GOOG: Google
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» smile_1 - GOOG buy or Bye Bye
In response to Another Click Fraud analysis posted by smile_1:"GOOG is a $228 stock about fv if they sustain 30% lt growth
I would begin buying GOOG at about 30, maybe"
GOOG buy or Bye Bye
Looks like the hype is coming out of GOOG today and reality is catching on. Ouch!
-- posted by smile_1
» smile_1 - fatal flaw
if analysts start cutting forward earnings for GOOG - and you know they will:
1) Fed has one more hike @ 25 basis pts
2) search.yahoo.com ramp is coming
3) search.msn.com ramp is here
4) click fraud
5) non divirsified earnings stream where barrier to entry is not that great.
I still think Google has the advantage in search engine algorithm but the gap is closing fast.
Bottom line could see forward earn. of 6.5 not 8.76
price on goog could be below 200 in 3 to 6 months.
I bid 28.5 in after hrs for 100 shares just for laughs
-- posted by smile_1
» smile_1 - Re: fatal flaw
In response to fatal flaw posted by smile_1:Really very interesting to see the CNBC guys interview one of the GOOG sell side analyst.
The question which came up a number of times was:
Why aren't you cutting your earnings for GOOG since goog simply met expectations and did not beat or hit whisper?
The analyst mumbled something about the shares being bid up by MO players and that 10-15% of that fluff is now gone.
Still didn't answer the question.
Those who have been around awhile know what is going on.
It's called distrubution.
Big players holding this pig up to sell to retail bag holders.
Look out below.
-- posted by smile_1
» smile_1 - Re: fatal flaw
In response to Re: fatal flaw posted by smile_1:but we hit our estimate on Rev....
it was just a minor tax rate issue...
or was it: http://biz.yahoo.com/rb/060202/google_in...
moral of the story - don't be a bag holder
-- posted by smile_1
» smile_1 - Re: fatal flaw
In response to Re: fatal flaw posted by smile_1:Just so no one misses it...
The real story is that they put more into foreign operations hoping to get a big bang from that buck, and they did not.
Good short from 475 or whatever that high point was. Very easy to see this pig was not going to keep up the YOY Rev grwth it was used to surprising the GooG bag holders with.
-- posted by smile_1
» Normxxx - Google poker
Google pokerCommentary: Know when to walk away, know when to run
By Bambi Francisco, MarketWatch
SAN FRANCISCO (MarketWatch)— Watching investors trade Google reminds me of watching my father play poker.
At times he's a conservative player, somewhat analogous to a value investor in the stock market. In general, he's aggressive, playing a lot of hands and inclined to bluff. He makes big gambles with barely a high card, and others fold around him, nervous that he has a strong hand.
The question for many investors who sit around this great poker table that we call the stock market is: Do you buy Google below $400?
(Well, maybe it's: Did you buy Google (GOOG) below $400? After all, the stock ended Wednesday a shade above that once-towering target.)
As a poker-player's daughter I ask myself, what will momentum investors sitting around the table do? Will they rush in and bid up the stock? Will others nervously snap it up in some sort of panic buying feeding frenzy? Will they keep the stock afloat long enough that long-term investors begin to build up their holdings around $400?
What's the risk if I fold this round while Google trades below that number?
There is a risk.
Here's the risk to the upside.
"There's been so much liquidity in the marketplace over the last three weeks," said Jay Matulich of Septos Opportunity Fund, in an interview with This Week's Wizard. "M-3 [money supply], for example, is up almost $500 billion and has been growing at double-digit rates over the last three months." Even with another rate hike in place, "the Fed is providing plenty of liquidity to the marketplace, and I think we could get a big, big liquidity blow-off in the markets and it may come fairly soon," he said.
Additionally positives include that industry advertising trends remain positive and investors expect Google to be a main beneficiary. Google uses its cash to buy growth. Amazon.com (AMZN) could show solid growth when it reports after the close Thursday. Investors believe the Internet story isn't dead. And Google could be added to the S&P 500 Index.
On the other hand, there's a risk to the downside.
I'd be choosing to fold for now, in hopes of another opportunity down the road to buy the stock at the same price or lower.
Google may have reported solid numbers in the fourth quarter, but we're now entering the slowest two quarters for this search giant— the second and third quarters. Even mighty Google isn't immune to the law of large numbers and seasonality.
