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- If an investor wants to invest in companies that benefit from a shift of advertising dollars to the online space, the two big choices are obvious: Google and Facebook.
- How profitable will future countries be that are not yet online? Why is every ad in the world not online already? Why is there still a print business at all?
- Forecasts are notoriously bad at predicting the future, so the only thing we can do as investors is buy future cash flows as cheaply as possible.
- Facebook-owned Oculus VR recently acquired two start-up companies with virtual-reality related technologies.
- One of them, 13th Lab, developed technology for creating 3D models of the world as a camera moves around.
- 13th Lab also developed SLAM technology, which can track a camera's location as it moves around.
- With SLAM, Oculus has the option to shift their focus and enter the smart eyeglasses market currently dominated by Google Glass.
- Google's autonomous car shows signs of progress.
- Needless to say, Google can monetize automobiles with software, hardware, satellite technologies, and its software ecosystem (Android).
- Because Google has an end-to-end solution, paired with significant competencies, the market opportunity looks compelling.
- The potential revenue from being a part of the value chain is huge, as automobiles is a $4 trillion market.
- Response to an alarming article by Anton Wahlman addressing a few issues.
- Android market share is much more important than Nexus sales and looks fine, according to IDC stats.
- The Nexus 5 may not be available at Wahlman's location, but that doesn't prove the company isn't capable of selling a phone.
- The Nexus 5 probably sold really well, as asserted by Google, but shareholders shouldn't be too concerned whether Google sells any handheld devices.
- The Nexus phones are intended to function as a supporting device for the adoption of Android.
- Every single smartphone on Google’s direct-to-consumer eCommerce site is listed as sold out, and in most cases have been for months.
- Other models (Google Play Edition) from Samsung and Sony have been discontinued altogether.
- How is it possible for the world’s smartphone market share leader to simply abdicate?
- This explains Google’s recent market share loss to Apple, and its resulting underperforming stock in 2014.
- Who is responsible for this fiasco at Google? New management is urgently needed.
Google Is Undervalued And Unloved And Positioned For Success In The Future: Part 1
- Google's Search Business has more tailwinds going forward and is intact for future growth.
- Google's shares are undervalued based on the company's earnings line and historical valuation and have underperformed the S&P 500 in 2014 by a wide margin.
- While Mobile Search is a temporary headwind due to qualitative issues and lower margins, Google has a dominant position in this fast growing space.
Google's M&A Activity Is One Of The Company's Primary Value Drivers
- With undisputed dominance in search, the rest of Google's success depends on M&A activity.
- In the past, the company has made effective acquisitions that have bolstered company finances and operations.
- This trend should continue due to numerous opportunities and a strong balance sheet.
- Google is suitable for Enterprising Investors, but not Defensive Investors following the ModernGraham approach.
- According to the ModernGraham valuation model, the company is undervalued at the present time.
- The market is implying 8.96% in annual earnings growth over the next 7-10 years, which is significantly less than the growth the company has seen in recent years.
Google & FTC: Billing Kids' In-App Charges Without Parental Consent
- Google settles with the FTC.
- Situation similar to Apple and Amazon issues.
- Not the first settlement with FTC.
- Offline retailers in India have refused to stock Android One inventory.
- This move could limit Android One's growth in India.
- Retailers in Pakistan, Sri Lanka, Nepal and Bangladesh might follow suit.
- Several smartphone manufacturers might back-out of the Android One initiative going forward.
- Google faces competitive and legal challenges going into FY 2015.
- Admittedly, the range of possibilities is extremely wide, inducing a lot of uncertainty.
- In a conservative scenario, the stock remains flat and underperforms the Standard & Poor 500.
- However, if Google negotiates a favorable settlement or wins an anti-trust case, the stock will outperform and appreciate by 28.7%.
- With so much uncertainty, I think that it would be prudent for investors to reallocate capital to more compelling investment opportunities.
Google For Work Pursues Enterprise Simplicity Over Microsoft Office 365
- Better margins, profits for top Google ecosystem members.
- Easier for consultants, experts to sell all Google cloud services.
- Battle vs. Microsoft Office 365, Azure cloud shifts to larger business customers.
Google: Despite Headwinds, Model Illustrates Significant Upside
- US advertising to grow at the fastest pace since 2004.
- Departure of Mozilla insignificant.
- Google Play launching in China.
- LR model shows upside of approximately 14%.
There are no Transcripts on GOOGL.
Mon, Dec. 22, 2:15 PM
- Whereas prior Google (GOOG +1.7%) self-driving car prototypes lacked features such as steering wheels, headlights, and brake pedals - different prototypes focused on testing different systems - the Web giant says it has now "put all those systems together in [a] fully functional vehicle—our first complete prototype for fully autonomous driving."
