Oct. 21, 2014, 12:13 PM
- Google (GOOG +0.2%) has led a $542M funding round in Magic Leap, a secretive augmented reality startup promising to deliver 3D imagery that's far more lifelike than that provided by current virtual reality solutions, such as Facebook's Oculus Rift. Other investors include Qualcomm (NASDAQ:QCOM), film studio Legendary Entertainment, and VC firms Kleiner Perkins and Andreessen Horowitz.
- Re/code reports "a key part of Magic Leap’s plans involves a wearable device that will track users’ eyeballs and project images onto them." It adds the company "intends to use an infrared camera similar to the Microsoft Kinect to create a 3-D understanding of the world around the wearer — so the virtual objects can appear to go both in front of and behind things." By contrast, Oculus relies on standard displays to project a flat, panoramic image.
- Google reportedly doesn't have any current plans to integrate Magic Leap's tech with Google Glass. In February, the company launched Tango, an augmented reality solution for Android phones that can track motion and create visual maps of a user's surroundings.
Oct. 17, 2014, 11:04 AM
- Much as it took Google's (GOOG -1.4%) Q1 miss in stride (previous), the sell-side generally isn't too worried by the company's below-consensus Q3 results.
- Several firms have cut their targets, but that might have as much to do with Google's YTD performance as anything else. Shares have pared their losses amid a Nasdaq rally.
- Needham: "While Paid Clicks slowed, particularly in mobile, we believe Google is well positioned for the transition to mobile ... We also expect Google to benefit from its strengthening relationship with brands. Google's efforts to prove that its online advertising attribution drives offline conversions should translate into larger ad budget allocations."
- BGC: "The CPC decline abated. That’s a big positive. If CPCs flatline that’s going to help the core meaningfully." SunTrust: "Google continues to dominate search share and be a leader in display, video, mobile, and software applications. The network effects created powerful product extensions to provide a prolonged period of growth."
- BofA is also staying bullish, but has cut its target by $70 to $600, and voices some concerns. "While some of the slowdown in growth is due to tougher comps, results suggest a slowing environment for Online traffic and advertising, or a competitive shift to social sites." It was only a few days ago that Eric Schmidt highlighted the threat posed by mobile apps to Google search.
- Jordan Rohan (formerly with Stifel) notes that for all of the company's far-flung investments, Google's fortunes are still heavily tied to its original product. "Google’s core search business is the best Internet business model ever created. Every other business Google is in looks pedestrian by comparison."
- Prior Google earnings coverage
Oct. 16, 2014, 5:52 PM
- "It's the time of year when we do equity refresh," CFO Patrick Pichette stated on Google's (NASDAQ:GOOG) Q3 CC, downplaying the company's heavy opex growth (especially for R&D). He insists Q3's spending growth rate was unique, and suggests rates will be lower going forward. (live blog)
- Likewise, sales chief Omid Kordestani (filling in for the departed Nikesh Arora) suggested the slowdown in paid click growth is a normal fluctuation, and that swings happen from time to time as changes are made. Is Facebook a culprit? The social networking giant's ad sales rose 67% Y/Y in Q2 to $2.68B.
- Pichette attributes much of the 20% Y/Y increase in Google sites revenue to mobile search (not surprising), and the 9% increase in ad network revenue to Google's AdMob (mobile display ad) and Ad Exchange platforms. Given the low overall growth rate, that suggests mainstay AdSense network ads - the focus of many policy changes meant to improve the user experience - were soft. Google Play and ad licensing fueled the 50% increase in Other revenue.
- Google suggests mobile ad prices are rising, but (as usual) doesn't provide details. The company does note total cost per click would've been up 1% Q/Q if not for forex.
- GOOG -2.7% AH. Q3 results, details.
Oct. 16, 2014, 4:19 PM
- Google's (NASDAQ:GOOG) paid clicks rose 17% Y/Y (and 2% Q/Q) in Q3, a marked slowdown from Q2's 25% growth. Clicks on Google sites +24% vs. +33% in Q2; clicks on ad network sites (hurt by policy changes) +2% vs. +9%.
