GOOG will go DOWN
$280.00 on 2/06/09
$569.96 (72.08% from time of market call)
I don't know if you heard the Disney conference call but they made it clear that they are seeing an huge softening in ad pacing. With a weakening in the auto sector, financial sector, and retail companies are spending less on advertising and while it is only 20% of the companies revenue it had an effect on Disney. This is a huge concern for me, lets be honest Google is a one trick pony, most of there money comes from their ad business and while they haul in 70% of ad spending online I am still curious to know how much that really is. Google is not Apple it has one cash cows and a series of liabilities around it i.e solar exploration business, that eats away at its revenue each year. I believe that this will hurt the company considerably during this global slowing. I know Jim Cramer loves this stock but if you listen to him when it comes to managing your portfolio then you must be enjoying your AIG's gains. Furthermore, remember last month's announcement by Google to enter the television ad space; show me the money. I believe that Disney's conference call was extremely revealing to a trend of economic slowing and cutting back by several business. Another thing I dislike about Google is the fact that they have admitted that they are not hiring as much new talent. Lets face it when you are a tech company you survive on the strength of your ideas and talent of your staff. Google has problems retaining their staff already (they are extremely ambitious and like the idea of running their own shop) how will they compete with its competitors if they don't continue to hire the brightest talent in the tech space. I read an article in fortune that basically portrayed Google's executive team as so despair to keep talent and expand their business that they offered former employees a blank check for an idea that they did not fully understand, which the former employees rejected and left to form their own shop. Don't believe the hype no tech company with an balance sheet as bad as Google can be recession proof. Google reminds a little like the American government, they like to throw money at their problems and hopes to god that it fixes itself. I do believe that this recession will not be a rather productive season for Google and expects it to be reflected by the stock price.
"solar exploration"? At best, Google might spend $50mm
per year in R&D related to solar, that's not even 2 dimes.
Where do you get Google having a bad balance sheet? Something about
tons of cash you don't like?
If the recession/depression is as bad as you seem to be implying,
reducing hiring will mitigate any small revenue growth shortfalls,
and just HAVING a job will be reward enough during rising
unemployment. I don't think Google mgt really needs to worry
about losing employees to start-up ideas, very risky these days--
see Sequoia letter.
Stock is down by over 50%, pretty sure the "tough times"
are already baked into stock price, whereas not so sure with Disney
or "legacy" advertisers. You can almost watch any show or
movie online these days, that's a revenue upside for Google,
not so much for Disney and friends whom must compete with more and
more increasingly higher quality amatuer content.