Searching isn't as robust during the spring and summer quarters as it is during the holiday and first quarter because most people would rather be outside than inside on their computers.
Last year, shares of Google traded flat between February and late April. To be sure, that lackluster performance in shares was partly due to some investor skepticism surrounding demand for keyword searches. It was a perfect time to be bullish, actually, since everyone was bearish. To this end, I suggested in mid-February 2005 to be bullish on Google because demand for keyword searches were far more widespread than investors had thought.
It was a good call since after Google reported its first-quarter results in late April 2005, the stock shot up 50% or roughly $100 to over $300 between the time Google reported in April and the end of June.
But last year, Google was not as widely owned as it is this year. The stock was driven higher by a number of institutional investors getting in at whatever price they could.
Google is also posting larger numbers, making it harder to maintain its growth rate. It already showed some of that deceleration in the fourth quarter. About 4% of advertising is going online. Does that percent jump up to 15% or 20%? If so, is Google going to be the beneficiary of all those ad dollars online? It'll be a big beneficiary, but not the only one.
Additionally, after Google's first-quarter report, and the initial jump to $300 by the end of June, the stock traded sideways through October.
What does this mean? It means there won't be the additional buyers driving up the stock this time around. Nor will there be the seasonally strong quarters to add as a tailwind. And, I haven't even mentioned the Google employees who will likely take the opportunity to sell shares.
What multiple will you pay?
As I've said in my piece for Trading Strategies, and in a couple of other columns, what you pay for Google depends on the multiple you're willing to offer, the return you think you might earn, and the risk you're willing to take. See Trading Strategies column.
Google is trading at a multiple of about 45 times next year's projected earnings. As it gets larger, and growth slows, that multiple does contract.
Any slowdown in growth results in a contraction in the multiple investors are willing to pay. Therefore, an investor may only be willing to pay you, say, 35 times 2007 earnings of $12, which gives you a stock price of $420 in a year.
That means if you bought the stock Wednesday— even at $370, where it's not trading anymore— you might earn a 14% return in a year. Is that worth the risk? That's up to you.
If Google earns $10 in 2007, and someone pays you a 35 times multiple for those earnings, Google would trade at $350 a year from now.
Est. EPS
2007 $ 9 $ 10 $ 12 $ 13 $ 15
50x $450 $500 $600 $650 $750
40x $360 $400 $480 $520 $600
35x $315 $350 $420 $455 $525
Rather than enumerate the pro's and cons. I'm just going to leave you with some of the columns I've written in the last six weeks.
During that time, and especially when Google traded above $450, I've cautioned that expectations for Google were running high.
See Net Sense: Will Google shrug?
See Net Sense: Internet predictions for 2006.
See Net Sense: Google at $600.
My blog lab
I moderated a panel for the Information Industry Summit Wednesday in New York called "My Media: The explosion of User-generated Journalism." Jeff Jarvis, a prolific and outspoken blogger was among the panelists. I guess that's redundant, most bloggers are outspoken. Jarvis has suggested that I'm myopic and blind to the possibilities of user-generated and audience-generated content. Actually, I'm not. I'm a blogger too. Much as Google has its labs, my blog is my lab. It's a way to understand what readers and viewers are interested in, and how they interact with one another. Most especially, I like to see if I can start a conversation, walk away, and see if my readers continue the discussion. They do. I've learned about readers. One recently told me to keep my personal ideologies to myself. That was odd. It's my blog, after all. What did I learn? I learned that the audience wants to be heard, wants to control, wants to have some sort of authority and influence, even if it means kicking a blogger off their own blog. I hope the panel will help answer some questions, like, how do you control this mob? How do you manage, organize and measure what is relevant?
______________
The contents of this letter/report does not necessarily reflect the opinions or viewpoint of normxxx. They are provided for informational/educational purposes only.
The content of this message is not to be construed as constituting market or investment advice. It is intended for educational purposes only. Individuals should consult with their own advisors for specific investment advice.
-- posted by Normxxx
» SteveT - In the Drink
BARRON'S COVER
By JACQUELINE DOHERTY
INVESTORS HAVE BEEN FIXATED on Google the past few weeks, as its shares have tumbled nearly 25% from a peak of $475 -- and the fact is, there could be a lot more tumbling ahead. The share price could well be cut in half over the next year as the Internet giant grapples with growing competition from Microsoft and Yahoo!, increased pricing pressures in its online ad sales and mounting concern about what's known as click fraud.