- On the bright side, cost per click (CPC) was flat Q/Q and only down 2% Y/Y, suggesting the pressure caused by low smartphone ad prices is abating. CPC for Google sites and ad network sites both fell 4%.
- EPS was hurt by heavy spending: Opex was 37% of revenue vs. 35% in Q2 and 33% a year ago. R&D spend +46% to $2.66B; sales/marketing +28% to $2.08B; G&A +20% to $1.37B. Headcount grew by nearly 3K from the end of Q2 to 55,030.
- Google sites revenue +20% Y/Y to $11.25B; ad network revenue +9% to $3.43B. All other revenue (Nexus hardware, Google Play, etc.) +50% to $1.84B.
- Traffic acquisition costs were 23% of revenue, even with Q2 and down from 24% a year ago. International sales were 58% of revenue, even with Q2 and up from 56% a year ago.
- Free cash flow was $3.58B,+28% Y/Y but less than net income of $4.37B. Capex totaled $2.42B (15% of revenue ex-TAC).
- Q3 results, PR
Oct. 16, 2014, 4:02 PM
Oct. 15, 2014, 5:35 PM
Oct. 15, 2014, 4:45 PM
- Internet stocks are selling off in AH trading as Netflix craters in response to its light Q3 subscriber adds and disappointing Q4 guidance, and eBay slumps after providing weak Q4 guidance and reporting only 6% Y/Y Q3 Marketplaces growth.
- Google (NASDAQ:GOOG) -1.6% AH. Facebook (NASDAQ:FB) -1.5%. Amazon (AMZN - taking share from eBay) -2.8%. Twitter (NYSE:TWTR) -1.9%. LinkedIn (NYSE:LNKD) -4.2%. YELP -1.4%.
- Internet ETFs: FDN, PNQI, SOCL
Oct. 15, 2014, 12:53 PM
- Android 5.0, first unveiled as Android L at Google I/O (GOOG -2.8%), features major UI changes (new colors, icons, animations, etc.) thanks to its use of Google's Material Design language. It also supports interactive lockscreen notifications, new voice commands, a new battery saver mode, and better content/app syncing between Android devices.
- Under the hood, 5.0 (codenamed Lollipop) sports a new runtime and graphics extension pack to boost performance - developers have often criticized Android's resource efficiency relative to iOS - and over 5K new APIs, many of which have cross-device interactions in mind. The Verge declares 5.0's UI and feature set "lays the foundation for Android to grow as a platform outside of smartphones and tablets."
- The Nexus 6 phablet (codenamed Shamu) has been officially unveiled. As rumored, the device sports a 5.9" 2K display, 13MP camera, and Qualcomm Snapdragon 805 CPU, and will be made by Motorola Mobility (OTCPK:LNVGY). It's priced at a steep $649 unsubsidized ($300 more than the 5" Nexus 5).
- The Nexus 9 tablet, to be made by HTC (OTC:HTCKF), features a high-res 8.9" display and is powered by Nvidia's (NVDA -1.6%) Tegra K1 processor (contains a powerful GPU). Pricing is once more steep: 16GB and 32GB models respectively go for $399 and $479.
- The Nexus Player set-top is made by Asus (OTC:ASUTY), and runs on Google's new Android TV platform, which delivers a more media-centric UI than the sputtering Google TV. Like Amazon's Fire TV, the Nexus Player has an optional gaming controller. No word on pricing yet.
Oct. 14, 2014, 10:48 AM
- The Google Shopping Express same-day/next-day delivery service has been renamed to Google Express. It has also added Chicago, Boston, and D.C. to its list of supported cities; existing markets include the Bay Area, West L.A., and Manhattan. Altogether, Google (GOOG +1%) says it now provides same-day to 7M+ people, and next-day to nearly 12M Northern California residents.
- The service (free on a trial basis until now) has been priced at $95/year. While that's only slightly less than Amazon Prime's (AMZN +1.2%) $99/year fee, Google charges no additional fee for same day/overnight delivery on most $15+ orders.
- Amazon charges Prime subs a $5.99 flat fee for same-day orders of up to 150 pounds. Its AmazonFresh service doesn't charge a per-order fee and covers the delivery of fresh/refrigerated items, but also costs $299/year and has a $35 minimum.