- Nonetheless, Google's safety drivers "will continue to oversee the vehicle for a while longer, using temporary manual controls as needed while we continue to test and learn." The company presented a study last year claiming its self-driving cars already drive more safely in autonomous mode than when under human control.
- The WSJ reported on Friday Google is looking for auto industry partners to "bring its vision of a self-driving car to market within the next five years." Project director Chris Urmson: "We don’t particularly want to become a car maker ... We are still assessing the business model. We don’t know what the right relationship is."
- Urmson reiterates software, not hardware, remains the biggest challenge to bringing fully self-driving cars to market. Google maintains a target of launching one by 2017-2020.
- Driver-assistance tech leader Mobileye (MBLY -0.1%) is hoping to provide many of the hardware subsystems needed to make fully autonomous driving a reality. Its solutions are believed to underpin the advanced driver-assistance features recently launched by Tesla.
Fri, Dec. 19, 4:50 AM
- Building upon its current Android Auto software, Google (NASDAQ:GOOG) is laying the groundwork for a version of Android that would be built directly into cars.
- This integration would allow drivers to reap all the benefits of the Internet without plugging in their smartphones, as opposed to Google's current Android Auto software which requires a phone to be plugged into a compatible car.
- If successful, Android could become the standard system powering a car's entertainment and navigation features, although the move is likely to face heavy competition and various business challenges.
Wed, Dec. 17, 11:03 AM
- Pivotal Research's Brian Wieser has upgraded Google (GOOG +0.9%) and Twitter (TWTR +1.6%) to Buy in the wake of yesterday's selloff. His targets are respectively $610 and $42.
- Wieser: "We have been generally negative on Google since early 2013, given our ongoing concerns about margin erosion, intensive capital investment plans and diversification (also capital intensive often) away from the company's core advertising business." However, he now admits Google has grown faster than expected, and that margin erosion has been less than feared.
- Wieser is still concerned about a mix shift towards (lower-margin) display ads from search ads, and wishes Google (has no dividend or buyback program) would return some cash to shareholders. But he thinks those issues are now priced in.
- Regarding Twitter, Wieser still believes its core service "has only niche market potential at maturity," but considers the recent selloff overdone. He's also concerned about Twitter's management turmoil, arguing it could be a sign Twitter is "still trying to become something bigger than it presently is”
- Google made new 52-week lows yesterday following a JPMorgan target cut. Twitter closed near its lowest levels since June.
Tue, Dec. 16, 2:54 PM
- Though reiterating an Overweight rating, JPMorgan's Doug Anmuth has slashed his Google (GOOG -2.2%) target by $70 to $600, and also cut his estimates.
- Among other things, Anmuth cites "the transition from desktop to mobile search, continued margin compression, and increasing competition from Facebook."
- The indirect challenge posed by Facebook to Google's ad dollars was raised by some following Google's Q3 miss. Meanwhile, Facebook's Atlas (display ad-buying/measuring) and Audience Network (mobile ad network) platforms directly compete against Google's DoubleClick and AdMob units.
- The ability of Google search to deliver ads directly tied to user intent (i.e. what a user is looking to buy at a particular moment) still acts as a key selling point when battling for ad dollars. Facebook's ad targeting, by contrast, is often driven by previously-obtained user data.
- Shares have made new 52-week lows. Google now goes for 14x 2015E EPS exc. net cash/investments. The 2015 revenue growth consensus is at 17.7%.
Mon, Dec. 15, 7:02 PM
- The WSJ reports Google (NASDAQ:GOOG) has "approached retailers about creating a 'buy' button" for Google Shopping that would work much like Amazon's (NASDAQ:AMZN) one-click ordering feature.
- Google is also said to be "considering a [Google Shopping] marketing program that would allow merchants to promote two-day shipping." The program would be similar to one from ShopRunner that provides unlimited two-day shipping from various retailers for $79/year. Amazon Prime, of course, provides unlimited two-day shipping (among other things) for $99/year.
- Sources caution several retailers approached by Google were cool to the "Buy" button concept, fearing more price competition and a loss of control over the shopper experience. Google could profit from the button either by charging a transaction fee, or by simply seeing higher conversions when it's used (thus raising ad prices). The company might also get better conversion data than it's currently receiving.
- As ChannelAdvisor's data drives home, Google Shopping ads (deeply integrated with Google search) have been seeing rapid growth; Wal-Mart, Best Buy, eBay, and Sears are among their many buyers. Amazon, though spending plenty on standard Google search ads, is a high-profile holdout.
- Google officially launched its $95/year Shopping Express same-day/next-day delivery service (competes against Prime's same-day services) in October. Around the same time, Eric Schmidt called Amazon Google's biggest search rival, due to the fact Amazon shoppers are more likely to bypass Google search.
Fri, Dec. 12, 11:33 AM
- In response to a new law requiring Internet companies to store their users' personal data within Russia (seen by critics as an attempt at censorship), Google (GOOG -1%) is shutting down its Russian engineering office.