Suffice it to say, there are those who disagree: Fans insist that Google (ticker: GOOG) is headed to $500, maybe even $2,000. But the list of challenges the company faces is nothing short of mind-googling. As if Microsoft weren't enough, the search concern is headed for brawls with content providers like newspaper and book publishers. Phone and cable firms may also join the fray. Google's cost structure, meanwhile, is ballooning, with the company hiring thousands of new workers and mulling projects as far afield as space travel. If Google trips on even a few of the challenges, its earnings could easily disappoint.
To get a sense of what might happen to the stock, we gave one über-bull's 2006 revenue estimate for Google a 20% haircut, trimmed his projected expenses by 5% (but no further, because bulls greatly underestimate Google's costs), deducted stock-based compensation and, generously, gave the company credit for the considerable interest income on its cash. The result: Earnings would be 30% lower than the bull's projection, at $6.28 a share. If the stock were to maintain its current multiple of 41 on those lowered earnings, it would be worth $257. It's more likely the multiple would shrink to as low as 30, in line with the slower growth. That would make the stock worth $188, versus its recent $360.
Though this exercise is less than scientific, it clearly demonstrates two things. First, Google's business has tremendous leverage -- changes in revenue, in either direction, have outsized impacts on the bottom line. That's the result of high profit margins: 88% of net revenue and 58% of gross revenue. Second, the exercise provides a glimpse of the risk posed by a lofty stock multiple.
"Google reminds me very much of what went on in 1999 and 2000," says Fred Hickey, editor of the well-regarded High-Tech Strategist newsletter and a member of the Barron's Roundtable. "The valuation is insane, relative to what they do."
GOOGLE, BASED IN MOUNTAINVIEW, Calif., has been the hot company of the decade. Anyone with a personal computer knows the virtues of Google's cheery-looking search engine. The company's stock -- which came public in 2004 and then marched above $200, $300 and $400 -- is the stuff of cocktail chatter around the world. Co-founders Sergey Brin and Larry Page, who dreamed up Google seven years ago as computer-science students at Stanford, are now cultural icons with estimated net worths of $11 billion each.
Over the past two years, the company has shot ahead of Amazon.com (AMZN), Yahoo! (YHOO) and eBay (EBAY) in terms of sheer growth. Net revenues have increased more than 300% and operating earnings have soared 750%.
Though the company rightfully describes itself as a global technology leader, it makes its money from hawking ads. A full 99% of 2005's $6.14 million of gross revenue was derived from advertising; the other 1% came from licensing its search technology.
Google, which declined to make executives available for this article, profits from advertising in two ways. About 55% of gross revenue is generated when you click on an advertisement on Google's search-result page. Another 44% of gross revenue comes from clicks on ads that appear on Websites that are part of Google's network, hundreds of companies that gain advertisers for their own Websites through Google. Last year, Google kept 21% of the ad revenue from this channel, with the remaining $2.1 billion going to its partners. Google's $4 billion of net revenue excludes payments to Websites in the network.
Without question, the geeky Google guys have built one awesome money machine. The problem is, all the awesomeness is more than reflected in the stock price Barron's Online correctly made that observation when the stock was at $400 three months ago. The observation is still true at $360.
Google now sports a market capitalization of $110 billion, the 18th largest in the U.S. stock market. It is bigger than the likes of Wells Fargo and Coca-Cola. Google's market cap is 27 times its 2005 net revenue of $4 billion and 17 times its $6.53 billion of net revenue estimated for this year. That's almost double the ratio of some of its peers.
The shares also trade at a lofty valuation, relative to earnings. Google earned $5.70 a share in 2005, and that should grow to $8.85 this year and $12.06 in 2007, according to analysts polled by Thomson Financial. While those are heady numbers, they exclude stock-based compensation expenses and include substantial interest income from the company's $8 billion cash hoard. If expected stock-based compensation of $320 million and interest income of $320 million are tax-adjusted and deducted, 2006 estimates shrink to $7.47. Based on the current share price, minus cash of $26 a share, the price-earnings multiple rises to 45.
