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  • Business Model Concerns Outweigh A More Appealing Valuation [View article]
    I agree with the previous comments on your claim of low guidance. PCLN is known for being conservative, last quarter they gave a guidance of 6.35 to 6.85. The top of the range was therefore 5% below the estimates of 7.21 at that time and the market reacted positively. They just issued Q2 guidance of 11.22 to 12.01, the top of the range being just 1% below current estimates of 12.12. Expect sales consensus and especially EPS estimates to rise in the next 3 months.

    As for the business model and the concern on their pricing, I believe the expedia prices and the PCLN prices to be very similar and PCLN has a policy in most countries of lowering their price if you find cheaper... PCLN also has a significantly wider reach than its competitors now so you could argue that they have a bargainging power and might obtain lower rates than their competitors.

    In terms of business model I am more concerned about the lower barriers to entry, the ever changing environment, the possibility for GOOG and other large players of entering the market more agressively and above all the falling ROIs meaning that PCLN has to keep increasing its online advertising faster than revenue growth and the European market has low brand recognition: it is all about putting yourself on the top of a London-Paris Google search!!

    In terms of a valuation, PCLN trades @ 20.9 times forward PE below its 10 year average of 21.6. The stock will need to have a return of 15 % in the next 8 months just to maintain this "below average" PE so my opinion is it is a BUY!
    May 10 07:06 AM | 2 Likes Like |Link to Comment
  • Google Missed: Where's The Outrage? [View article]
    The market is always right
    Feb 4 04:33 AM | Likes Like |Link to Comment
  • Google Missed: Where's The Outrage? [View article]
    That's a very poor answer.

    I just explained why GOOG didn't disappoint this quarter (just like the previous one), but i''ll explain again:
    - GOOG did not disappoint on EPS, Motorola did. This is probably why it announced the sale before the results.
    Strip the sudden rise in Motorola's Operating Losses and you get a nice EPS beat!

    So basically it missed because the division it is now selling had very poor results...

    Growth has slowed down because of Motorola again and GOOG networks being "cleaned of the poor advertisers" but it is showing signs of bottoming out and core advertising growth has accelerated to 21%

    Please remember that it is not about absolute growth but whether growth is accelerating or decelerating. Now strip Motorola from the results, look at the past 2 quarters and tell me it is not accelerating.
    Feb 3 10:43 AM | Likes Like |Link to Comment
  • Google Missed: Where's The Outrage? [View article]
    GOOG missed EPS expectations by 30bps because of a Motorola operating loss of $ 440M (~ $ 1.30 / share), twice the loss in Q3 (220M), Q2 (200M) or Q1 (180M). Now analysts can strip away those losses for next year. In fact GOOG has improved its margins all year (for the first time since IPO) if you strip Motorola who dragged down the consolidated margins further and further...

    Advertising GOOG owned websites accelerated at +21% growth and GOOG Network revenues showed signs of bottoming out. Hardware also accelerated at +100% with the Nexus 5 and chromecast.

    So every number has shown improvement and acceleration except for the Motorola Unit who has been a drag all year and especially in Q4. Strip it away and the results are great so I guess that is why the stock reacted positively to the announcement and the results.

    Now, you are right, at some point growth will slow down, GOOG will start disappointing and the stock will collapse from a valuation of 26 P/E to maybe15-18 P/E? But that time has not come yet and the stock will keep going further until the growth rate slows down.

    It's as simple as that.
    Feb 3 08:28 AM | 1 Like Like |Link to Comment
  • Earnings Preview: Google Q4 2013 [View article]
    Because there aren't that many company with $60bn in annual revenue that can still grow 20% per annum!
    Jan 29 04:05 AM | Likes Like |Link to Comment
  • Is Google Making Motorola A Loss Leader? [View article]
    This article is right on the spot!

    GOOG's core advertising revenue are so strong partly because of its strategy of giving Android for free. The cheap hardware is just a natural response to the competitive environment and the danger of having samsung switch to Tizen.

    GOOG is trying to get as many customers as possible, as opposed to as much revenue as possible (like AAPL). This is why they probably have low margins (probably negative) on the hardware and they give Android for free.

