GOOGL - Google

[Kiltacular]

Pretty interesting article on Larry Page:

http://www.businessinsider.com/larry-page-the-untold-story-2014-4?op=1

 

Excellent!  Thanks for highlighting.

[Guest hellsten]

2004:

http://www.hussmanfunds.com/wmc/wmc040823.htm

 

Finally, we go ahead and discount the future free cash flows to present value. There are a lot of considerations in our own approach that I'm going to skip, and simply make the assumption that no sane investor would take long-term risk on the stock if it were priced to deliver a long-term return of less than 10%. Using that (again very charitable) discount rate, the expected future cash flows have a present value of about $6.5 billion. This compares with a current capitalization of $29.4 billion at a stock price of 108.

 

So on charitable growth assumptions, Google's value (not including proceeds from stock issuance invested in cash and marketable securities) would be roughly $24 a share if it were priced to deliver long-term returns of even 10% to investors. This isn't necessarily a forecast about the future direction of the stock price. Rather, it's a statement that in my view, the stock is probably priced to deliver unsatisfactory long-term returns at current levels.

 

In any event, 24 bucks is somewhat less than 108.

 

GARP is difficult. Hussman obviously failed to predict the future. Never underestimate a talented management team and a good product (Google Adwords/Adsense).

[saltybit]

2004:

http://www.hussmanfunds.com/wmc/wmc040823.htm

 

Finally, we go ahead and discount the future free cash flows to present value. There are a lot of considerations in our own approach that I'm going to skip, and simply make the assumption that no sane investor would take long-term risk on the stock if it were priced to deliver a long-term return of less than 10%. Using that (again very charitable) discount rate, the expected future cash flows have a present value of about $6.5 billion. This compares with a current capitalization of $29.4 billion at a stock price of 108.

 

So on charitable growth assumptions, Google's value (not including proceeds from stock issuance invested in cash and marketable securities) would be roughly $24 a share if it were priced to deliver long-term returns of even 10% to investors. This isn't necessarily a forecast about the future direction of the stock price. Rather, it's a statement that in my view, the stock is probably priced to deliver unsatisfactory long-term returns at current levels.

 

In any event, 24 bucks is somewhat less than 108.

 

GARP is difficult. Hussman obviously failed to predict the future. Never underestimate a talented management team and a good product (Google Adwords/Adsense).

 

Thanks for posting this. A good reminder that the future is always uncertain.

Here's an Economist article in 2004 enumerating Google's potential obstacles then:

http://www.economist.com/node/2630422

 

[siddharth18]

I love how it said "In search, Google is now vulnerable because the barriers to entry to its market are low"

 

 

Thanks for posting this. A good reminder that the future is always uncertain.

Here's an Economist article in 2004 enumerating Google's potential obstacles then:

http://www.economist.com/node/2630422

 

[jay21]

I thought this was a good (long) read on self driving cars: http://www.newyorker.com/reporting/2013/11/25/131125fa_fact_bilger?currentPage=all&src=longreads

 

"In God we trust. Everyone else, bring data.”

[Guest ajc]

 

"We think we are going to fundamentally change humanity's understanding of the economic landscape on a daily basis," says co-founder Dan Berkenstock.

 

Here's an example of what he's talking about. In 2010, an analyst at UBS discovered that if he bought satellite images of parking lots of Wal-Mart stores, he could predict the company's sales figures before they were revealed in its quarterly earnings report, because cars in lots equal shoppers in stores.

 

"We're looking at Foxconn every week," Mr. Berkenstock says, because measuring the density of trucks outside the Taiwanese company's manufacturing facilities tells Skybox when the next iPhone will be released.

 

Skybox can determine how much oil is being pumped out of the ground in Saudi Arabia by imaging oil-storage tanks from above. The company can peg the likely price of grain months in advance by measuring the health of every square yard of cropland on Earth.

One city has used Skybox's data to determine who built illegal backyard pools and might also use it to identify water-restriction violators during a drought.