That's a multiple that the very greatest of technology companies haven't been able to maintain for long. According to FactSet, Microsoft (MSFT) back in 1999 traded with a peak P/E of 68 and a stock price of 58; the multiple is now 23 and the shares are half of what they were back then. Likewise, computer maven Dell (DELL) sported an 87 multiple in 1999 when its stock traded at 50. Now its multiple is 22 and its stock is 32. These are not companies that disappeared with the dot-com bust. They had strong businesses, but investors' expectations ran far ahead of reality, and growth slowed on an ever-larger base of business.
"Some of those who are euphoric about Google are focused on where the stock is going and not what the company is worth," says Scott Devitt, an analyst at broker Stifel Nicolaus, who rates the shares Hold. He thinks the stock is worth $400 in 12 months and would be an aggressive buyer if it fell to 314.
Google has been operating right in the sweet spot of the advertising world: ads placed on Internet searches. U.S. advertising in old-line media -- TV, radio and publications -- grew by just 4% last year to $265 billion, but Internet advertising surged by 34%, to about $13 billion, according to estimates by research firm eMarketer. And within Internet advertising, search advertising has been the fastest growing niche. It increased 42% in '05, and it's expected to grow by about 43% annually for the next four years, says eMarketer.
Advertisers like the targeted nature of search ads, which appear on Google's search-results pages with the label "sponsored links." They also like the ability to measure the results of the ads, seeing just how many people clicked them. Google has boosted its share of the segment to 40%, versus Yahoo's 30%, according to consulting firm comScore Networks.
The massive shift of dollars into search advertising helps explain why analysts expect Google to post high net revenue growth -- 63% this year and 40% in 2007, according to Thomson Financial. But those estimates may be ignoring a number of potential developments in the industry that could clip growth rates.
COMPETITION IS GETTING FIERCE. Over the next year, both Yahoo! and Microsoft's MSN portal are expected to improve their search offerings. In the second half of this year, Yahoo! hopes to improve its systems so that search-engine ads are more relevant to search results and therefore more likely to be clicked.
Microsoft, for its part, plans to introduce Windows Live Search, which will allow users to search across the Web, their desktops and their mobile devices, getting "fast access to real answers rather than hundreds of pages with thousands of links," according to Microsoft. It also is launching adCenter, allowing advertisers to come directly to Microsoft to place their ads on MSN and its searches instead of having to go through Yahoo!.
Last week, news came out that Amazon.com has jumped into the game through its network of "associates" -- Websites that have links to Amazon and receive fees when readers click the links and buy products. Amazon is offering to place ads from a third party on affiliates' sites; Amazon and the affiliates would then split the revenue generated by clicks on the third-party ads.
"Google is focused on one area. They're great at it, but the competition is mounting," warns Scott Kessler, an equity analyst at Standard & Poor's. He has a Sell recommendation on the stock and a 390 target.
There's also the threat someone will come along and change the rules of the game. Microsoft Chairman Bill Gates in a presentation in India reportedly discussed the idea of sharing the ad revenue generated by searches on MSN with the people conducting the searches. It's something Amazon.com already has started, by offering regular users of its search site, A9.com, 1.57% off of "virtually" all purchases at Amazon.com.
Certainly, prices paid for search advertising could take a fall. The market, in fact, has many of the earmarks of a bubble waiting to be popped.
To get an ad placed on Google or on its network, advertisers continually bid in an auction of key words or phrases used in searches. Google chooses to use the ad that has the best combination of high bid and relevance to searchers. The winner gets to show its ad prominently on the search-results page that pops up when someone types the key word into the search engine. The ad could also pop up on a Google partner Website, and the advertiser pays every time it gets clicked. The prices paid for advertising literally change every second and are entirely at the whim of the market.
"You have a frenzy for ad words that could disappear," warns Hickey. And that makes him unwilling even to take a stab at what Google's revenues will be or what the stock is worth.
A key phrase like "charity car donation" cost advertisers $35 per click in November, according to the word-tracker AdsenseHeaven.com. The phrase "home equity loan online" went for $27.89 and "mesothelioma attorneys" -- essential for an asbestos lawsuit -- went for $16.46.
Those popular phrases are much more expensive than the average word. A key-word price index calculated by marketing firm Fathom Online came in at $1.43 in December, up 4% from when the index was started in October 2004 but down from a peak of $1.93 in April. Some other market trackers, however, say they haven't seen a decline.
