead him to "assume a steeper gross profit dollar growth trajectory for YouTube" thanks to adoption of its recently-launched TrueView ad format, which lets users learn about/buy products shown in video ads. An ad-free subscription service is in the pipeline. Meanwhile, Facebook has been taking a number of steps to encroach on YouTube's turf.
- Separately, The Information reports Google is working with Huawei on a next-gen Nexus phone due this fall, as well as on a Chinese app store. Local Web giants Baidu, Qihoo, and Tencent currently dominate the Chinese Android app store market. Chinese developers are able to upload apps to Google Play, but only for international distribution.
- Google is outperforming on a day the Nasdaq is up 1.3%. Q2 results arrive on July 16.
Wed, Jul. 8, 5:33 PM
- 9to5 Google reports the first commercial Google Glass (NASDAQ:GOOG) model features "a larger prism display, as well as an Intel (NASDAQ:INTC) Atom processor that brings better performance and moderately improved battery life." Connectivity is provided via Bluetooth and dual-band Wi-Fi.
- The site adds Google is internally referring to the Glass model as Enterprise Edition. Many businesses and institutions have come up with potential uses for Glass, even as consumer attitudes towards the product remain quite mixed, thanks in large part to the privacy concerns caused by its camera.
- Still no word on the model's pricing or official launch date. It's expected to be much cheaper than the $1,500 charged for the Explorer edition of Glass, which Google stopped selling earlier this year.
- A larger display could provide an ASP boost for Glass microdisplay supplier Himax (NASDAQ:HIMX). The WSJ reported last fall Intel would provide the CPU for a next-gen Glass model.
Wed, Jul. 1, 7:23 PM
- Furthering its efforts to challenge YouTube (NASDAQ:GOOG) as a video hub, Facebook (NASDAQ:FB) plans to roll out Suggested Videos, a feature that (using an algorithm) recommends new videos for a user to watch that are related to one just seen. The feature will be tested for "a few months" before fully launching.
- In addition, starting in the fall, Facebook plans to give content providers such as the NBA and Fox Sports a 55% revenue cut (on par with YouTube's) for ads run against Suggested Videos. The news comes a day after Facebook began giving advertisers the option to only pay for video ads that have been watched for at least 10 seconds, and less than two months after the launch of Instant Articles, for which Facebook is allowing publishers to keep all of the ad revenue produced by their content.
- With over 4B daily views for its autoplay videos and plenty of high-profile publishers sharing videos with followers, Facebook has already become a major indirect threat to YouTube, even if its video library and discovery features aren't yet comparable. In recent months, the company has begun letting users embed hosted videos on other sites, and has also added a Videos tab for Facebook Pages.
- Last month, RBC predicted video ads (carry much higher per-view prices than display ads) would account for a majority of Facebook's ad revenue over the long run. Video ad tech platform LiveRail was acquired last summer.
Mon, Jun. 29, 5:24 PM
- Confirming a recent Bloomberg report, Microsoft (NASDAQ:MSFT) states AOL, just acquired by Verizon (NYSE:VZ), will "assume management and sales responsibility for all of Microsoft's display, mobile and video advertising inventory in nine key global markets -- the United States, the United Kingdom, Canada, Brazil, France, Germany, Italy, Spain, and Japan."
- AOL will handle ad inventory for MSN, Outlook Mail, Xbox, Skype, mobile apps, and other Microsoft properties. The WSJ reports "Microsoft’s roughly 1,200 advertising employees — from engineering to sales — will be getting offer letters to join AOL."
- In addition, AOL and Microsoft have signed a 10-year search/search ad pact that will make Bing AOL's search provider, starting Jan. 1, 2016. AOL has thus far been relying on Google (NASDAQ:GOOG) search. AOL's search ops had Q1 revenue of $116.4M (+19% Y/Y), and 2014 revenue of $402.6M (+4%).
Mon, Jun. 29, 10:17 AM
- The Supreme Court has ruled Oracle (ORCL -0.4%) can press claims Google (GOOG -1%) infringed its copyrights by using Java APIs within Android, turning down a request by Google to hear the case. The dispute will now return to a lower court.
- Oracle has sought over $1B in damages. Though a district court jury cleared Google in 2012 of infringing 8 Oracle patents, it ruled Google infringed Oracle copyrights. A federal appeals court later declared Oracle's code is eligible for copyright protection, sending the case back to the district court. Google had appealed that decision to the Supreme Court.
- Google, backed by Yahoo, Red Hat, and HP, has argued granting Oracle's code copyright protection will prevent developers from building on top of past software innovations. Oracle, backed by Microsoft, EMC, and NetApp, has accused Google of plagiarizing its code.
- Update: Some more Google news: The EU is now giving Google until Aug. 17 to respond to antitrust charges. The WSJ recently reported the EU wants major changes to Google's shopping search rankings.
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