 

 

http://online.wsj.com/articles/amid-stratospheric-valuations-google-unearths-a-deal-with-skybox-1402864823

 

 

 

[Liberty]

Good post, looking back on 10 years since IPO:

 

http://basehitinvesting.com/10-years-of-google-and-the-importance-of-long-term-thinking/

 

[Palantir]

Anyone know another fast growing tech company with a circa 30B market cap, brilliant ownership, focus on the long term, and obvious edge over the competition? A company that people actively root for?

 

;D

 

 

 

[dwy000]

...that throws off a massive amount of cash flow

[Picasso]

Anyone know another fast growing tech company with a circa 30B market cap, brilliant ownership, focus on the long term, and obvious edge over the competition? A company that people actively root for?

 

;D

 

Tesla?

[txlaw]

Spotify officially adds Omid Kordenstani, Chief Business Officer of Google, to its board:

http://recode.net/2014/09/11/spotify-adds-googles-omid-kordestani-to-board-along-with-rene-obermann/

 

Very interesting.

[rayfinkle]

maybe a dumb question...but at 20-30x earnings google does not seem expensive. Has anyone put some thought into this recently?

 

I have a handful of friends that work there in different roles--the level of talent and management there is outrageously good, and they have unlimited capital to invest in long-term world changing ideas.

 

 

[Palantir]

Google is a great business that is a near monopoly and a cash machine, and I think it can be a great investment, I bought in '12 and sold this year. My concern is how strong their market will be if in the future search is less relevant. But that's just IMO and you may feel differently.

[rkbabang]

I did an experiment earlier this year.  I was selling something (the website is down now because I no longer am) and decided to advertise with Google adwords and with Bing.  I set up both campaigns the same way with the same key words and the same spending limit ($5/day).

 

Adwords drove a lot of traffic to my site every day and it cost me $5 every day.  In the entire time that I had the advertising active (almost 6 months) Bing only got me few clicks for a total cost of $0.67.  So Google made about $900 of of me and drove a lot of traffic to my site, Bing gave me almost nothing and charged me almost nothing.  If I ever need to do any web advertising again I wouldn't even bother with Bing, it wasn't even worth the time I spent to set it up.

 

 

[DCG]

Nexus 6, 9, and Player announced, along with Lollipop:

 

http://www.google.com/nexus/

[Liberty]

Interesting piece: http://stratechery.com/2014/peak-google/

[justinbaka]

Anyone thinks the recent slide in share price of GOOG is a good entry point?

 

Seems like the shares are sliding due to the concerns of the souring of the relationships between European regulators and Google, whereby the Europe's privacy watchdogs aren't happy with the "right to be forgotten" rules and demanded that rule to be extended to the US Site.

 

Implication of this might be pressures on Google to split up which might not be such a terrible thing for shareholders.

 

At this juncture, it seemed to be trading at a EV/EBITDA of 15.5x and Forward P/E of 17.8x which is cheap for a company of this quality, with free options on its innovation line-ups.

 

Any thoughts?

[jawn619]

Anyone thinks the recent slide in share price of GOOG is a good entry point?

 

Seems like the shares are sliding due to the concerns of the souring of the relationships between European regulators and Google, whereby the Europe's privacy watchdogs aren't happy with the "right to be forgotten" rules and demanded that rule to be extended to the US Site.

 

Implication of this might be pressures on Google to split up which might not be such a terrible thing for shareholders.

 

At this juncture, it seemed to be trading at a EV/EBITDA of 15.5x and Forward P/E of 17.8x which is cheap for a company of this quality, with free options on its innovation line-ups.

 

Any thoughts?

 

not enough MOS for me yet but will keep an eye out. Google is a great business

[wbr]

Peak Google (?)

 

http://stratechery.com/2014/peak-google/

 

I found this article very thought provoking. I have never owned Google stock, but I have always admired the company and its culture. At the same time it is important to challenge your views and not fall in love with a company or its stock.

 

That being said I think the article misses some important points.