Key-word prices are coming under some pressure as consumers have become more sophisticated searchers and use more varied or specific words to search. That has increased the inventory of words to bid on just as the number of places for ads to appear has increased. Despite those pressures, the search industry's revenues have continued to climb because the number of searches conducted on the Internet has risen rapidly -- up 55% last year alone, according to Nielsen/NetRatings.
THE LOFTY PRICES FOR COVETED WORDS already have prompted some large advertisers to scale back. Flower giant FTD Group (FTD) recently complained about the high price of search advertising. "During the Christmas season, certain online search engine costs increased significantly over the prior year, and as such we made the decision not to pursue the resulting high-cost order volume," said Michael Soenen, chief executive officer.
FTD's move was spotted by none other than Henry Blodget, the scorned Wall Street analyst who famously predicted Amazon.com would more than double to $400 while the tech bubble was still inflating. He reported the move on his Internetoutsider.com while laying out a bear scenario for Google. If it plays out, he wrote, the stock could crumble to $100.
A number of other companies, including eBay, Priceline (PCLN) and Travelocity, owned by Sabre Holdings (TSG), have mentioned "an unsustainable level of spending" on search advertising, says Devitt of Stifel Nicolaus, citing transcripts of company presentations.
"IN SOME CASES," HE WROTE in a report, "pure-play Internet companies have shifted advertising to TV, newspapers and branded alternatives on the Internet, at just the same time that traditional offline media buyers are heading to the Internet in droves. One industry executive noted that the lifetime value of a customer acquired through Google for his/her business had approached zero."
In other words, just as the smart money is pulling out of search advertising, the dumb money is flowing in. But it's probably only a matter of time before everyone figures out the economics involved.
Before search advertising can take hold for the long term, it must candidly face up to click fraud. Each time an Internet user clicks on an advertisement, the advertiser pays Google. But as with any booming industry, an underworld has sprung up: Individuals and large, organized "click farms" have started firing off barrages of clicks, around the clock. Some nefarious clickers are trying to drive up the cost of their competitors' advertising. Others may be Websites that want to boost their own revenue by clicking on the ads on their own sites.
CLICK FRAUD CAN BE ESPECIALLY MENACING if it's conducted through software that can infect and take over a computer without the user's knowledge. The computer then clicks on a specified ad one, two, three times a day without the owner's knowledge. Multiply that by hundreds or thousands of computers, and soon you have robotic, or "bot," armies, controlled by "bot masters." Sadly for Google, this isn't a fantasy video game; it's very real.
Click fraud is something that everyone in the industry knows is out there. By some estimates, up to 25% of all clicks are fraudulent. But companies in the search-advertising business won't quantify how the fraud affects them. Not Google, not Yahoo!, not eBay, which is believed to be the largest search advertiser on the 'Net.
Not surprisingly, there is whole industry that advertisers can hire to analyze the clicks they're paying for. One such firm, Click Defense, is part of a lawsuit that alleges Google hasn't cracked down against click fraud and thus has left advertisers vulnerable.
Google has denied any wrongdoing and says it is addressing the issue. A spokewoman told Barron's in an e-mail: "Our expert teams and technology filter out certain invalid clicks before they even reach the advertisers' bills. When we become aware that customers have been charged for invalid clicks, we work to refund advertisers as quickly as possible." She added that losses associated with invalid clicks are "non-material."
None of this seems to cool the ardor of Google bulls. They believe the company will take its success in the realm of search and replicate it far and wide, making the stock the rocket that Microsoft was through the 1990s.
Mark Stahlman, the technology strategist at broker Caris & Co., figures Google will ultimately garner 1% of the global digital-services economy, which will include everything from buying books to paying a fee to store your medical and financial information. As a result, Stahlman says, Google's revenues could grow to a cool $100 billion, which would justify a long-term target of $2,000 on the shares.
Many bulls are focused simply on the company's ability to expand search into the world of audio and video content and tap into the $20 billion radio advertising market or the $64 billion market for television advertising. To that end, Google has purchased dMarc Broadcasting, which runs an online system for advertisers to buy radio advertising, for $102 million of cash and more than $1.1 billion more over three years if the company hits certain targets. It has also launched Google Video, which allows you to search for and download TV shows and music videos.
Google, however, faces formidable obstacles in such expansions. The distributors of the video on TV -- that is, ABC, CBS, NBC and Fox -- have strong brands. Consumers, for instance, know to go directly to CBS to get the latest Survivor episode. While the networks like the idea of also distributing videos through other sources, they're unlikely to give the business to just one source. By having a number of distribution sources, they may be able to better control pricing.