    It's not about revenues and margins, it is about getting as many customers as possible using their apps, their services and giving GOOG as much information as possible to increase advertising revenue.
    GOOG keeps building its moat and is almost untouchable in the advertising market... The higher the advertising revenue, the cheaper they can sell their phones, driving more and more customers on Android platforms, collecting more information from Maps, google play, Chrome...

    They have a stronger and stronger MOAT but at some point they will face a headwind (everybody does) and they know it.

    That is why they try and prepare the future whith IAAS in cloud, Robotics, cars, aging etc...

    Those are just bets they are making for when the environment gets tougher in advertising... But let's face it: they have a few years before someone even scratches the wall of their castle!
    Dec 5 01:33 PM | Likes Like |Link to Comment
  • What Will Drive Google Forward? [View article]
    GOOG is actually comoditizing the mobile market: software & hardware. They believ they can earn more money with advertising if more people use internet and have smartphones around the globe...
    Tthey are commoditizing the smartphone market by lowering their margins (maybe even having negative margins) and offering high-end phone at very low prices! They are actually bringing Samsung down and everyone else with them as they just want the industry prices to fall and they're not afraid of losing money on this. They are doing the same thing with cable in the US, their baloon project, or their latest adventure: phoneblocks!
    Only AAPL is fighting back correctly by raising prices and having a "luxury" "fashionable" approach to defend their castle.

    They are a such a threat to all hardware companies, I wouldn't want to be manufacturing phones, computers or tablets right now...
    Nov 1 03:32 PM | Likes Like |Link to Comment
  • What Will Drive Google Forward? [View article]
    Thank you for the article, I strongly agree with your analysis!

    I hope people realize that the great businesses with strong prospects will always have high valuations and will always be "expensive"... But if you take a long term view and believe in management's ability to execute well and deliver then it will be worth it.

    Then again, you will never stop retail investors from buying BBRY and short GOOG...
    Oct 31 02:18 PM | 2 Likes Like |Link to Comment
  • BlackBerry's BBM Head Start [View article]

    There is no more BBRY stock. To be fair it is probable that BBRY is using the data on the BBM release to try and negotiate a better deal and a better price. So I imagine that's what you are trying to guess? How many cents/share more you can have thanks to the apparent popularity of BBM...?

    Come on, let's not fool ourselves: None of us have any idea of what is going on around the negotiating tables... Some of us are trying to "invest" money here, I stopped playing blackjack a while ago...
    Oct 30 07:05 AM | Likes Like |Link to Comment
  • BlackBerry's BBM Head Start [View article]
    I agrre with you shaned... this is a sad story!

    I was highly interested in BBRY and confident that the company would succeed with its new phones and internally developped OS... I still believe the technology is competitive compared to Apple or Samsung (or maybe even better?!) but the client is king, and the client doesn't want Blackberry, it's very clear now!

    Someone will buy parts or all of BBRY but nobody knows at what price and when... As the company is losing a significant amount of cash every quarter, time is the ennemy here and the Private Equity industry will do everything to get the lowest price.

    If you already have your money into it I understand that it is worth the wait, but investing in BBRY in the past 1 -2 months is not called investing... You might as well play the lottery.

    Mr. Kesarios, I really liked your bullish points on BBRY and I always thought they were objective and based on facts. Now I don't think it is the case anymore and you are not doing anyone a favor by defending it like that.

    The reality is that this is the stock market. BBRY is being bought and time is the ennemy. Professionals will do everything they can to get the lowest price. Frankly, nobody knows what the outcome will be but we know it will be a long fight between buyers and shareholders that will probably last a while and involve many lawsuits...

    I still think it's a great company, but the profits will go to the private equity industry not the actual shareholders, that is the reality of the story.

    PS: I do not hold and have never held any position in BBRY
    Oct 30 06:50 AM | 1 Like Like |Link to Comment
  • Google smartwatch on tap, Motorola launches modular phone project [View news story]
    Which is exactly why AAPL and GOOG are two very different companies and people should try and stop comparing valuations.
    Oct 29 11:00 AM | Likes Like |Link to Comment
  • Google Is Held To A Different Standard Than Apple And Others [View article]
    I have to agree with Jonrice 80! Again I agree with most of your article and I've been thinking the exact same thing during the Week-end after looking at the numbers but you are really off on the valuation!