 

First of all it cannot be overstated how much a company can change when the founders are not in charge anymore. Apple has done well because Steve Jobs accepted the fact that the iPhone would cannibalize the iPod. When the founder is gone a company usually stops challenging their own businesses and pushing forward into (risky) ventures. In the tech space this is the greatest mistake. Thus the comparison between MSFT at the beginning of the new millenium and GOOGL today is off. The founders are still in charge and that makes a huge difference.

They have shown the ability to change when they bought Android even though they knew that their mobile search would compete with their desktop search and be less profitable (at least in the early years). But if they didn't do it, someone else would have done it. I think as long as Sergey and Larry are in charge they will find new opportunities and defend their existing markets - even if they have to tear something down and rebuild it.

 

The article also emphasizes the importance of native ads and claims that Google is not in a good spot to benefit from those. At the same time it seems to dismiss the scale Youtube has achieved and its opportunity in the native ad market, because it is small compared to the non-native search ad revenue stream. If Youtube was a standalone company it would be pretty damn large. I don't see many larger players in the native ad market except FB. Additionally Google has the resources to do strategic deals if necessary.

 

Maybe I'm just a fanboy but to me it does not feel like "Peak Google".

[merkhet]

Anyone thinks the recent slide in share price of GOOG is a good entry point?

 

Seems like the shares are sliding due to the concerns of the souring of the relationships between European regulators and Google, whereby the Europe's privacy watchdogs aren't happy with the "right to be forgotten" rules and demanded that rule to be extended to the US Site.

 

Implication of this might be pressures on Google to split up which might not be such a terrible thing for shareholders.

 

At this juncture, it seemed to be trading at a EV/EBITDA of 15.5x and Forward P/E of 17.8x which is cheap for a company of this quality, with free options on its innovation line-ups.

 

Any thoughts?

 

not enough MOS for me yet but will keep an eye out. Google is a great business

 

Google's MOS comes from the business itself -- if you're looking for an entry point like 10x earnings, it might be a while...

[TwoCitiesCapital]

Anyone thinks the recent slide in share price of GOOG is a good entry point?

 

Seems like the shares are sliding due to the concerns of the souring of the relationships between European regulators and Google, whereby the Europe's privacy watchdogs aren't happy with the "right to be forgotten" rules and demanded that rule to be extended to the US Site.

 

Implication of this might be pressures on Google to split up which might not be such a terrible thing for shareholders.

 

At this juncture, it seemed to be trading at a EV/EBITDA of 15.5x and Forward P/E of 17.8x which is cheap for a company of this quality, with free options on its innovation line-ups.

 

Any thoughts?

 

not enough MOS for me yet but will keep an eye out. Google is a great business

 

Google's MOS comes from the business itself -- if you're looking for an entry point like 10x earnings, it might be a while...

 

Agreed. I want to say that even in 2008-2009 when I was picking up my shares that it was only at a around a 12-15 multiple. It never got as low as 10x even then.

[karthikpm]

Basehit investing had a look at Google .

 

http://basehitinvesting.com/10-years-of-google-and-the-importance-of-long-term-thinking/

[Liberty]

http://news.investors.com/121114-730087-google-could-lose-big-if-it-loses-apple-safari.htm

 

Google (NASDAQ:GOOGL) has potentially $9.4 billion in gross revenue at risk if it's unable to renew a contract with Apple for mobile Safari toolbar searches, says a Citigroup report, which says potential losses depend on how many Apple customers stick with Google's search engine.

 

Google stock had fallen 3.5% as of Wednesday's close since the Information reported on Nov. 24 that Google's default search agreement with Apple might be in peril. Google stock, though, was up a small fraction in early trading Thursday.

 

That report said the Apple-Google deal is set to expire in 2015, possibly as soon as January. Apple's iPhone 6 sales have been stronger than projected, increasing the potential impact.

 

Citigroup analyst Mark May estimates that 60% of Google's 2014 mobile search revenue will come from its default search deal with Apple (NASDAQ:AAPL).

[rishig]

Whitney Tilson and John Heins (co-author of the Art of Value Investing book) visited Google a few weeks back. His presentation was called "A Google Skeptic Eats Crow"

[AzCactus]

New 52 week low today