- Nonetheless, Google insists it will increase its business investment in Russia next year, and says it still has "a dedicated team in Russia" to support local users.
- Yandex (YNDX +4.2%) has rallied following the news. LiveInternet.ru estimates Yandex had 60% of the Russian search market in Q3, and Google 31%.
- Google shut down its Chinese search engine (Google.cn) in 2010 rather than continue censoring its results. This week, the company announced it's shutting down Spain's version of Google news in response to a law requiring it to pay publishers for excerpting content.
Thu, Dec. 11, 4:34 AM
- Google (NASDAQ:GOOG) is shutting down its Google News service in Spain due to new legislation that will require the company to pay publishers for displaying any portion of their work.
- "As Google News itself makes no money (we do not show any advertising on the site) this new approach is simply not sustainable," announced Richard Gingras, head of Google News.
- The company will close the service on December 16 and will remove all Spanish publishers from its international versions.
Wed, Dec. 10, 7:10 PM
- Google's (NASDAQ:GOOG) DoubleClick Ad Exchange came first in ad analytics firm Pixalate's study of the quality of the ads delivered by 400 real-time bidding (RTB) platforms. Pixalate says its analyzed 100B+ ad impressions, gauging metrics such as viewability, fraud rates, engagement, and domain masking (i.e. the disguising of the Web address an ad links to).
- Google/DoubleClick, which has been gaining display ad share for a number of years, received a maximum network score (measures the quality of ad domains) of 99. It also got high marks for inventory quality (92), viewability (96), engagement (90), domain masking (96), and fraud (88).
- Among publicly-traded online ad firms, The Rubicon Project (NYSE:RUBI) was a standout, coming in at #3. Criteo (NASDAQ:CRTO) also fared well, ranking #15.
- On the other hand, mobile ad network owner Millennial Media (NYSE:MM) was ranked #300. Millennial, bleeding mobile ad share to Google and Facebook (among others) over the last two years, is said to have a "high ratio of fraudulent traffic."
- RTB accounts for much of the burgeoning programmatic (automated) online ad market. eMarketer forecasts the U.S. RTB market will grow 123% this year to $9.25B, and total $11.8B in 2016. The adjacent programmatic direct market (covers the automated buying of entire ad campaigns from publishers) is expected to grow over 10x from 2014 to 2016, to $8.6B.
Mon, Dec. 8, 2:30 PM
- Facebook Search (FB -0.5%) has been updated to support searching for keywords within posts, photos, and other content that has previously appeared in a user's news feed. The feature is initially launching to PC and iOS users; Android support will arrive later.
- For now, Facebook doesn't plan to sell mobile search ads, or any new keyword-based ads in general. But as Google (NASDAQ:GOOG) can vouch, offering such ads could prove very lucrative long-term. While Facebook has a treasure trove of data about its users, it knows relatively little (compared with Google and other search engines) about what a user is interested in buying at a particular moment. Keyword searches can help change that.
- Product manager Rosseau Kazi says Facebook also plans to eventually provide keyword searches for publicly-shared posts, a move that would make it a bigger indirect threat to traditional search engines. "Facebook has a wealth of information you can’t get anywhere else."
- Facebook is also finally bringing Graph Search to mobile. Though launched to much fanfare in early 2013, Graph Search hasn't lived up to expectations thus far, as users found its approach to queries (for example, searching for all friends who live in Seattle who work for Starbucks) too complicated relative to standard search.
- Mark Zuckerberg reiterated Facebook's commitment to Graph Search in a spring interview, while adding the product is aimed more at mobile than PCs.
Fri, Dec. 5, 8:19 AM
- Noting search maturity, lack of product catalysts, and margin pressure to investments in competitive and long-duration businesses like cloud computing and retail delivery, analyst Justin Post says his team's estimates for Google (NASDAQ:GOOG) are lower than the Street's.
- Post also cites increased regulatory risk, particularly in the EU, strong Apple product cycle and search contract renewal uncertainty, and competition and reversal in U.S. online ad market gains due to social media.
- Post and team lower their 2016 EPS estimate to $33.81 on revenues of $73.72B vs. the Street at $35.77 and $73.4B.
- Shares -1% premarket
Wed, Dec. 3, 6:45 PM
- The WSJ reports Google (NASDAQ:GOOG) plans to offer higher commissions to top-performing Google Apps resellers, hoping to put a larger dent into Microsoft's (NASDAQ:MSFT) productivity software dominance. Right now, Google has only 10K+ Apps reseller partners; Microsoft has 400K+ for Office.
- Gartner estimates Google accounted for less than 1% of the productivity market's revenue in 2013, compared with Microsoft's 90%+. Corporate familiarity/comfort with Office, together with strong uptake for Office 365 (features both cloud and local apps, unlike Google Apps), have stood in Google's way.