- Express has added 16 new merchant partners in recent months, including Barnes & Noble, Sports Authority, and PetSmart. Existing partners include Whole Foods, Walgreens, and Staples.
- Google's announcement comes a day after Eric Schmidt called Amazon Google's biggest search rival. Express could provide the Web giant with valuable shopping data that could help Amazon's rivals deliver better targeted ads on Google properties.
Oct. 13, 2014, 10:12 PM
- "Put simply, we created search for users, not websites," declares Eric Schmidt during a Berlin speech, defending Google's (NASDAQ:GOOG) integration of its own content within search results against claims that it violates antitrust law. (transcript)
- Schmidt: "Companies like Expedia, Yelp, and TripAdvisor argue that it deprives their websites of valuable traffic and disadvantages their businesses. They’d rather go back to 10 blue links. What’s interesting is that the traffic these websites get from Google has increased significantly."
- The Google chairman also argued Amazon, rather than Bing or Yahoo, was Google's biggest search rival (previous), since Amazon shoppers often go straight to its site/apps and bypass Google search (and its ads). "They are obviously more focused on the commerce side of the equation, but, at their roots, they are answering users’ questions and searches, just as we are."
- He also noted the threat posed by mobile, where (deep linking efforts notwithstanding) users are more likely to access content by directly opening an app. "Seven out of every eight minutes of mobile phone usage is spent within apps. And the most popular app in the world ... is Facebook, a company which now describes itself as 'the on-ramp to the Internet'." Google, of course, has a few popular apps of its own.
- Schmidt insists to regulators his company remains quite vulnerable to disruption. "The next Google won’t do what Google does, just as Google didn’t do what AOL did."
Oct. 13, 2014, 4:11 AM
- YouTube's payments to media firms using its Content ID technology, which was set up in 2007 to allay fears about the unauthorized use of copyrighted material, has hit $1B.
- Content ID enables media companies to monitor when video they own has been uploaded onto YouTube without authorization and gives them the option to sell advertising on the content and make money from it or to have it taken down.
- "The vast majority choose to monetize and track rather than block the videos," Google's (GOOG, GOOGL) Fred von Lohmann tells the FT.
- FremantleMedia, which is behind "The X-Factor" and "Britain's Got Talent," has made Content ID "a core part of our digital business," the company says.
Oct. 12, 2014, 2:16 PM
- In a test involving thousands of queries on various subjects, Stone Temple Consulting found Google Now (NASDAQ:GOOG) managed to "completely answer" a question 88% of the time, a rate well above the 53% posted by Apple's (NASDAQ:AAPL) Siri and the 40% delivered by Microsoft's (NASDAQ:MSFT) Cortana.
- In addition, Now showed "enhanced results" (results featuring some kind of knowledge box/panel or structured data) 58% of the time; Siri did so 29% of the time, and Cortana 20%.
- Stone Temple was also impressed with Now's ability to return complementary data and detailed results: A query of "Burj Khalifa height" returned (in addition to the skyscraper's height) the heights of various other buildings, and a query of "becoming a firefighter" returned step-by-step instructions from FireScience.org.
- Now, which comes built into Google's version of Android and is available on iOS through the (well-downloaded) Google search app, both strengthens Google's mobile search position, and (to the extent the search app is used instead of Mobile Safari on iOS) lowers the company's search traffic acquisition payments to Apple.
- It also could be a key differentiator for Google in the realm of wearables, where time and location-sensitive push notifications are viewed as a killer app. The recently-launched Android Wear platform features tight Google Now integration.
Oct. 8, 2014, 12:59 PM
- ChannelAdvisor (ECOM -1.8%) clients selling on Amazon (AMZN +0.1%) saw a 37.9% Y/Y same-store sales increase in September. That figure is down from August's 45.1%, but above that for all but 2 of the last 12 months and still over 2x e-commerce industry growth. 35% of the sales were fulfilled by Amazon, up from 30.2% a year ago.