    Why compare the P/S of AMZN and GOOG? They do have the same business model => "focus on the customer and experience, and the profits will naturally come after".BUT one is highly profitable since 2003 and the other is still losing money...

    You can't select peers just using the Market cap!! That makes absolutely no sense... A company's value depends on its sector (opportunities etc.), its growth rate (obvisouly, if you have a stable valuation with earnings growing 20%, the stock will go up by 20% during the year: that is what growth is!), it's margins / profitability / leverage ...

    So GOOG trading at twice the P/S of AMZN is actually not much, GOOG is more than two times more profitable that AMZN...

    It doesn't matter when GOOG was built becaus FB and GOOG are quite different so the valuation will not come down in 5 or 6 years... It will come down as growth slows and the expectations start lowering...

    The forward P/E of GOOG is about 20x (it has been oscillating between 15 and 20 for the past 5 years: very stable) ang AAPL is 12.5 so... I think that is a 50% mark up....

    Priceline grows fairly quickly and they actually earn a significant amount of money in advertising in Europe. Its revenues are linked to online sales and the e-commerce market in general. It could be a good peer to look at! Ebay is a very good example as well..

    Finally, the value of a company depends on the market and if you short GOOG now, you better be sure that the bull market is turning for bear... I don't see it that way, and I see shorts having a hard time in general! I think shorting GOOG now is a big mistake, but it could be a good trade in the medium term; / long term, as GOOG's revenue growth slows...

    Anyway, I think you have an interesting article and you're right when noticing that the market doesn't treat these GOOG and AAPL the same way (too positive on GOOG) but unfortunately I find that you miss the basics on Valuation. I am not saying it is cheap, Even my valuation (average of 7 valuation methods) comes slightly below a $1000 with very bullish assumptions... But you have the wrong peers, you don't put value on the growth, you don't put value on the sector and its prospects and finally on the specific of the company...

    By the Way the PEG (Price to earnings growth) of GOOG is 1.39, FB is 2.51, MSFT is 1.70, AMZN is 10.45 (that is because of their margin skewing the Earnings growth rate)...
    Oct 22 07:24 AM | 1 Like Like |Link to Comment
  • Google Is Held To A Different Standard Than Apple And Others [View article]
    I completely agree with the author when he says that GOOG is treated differently, and yes I think +13% on a beat that is mainly due to a lower tax rate and lower expectations is extreme.
    On the other hand, you do mention that the core advertising segment shows acceleration growing at +19.6% and you don't talk about the fact that GOOG seems to be stabilizing its gross margin and operating margin which had been declining since the IPO... And they also have a lot of room for improvement (Motorola's gross margin is around 10%!). I'm not talking about the potential (yet still speculative) opportunities GOOG is trying to seize...

    So in the end I don't see how GOOG should be valued like an AAPL or MSFT? And could you explain why you choose them as peers? I mean 85% of GOOG sales are Advertising... While MSFT and AAPl are Hardware companies, in the process of being commoditized... So Appart that they're all classified as Tech, I don't really see them as peers... should I?
    Oct 21 04:57 PM | Likes Like |Link to Comment
  • Google: Stuck In The Middle And Going Nowhere [View article]
    GOOG has prospects other than online adverising while AAPL is seeing a decline in their top line growth rate without any prospects.

    Apple was highly valued for being an innovative company. But as that is changing, the valuation is changing as well. It is still a very profitable business, focusing on the high end of the market and this "Luxury strategy" should pay off in the Long-Run.

    GOOG benefits from the fact that it is still a highly innovative company, and it needs to show that its prospects (Google glass, Driverless cars, Chromecast in TV, Google music...) are valuable assets that will generate growth and higher margins in the Long run...

    In other words there are opportunities/risks that the market sees in Google but not in Apple anymore.
    Oct 11 03:38 PM | Likes Like |Link to Comment
  • Bull Of The Day: CME Group [View article]
    This stock is not about earnings, you should look at its historical P/E. It's a stocks that sees multiple expansion when the Macroeconomic environment looks better and that collapse before a crisis! Now that it has been "re-valued" by the market it will grow with earnings (hopefully double digits) but you don't want to hold it before a bubble...
    Aug 6 09:10 AM | Likes Like |Link to Comment