- Google has run about 6,000 studies for ad clients in recent months to see if brand ads leave their intended impression on viewers, says display/video ad VP Neil Mohan. The studies are part of an aggressive push by Google to compel marketers to move more of their brand ad spend online.
- Related efforts include working with Nielsen and comScore to get a better read on who's seeing a particular ad, and ensuring ad impressions are actually viewed by a person (still a challenge). YouTube is set to be a major beneficiary of the shift in brand ad spend towards digital channels.
- The U.K. plans to impose a 25% tax on profits locals produced by multinationals that are shifted to tax shelters. The press is already calling the levy a "Google tax" - it comes amid broader EU scrutiny of the use of tax shelters by multinationals.
- Google has confirmed it's launching versions of popular products, including search, YouTube, and Chrome, meant specifically for kids 12 and younger (previous). Though parental controls will be included, concerns about running afoul of FTC privacy and children's advertising rules exist. "We expect this to be controversial, but the simple truth is kids already have the technology in schools and at home," says Google exec Pavni Diwanji.
Tue, Dec. 2, 1:46 PM
- In the latest sign that Google (NASDAQ:GOOG) remains committed to Glass in spite of recent pessimism about its future, the Web giant has been awarded a patent for a more streamlined Glass design featuring a much smaller casing.
- The patent grant comes in the wake of a Sunday evening WSJ report stating a new version of Glass (the delayed commercial launch model?) sporting an Intel CPU will arrive next year, and that (Segway comparisons aside) Google still primarily views the display glasses "as a consumer device."
- Himax (NASDAQ:HIMX), which has asserted its LCoS microdisplay unit maintains a strong relationship with Google, is rallying on a day the Nasdaq is up 0.5%. Shares fell moderately yesterday amid a tech selloff.
Mon, Dec. 1, 3:50 AM
- Intel (NASDAQ:INTC) will power the next version of Google (NASDAQ:GOOG) Glass expected next year, WSJ reports, replacing the current processor from Texas Instruments (NASDAQ:TXN).
- Intel chips already power several Google devices and items, including Google's servers, self-driving cars and the Nexus Player.
Thu, Nov. 27, 7:52 AM
- European Parliament lawmakers overwhelmingly voted in favor of a resolution urging antitrust regulators to consider splitting Internet search engines, such as Google (NASDAQ:GOOG), from other commercial services.
- The controversial initiative will have no binding power over the European Commission, the bloc’s top antitrust regulator, but proponents of the measure hope it will add pressure.
Tue, Nov. 25, 1:13 PM
- The Information reports Yahoo (YHOO - unchanged) and search partner Microsoft (MSFT +0.5%) are aggressively trying to sell Apple on replacing Google (GOOG +0.6%) as the default search engine for the Safari browser (pre-installed on all iOS/Mac OS hardware) when its Google deal expires in 2015.
- Apple, which naturally views Google as a major rival, already dropped Google as iOS and Mac OS' Spotlight search provider this year in favor of Bing. Yahoo, meanwhile, is less than a week removed from announcing it has displaced Google as Firefox's default U.S. search provider; Google is still the default provider in Europe.
- The Firefox deal suggests Google is willing to walk away from default search agreements if Yahoo/Microsoft (hungry to grow their scale) significantly undercut its revenue-sharing terms, betting much of its base will keep using Google regardless. Macquarie has estimated Google provides Apple with a 75% cut on Safari-driven iOS search ad revenue.
- On iOS, users could keep relying on Google search in the event of a Yahoo deal by manually selecting Google as their Safari search option (should Yahoo become the default), or by using Google's popular search and Chrome apps. StatCounter estimates Google had a 92.2% October mobile/tablet search share to Yahoo and Bing's combined 6.5%.
Fri, Nov. 21, 2:33 PM
- An EU parliament draft motion seen by the FT says the "unbundling [of] search engines from other commercial services" should be considered a potential solution to dealing with Google's (GOOG +0.4%) market dominance.
- The European People's Party and the Socialists, the parliament's two main political blocs, are said to back the motion. German politicians - many of whom have been harsh Google critics - hold considerable sway within the parliament.
- The FT notes that while the parliament has no legal authority to break up a company, it has "increasing influence" on the EC, which initiates all EU legislation.
- The report follows intense local criticism of Google's search antitrust settlement with the EU. New EU antitrust regulator Günther Oettinger has signaled he'll take a harder line with Google than predecessor Joaquin Almunia.
- Eric Schmidt defended Google against its European critics in Berlin last month. Almunia, meanwhile, has suggested the backlash to his handling of Google partly stems from fears European tech companies have fallen behind U.S. rivals. "I don’t remember any case…that triggered…this kind of reaction, even of [a] smaller size."
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