- eBay (EBAY +1.1%) same-store sales rose 8.9% Y/Y, an improvement from August's 5.9% but still below industry growth. Amazon's share gains and Google algorithm changes continue taking a toll. Auctions -4.1%, fixed-price +7.6%, Motors +14.7%.
- Same-store sales driven by search ads - largely from Google (GOOG -0.4%) - rose 28.5% Y/Y, a sharp increase from August's 13.6%. Clicks +8%, ad prices +1% (pressured by low smartphone ad prices), orders +8%, average order value +15%.
- Google Shopping-related same-store sales rose 45.2% Y/Y, a slowdown from August's 54.3% but still far above industry growth. Average order value rose 33.9%, something ChannelAdvisor attributes to both strong consumer spending and algorithm changes that have led higher-priced goods to be shown more often.
Oct. 3, 2014, 10:31 AM
- India's Economic Times reports Google (GOOG +1%) is prepping a mobile messaging app meant to take on the likes of WhatsApp, Line, WeChat, and Viber. Sources state the app is likely due in 2015, and will be tested in India and other emerging markets.
- The app reportedly won't require a Google login. WhatsApp has famously eschewed requiring an online user ID in favor of relying on a user's phone number and contact book. Not surprisingly, Google's app will be free; WhatsApp charges $1/year in many markets after a year of free use.
- WhatsApp (600M+ monthly active users) and its peers have grown like wildfire in emerging markets (and some developed ones too) thanks to their ability to do away with SMS fees. Moreover, while WhatsApp has kept a minimalist approach to features, rivals have integrated gaming, payments, and e-commerce services, among other things.
- Google's Hangouts app (integrated SMS/Gchat/VoIP/video calls) sees a decent amount of use on account of being pre-installed on many Android phones, but it hasn't done much to affect the growth of WhatsApp and other major rivals. This summer, Google bought mobile messaging startup Emu, which had developed an A.I.-based virtual assistant service for its app.
- There were rumors Google was interested in WhatsApp before the Facebook deal was reached, but Google has denied making a bid.
Oct. 2, 2014, 2:40 PM
- Google's (GOOG +0.4%) new Physical Web initiative aims to let smart devices in public settings (vending machines, retail/transit kiosks, parking meters, etc.) interact with smartphone users without requiring them to first install a specific app for the device.
- A Bluetooth beacon app installed on Android/iOS phones would automatically scan for nearby smart devices, and give users the option for interacting/sharing data with them. Each device would have its own Web address, thus allowing a Web page (potentially personalized) to be opened on a smartphone when a user clicks on a link in the beacon app.
- Google plans to make Physical Web an open standard. The Web giant could benefit from the data it collects about user interactions and purchases, and potentially also from providing ads/promotions on the devices and their related Web pages. The initiative comes ahead of an expected explosion in the number of Web-connected embedded devices (i.e. the Internet of Things).
- GigaOm observes some questions/issues remain. "While there is huge value in people interacting with the objects around them, there is even greater value in giving objects enough intelligence to interact with each other ... Another problem is how to name the billions of connected things."
Sep. 26, 2014, 2:41 PM
- Google (GOOG +0.5%) has been increasing the number of Google apps OEMs must pre-install on phones running the company's version of Android to "as many as 20," The Information reports, citing confidential docs.
- Google is also said to be requiring more apps be placed on the home screen or "in a prominent folder," and that Google search be given more prominence. Affected OEMs reportedly include Samsung (OTC:SSNLF), Huawei, and HTC.
- The bundling of Google apps/services (especially Google search) is pivotal to Google's Android monetization strategy. Moreover, Google's ability to mandate bundling, together with Android's ~80% smartphone unit share, helps keep the company's mobile traffic acquisition costs down - the Web giant reportedly makes huge traffic acquisition payments to Apple for Mobile Safari search integration.
- Regulators and OEMs haven't always been thrilled with Google's requirements. The WSJ reported in July EU regulators are likely to launch a formal probe of Google's Android licensing policies.
- In January, Re/code reported Samsung had agreed (in tandem with a new patent cross-license) to tone down support for its own apps/services (often less popular than Google's) on Android phones. More recently, Samsung has been reported to be moving engineers out of its mobile software ops to other units.
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