"People who own proprietary content will do anything they can to prevent search engines from becoming the gate keepers to their content," says Leo Hindery, former CEO of AT&T Broadband and TCI and current managing partner of InterMedia Partners. "No one is going to let Google become the next Comcast."
THE COST SIDE OF GOOGLE'S INCOME statement could also become problematic. Google is spending ferociously to expand into many new areas, none of which have yet to produce significant profits. Last year Google's capital expenditures hit $838 million, a 163% increase from 2004. Research and development costs, meanwhile, climbed 115%; sales and marketing grew 79%. General and administrative expenses jumped 140%.
Google has been on an all-out hiring binge. Last year alone, the company's head count soared 88% to 5,680. Perhaps the highest-profile hire was Internet pioneer Vinton Cerf, whose new title is chief Internet evangelist.
All the hiring has Google issuing lots of restricted stock and options. In its fourth-quarter earnings press release, the company said it expects dilution of about 1% to 1.5% of outstanding shares per year from all equity grants to employees.
The company says about half the value of its grants will be in Google stock units, the other half in options. That means stock-compensation expense could reach $500 million to $800 million annually by 2010, up from $201 million, or about 70 cents a share, last year. Analysts have been backing stock-based compensation out of earnings estimates, but that may get tough to justify if the expense rises above $1 a share.
Google's spending ways caught investors' attention last week after The Wall Street Journal reported that Google is in negotiations to get its software installed on millions of Dell personal computers before they are shipped to users. If the deal goes through, Google would pay Dell fees approaching $1 billion over three years.
Still greater spending could lie ahead, as Google readily acknowledges. "We plan to invest heavily in R&D and engineering in the months and years to come so we can continue to create and launch new products and services," the company spokeswoman said.
ONE PROJECT IN THE WORKS: The company has proposed building a one-million-square-foot research park and collaborating with NASA research. Among the subjects under consideration: large-scale data management, connecting smaller computers for supercomputing, the convergence of nanotechnology and biotechnology. According to the Mercury News of San Jose, Calif., Google and NASA might consider offering commercial tours in orbit, creating an extreme-sports league to play in zero gravity, and building space labs for biotechnology research.
It's far-out stuff, all right. And as any NASA budget officer can attest, the bills for such projects can add up quickly.
Stahlman says there's been speculation Google will use some of the $8 billion of cash sitting on its balance sheet to build as many as 300 data centers around the world, connected with their own fiber cables.
Google has also shown interest in developing new ways to connect users to the Internet. It reportedly spent $100 million to invest in Current Communications, a company that provides broadband service over power lines.
Even Google's basic costs of providing a search engine could surge -- and they will if content providers have their way. Google currently does not pay for the content it displays on its search results page, making the company's cost of goods sold as cheap as can be. But that may not last for long. The World Association of Newspapers, a Paris-based group of 18,000 newspapers in 102 countries, has formed a task force to examine the "exploitation of content" by search engines.
Book publishers are also getting edgy about Google. The Association of American Publishers -- on behalf of McGraw-Hill, Pearson's Pearson Education and Penguin Group USA, Viacom's Simon & Schuster and John Wiley & Sons -- filed a complaint in the U.S. District Court in New York, alleging that Google is breaking copyright laws by digitally copying books. The publishers want the company to get the copyright owner's permission before doing so.
Google counters that "Creating an easy-to-use index of books is fair use under copyright law and supports the purpose of copyright: to increase the awareness and sales of books directly benefiting copyright holders." Copyrighted materials can be used legally for certain purposes, including teaching, research and news reporting.
U.S. phone companies may also want a piece of Google's action. BellSouth, AT&T and Verizon Communications have each made noises about getting paid by Internet companies in exchange for the speedy delivery of content over their wires. If the Bells are successful, it's a safe bet that the cable industry will try to institute the same charges.
The phone companies' campaign is in its early stages. But the subject is hot enough that the Senate Commerce Committee held hearings on the matter last week. Google says consumers are already paying for Internet access through subscription fees, meaning that billing the Internet companies would be double charging for the same service. However, the Bells are under the gun, losing local telephone clients to the Internet and cellphones. They're certainly motivated to boost their revenues in any way possible.
