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Google 2012 1Q Financial Analysis

|Includes: Alphabet Inc. (GOOG)

Google 2012 1Q results are good. 2012 1Q revenue is up to 10,6 bn.$. or +24% compared to 2011 1Q 8,6 bn.$. but almost the same as previous 4Q. As can be seen from graph below revenue is always at the same level in Q1 compared to Q4 then stably increases at the rest quarters. This is due to economic swing-back at Q1 after holiday sales at end of Q4. Net Income before depreciation has increased to 3,4 bn.$ which is more then +55% increase compared to 2011 Q1, but that quarter was unusually low. Compared to Q4 it has increased by 6% from 3,2 bn.$. Accumulated last 4 quarters Net Income before Depreciation has increased up to 12,8 bn.$ and should increase in the future.

According to http://www.netmarketshare.com Google share in search engine market stays stable around 80% so Google continues to be #1 without any notable competition. And in Mobile devices Google share is even larger ~90%

Income from google.com website generates ~70% of companies income same as it was in 2011 Q1, so companies dependence on one product remain high, but company is investing into new mobile technologies. Company is competing in its competitors fields: 1) Google+ competing with Facebook; 2) Chrome with Microsoft Explorer and 3) Android mobile + Motorola acquisition competing with Apple IPhone/IPad. And have to say that both 3 has improved their positions and moving at positive directions. In browser Chrome has gained from 12% to 19%. while Microsoft Explorer is losing its market share.

At mobile operating system Google Android has increased its share from 15% to 19%, but Apple (iOS) stays on top with its market share increased from 48% to 60%. As Mobile device market is almost dubbing each year this is were the main battle will be fought with Microsoft no were in sight with its tiny 1% of market share in Mobile market.

This could be the tigers that will boost companies revenue in the future even it some competitor will appear in Google monopolized search field. Company is gaining ground in new segments and is firmly holding its main search market. In general companies results are positive.

Balance structure continues to be very strong. Equity level is around 80%. ROE around 19% which both are quit good. Liquidity level 5,8 very good due to large cash and equivalent reserves which increased at Q1 up to 49,3 bn.$ from 44,6$ which is almost 2/3 of total companies asset - 77,1 bn.$. Account receivables 5,7 bn.$ turnover 48 days which is in line. Notable change in cash which increased from 10 bn.$ to 23 bn.$ while Short Term Investments decreased from 34,6 bn.$ to 26,2 bn.$ this is because company is preparing for final purchase of Motorola for 12,5 bn.$ which is not yet in companies balance sheet. This purchase results from companies results will be clear in the future, but this is a clear respond to Googles major rival Apple in order to take the competition to its mobile device field, keeping Google "homemarket" safe. But this could trigger Apple respond to attack Google at his stronghold by acquiring sites like yahoo or something other move. In general companies balance structure is strong.

 

Common Stocks 20,8 bn.$ 0,325 bn. 64,0 $
+ Retained earnings 40,9 bn.$ + 125,8 $ 189,8 $
+ 1 year Net income before Depreciation 12,8 bn.$ + 39,4 $ 229,2 $

Companies share basic value is ~190$ (Δ+6,7%/178$ compared with Q4). Current market price is606$ (Δ-1,6%/616$). which shows that market is paying 416$ more or 10,6 years of Net income before Depreciation earnings, which quit a lot but better then 12,3 years at previous 4Q financial analysis. Share profitability (Share market price/Net income before Depreciation) is 6,5% (Δ+0,5%/6%) which is average.

Company announced that it will pay annual dividends. It should be something around 3$/quarter/share or ~2% dividend yield which is a bit low due to high share price.

Analysis source: Google First Quarter 2012 Financial Results

Previous analysis: Google 2011 4Q financial analysis

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.