Last quarter's results, meanwhile, may indicate that Google needs to spend still more to beef up its financial- management systems. The company missed Wall Street's fourth-quarter earnings estimates because it allocated more costs than it expected to its international operations, thus boosting U.S. taxable income.
"I think a lot of people are rationalizing the fourth quarter as a one-time tax hit," says S&P's Kessler. "I don't agree. This indicates the company's need to focus on and invest in its ability to more effectively forecast, manage and execute its international operations." That, too, would mean spending more money.
THEN AGAIN, GOOGLE MAY NOT CARE much about meeting, beating or missing Wall Street's expectations. Ever since its auction-style IPO, the company has flouted the Street's conventions, including those for earnings guidance. While that has paved the way for some big upside surprises, it could also mean the company is more likely than others to post misses.
Finally, there's the matter of persistent insider selling. As Google starts to spend the $5 billion it raised through two stock offerings in the past year and a half, its senior executives have aggressively sold shares. Co-founders Brin and Page have each sold more than $1.5 billion of stock. CEO Eric Schmidt sold $493 million. Omid Kordestani, senior vice president of global sales and business development, sold $793 million, and Ram Shriram, a director, pocketed $442 million, according to Thomson Financial.
Granted these folks all continue to have substantial holdings in the company, and most of the sales were part of pre-arranged selling programs that Google asked these executives to establish at the time of the IPO. Still, it's notable that none have purchased shares in the wake of the recent stock pullback. Investors might be wise to follow what they do and not what they say.
E-mail comments to editors@barrons.com
URL for this article:
http://online.barrons.com/article/SB1139...
-- posted by SteveT
» smile_1 - Blunderous GOOG - excellent Recap
posted here: http://finance.messages.yahoo.com/bbs?.m...
well done boildnoil
=================================
Last Institutional Investor Out Loses
by: boildnoil 03/07/06 10:49 pm
Msg: 659661 of 659715
Boy I'd hate to be holding millions of shares.
- First, the .22 miss on earnings
- Then they discover it wasn't just taxes (a cover up)
- Then the CFO mentions slowing
- Then the lame $100B futuristic world of dreamland
- Then the insider trading in the area of $1B (more than they earn)
- Then the two founders come on TV and do a road show showing their immaturity
- Then the fact they don't give guidance (good thing or they might be out of business already)
- Then they leak phoney guidance on their website
- Then they make it look like an accident, and that way if its wrong, they don't get blamed.
- Then they tell somebody about earnings (leak) so that investors dump 20M shares before the earnings come out and stock tanks $100
- Then they tell the world they have a huge stock offering every year that is amounting to more than 1/4 of annual profits (net)
- Then they mention that business is slowing in select areas
- Then they mention that REVS (costs) are going up to an amount equal to the other 3 quarters earnings
- Then WS starts a press frenzy to support the stock while Thomson's shows everybody and their brother is dumping (even with the stock pps going up)
- Then WS gets more desperate and overnight changes the earnings for 2007 to $12 per share from $7 to make the target look good enough to sucker in more retail and little buyers to unload shares on
- Then some big houses change their projections and say $200 or $275 or $400 from the highs of $500 and $600
- Then some other independent firms start using the Elliot Wave analysis and determine that the stock has to drop to $316 or $304 support before it can legitimately make a come back
- Then the standard sites start showing short term selling is increasing and the stock's F&P chart puts a $324-304 target for short term
- Then the rumors of lower first quarter earnings and maybe a big miss put the possibility of $200s in reality
- Then stock charts starts showing the Bollinger Band low end could drop below $300
- Then accumulation starts reversing, and MACD and several other indicators start changing direction
- Then that Cramer dude decides to cool his pumping on it
- Then other analysts start saying things about click fraud (its bad, its nothing, its something, its looming) causing an aire of uncertainty
- Then the China thing
- Then the DOJ thing
- Then the possibility of wrong doing with insider trading
When only 60 days ago this was the growth stock that could do no wrong--somebody or some thousands of Wall Street firms seem bent on bringing it to a new low now.
-- posted by smile_1
» Kirk - PLEASE USE NEW FORUM ON NEW SITE
.We have a new discussion forum for Google on our new site here.
I also have an article called GOOGLE on the new site.
This forum is now closed. Please use the new Google forum for your discussion.
Thanks!
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-- posted by Kirk
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