GOOGL - Google

[Liberty]

Google keeping almost all its 200,000 employees working from home "at least" until July 2021:

 

https://www.wsj.com/articles/google-to-keep-employees-home-until-summer-2021-amid-coronavirus-pandemic-11595854201

[Liberty]

Q2:

 

https://abc.xyz/investor/static/pdf/2020Q2_alphabet_earnings_release.pdf?cache=a881c38

 

First revenue decline ever for the company

[villainx]

First revenue decline ever for the company

 

That's interesting.

[D33pV4lue]

Interesting to actually see how powerful search revenue is to operating margin. I knew the incremental revenue was amazing. But without ever seeing a down quarter you don't get to see the opposite affect. They are such a big company and search drives income. Wonder if this will force them to be more nimble cut back on certain costs to lower fixed cost nature of search. Already during Q2 they discontinued alot of the smaller projects that most likely didn't have a chance of becoming anything bigger. Positve commentary that search at the end of the quarter was flat YoY vs down. Looks like this could be the bottom.

[Spekulatius]

Interesting to actually see how powerful search revenue is to operating margin. I knew the incremental revenue was amazing. But without ever seeing a down quarter you don't get to see the opposite affect. They are such a big company and search drives income. Wonder if this will force them to be more nimble cut back on certain costs to lower fixed cost nature of search. Already during Q2 they discontinued alot of the smaller projects that most likely didn't have a chance of becoming anything bigger. Positve commentary that search at the end of the quarter was flat YoY vs down. Looks like this could be the bottom.

 

Google has become very fat. Just look at their employee count YOY. Their revenue/ employee hasn’t looked great for quite some time. Some people call it investment, but considering how much employees count still increase within their very mature search business, I think it is mostly bloat.

[Broeb22]

Interesting to actually see how powerful search revenue is to operating margin. I knew the incremental revenue was amazing. But without ever seeing a down quarter you don't get to see the opposite affect. They are such a big company and search drives income. Wonder if this will force them to be more nimble cut back on certain costs to lower fixed cost nature of search. Already during Q2 they discontinued alot of the smaller projects that most likely didn't have a chance of becoming anything bigger. Positve commentary that search at the end of the quarter was flat YoY vs down. Looks like this could be the bottom.

 

Google has become very fat. Just look at their employee count YOY. Their revenue/ employee hasn’t looked great for quite some time. Some people calling investment, but considering how much employees count still increase within their very mature search business, I think it is mostly bloat.

 

The greatest business model in the world doesn't need to grow employees that much, which is just one reason that dual share classes that consolidate power may be good in the short-term but not so good when a business is clearly being undermanaged. I hesitate to say mismanaged in this case because Google's business is so good, but there is no doubt they could be better managed in a variety of ways.

[Gregmal]

Meanwhile, Google uses MSFT's deal shadow to acquire a stake in ADT. Interesting move. Not really material though.

[glorysk87]

In this thread: people who don't understand that Google purposely bloats their cost structure and perennially under-earns in an effort to reduce antitrust scrutiny

[D33pV4lue]

Interesting to actually see how powerful search revenue is to operating margin. I knew the incremental revenue was amazing. But without ever seeing a down quarter you don't get to see the opposite affect. They are such a big company and search drives income. Wonder if this will force them to be more nimble cut back on certain costs to lower fixed cost nature of search. Already during Q2 they discontinued alot of the smaller projects that most likely didn't have a chance of becoming anything bigger. Positve commentary that search at the end of the quarter was flat YoY vs down. Looks like this could be the bottom.

 

Google has become very fat. Just look at their employee count YOY. Their revenue/ employee hasn’t looked great for quite some time. Some people call it investment, but considering how much employees count still increase within their very mature search business, I think it is mostly bloat.

 

Agree with glorsky that this could be related to anti-trust scrutiny. Also, the increase in headcount isn't related to google search. They built out a huge sales force for GCP, product managers and engineers. I don't know how revenue/employee is a relative metric almost as pointless as price to sales. Doesn't tell you anything about what those employees are doing, future prospects or profitablility. On another note, they issued 10B in debt as far out as 2060 at phenominal rates. 5.75B are sustainability bonds.

[Broeb22]

In this thread: people who don't understand that Google purposely bloats their cost structure and perennially under-earns in an effort to reduce antitrust scrutiny

 

That's awful presumptuous of you. How is that strategy working out for them?

[bizaro86]

In this thread: people who don't understand that Google purposely bloats their cost structure and perennially under-earns in an effort to reduce antitrust scrutiny

 

If that's true they are just volunteering to pay the equivalent of a fine every year.

[Liberty]

https://blog.google/outreach-initiatives/sustainability/our-third-decade-climate-action-realizing-carbon-free-future/

[coc]

In this thread: people who don't understand that Google purposely bloats their cost structure and perennially under-earns in an effort to reduce antitrust scrutiny

 

What is the evidence that this is actually true rather than a theory Google bulls hope is true?

[Broeb22]

In this thread: people who don't understand that Google purposely bloats their cost structure and perennially under-earns in an effort to reduce antitrust scrutiny

 

What is the evidence that this is actually true rather than a theory Google bulls hope is true?

 

I'm assuming you're asking specifically about the costs at the Google Ads business vs. the billions they set on fire annually in this century's version of Bell Labs otherwise known as "Other Bets". 

[Broeb22]

In this thread: people who don't understand that Google purposely bloats their cost structure and perennially under-earns in an effort to reduce antitrust scrutiny

 

What is the evidence that this is actually true rather than a theory Google bulls hope is true?

 

How about the famous Google company policy that allows all employees to spend 20% of their time on projects they're passionate about?

 

You can argue that this policy is exactly what attracts people to Google, and my response would be do you think the employees at Slack or Spotify get the luxury of working on pet projects while their respective companies fight for survival (dominance?)?

 

[Jurgis]

How about the famous Google company policy that allows all employees to spend 20% of their time on projects they're passionate about?

 

That's just (fake) advertising. Most people at Google cannot spend 20% of their time on the projects that they like.

[Liberty]

How about the famous Google company policy that allows all employees to spend 20% of their time on projects they're passionate about?

 

That's just (fake) advertising. Most people at Google cannot spend 20% of their time on the projects that they like.

 

https://www.hrzone.com/lead/culture/why-did-google-abandon-20-time-for-innovation

[glorysk87]

In this thread: people who don't understand that Google purposely bloats their cost structure and perennially under-earns in an effort to reduce antitrust scrutiny

 

If that's true they are just volunteering to pay the equivalent of a fine every year.

 

I mean yea -- it's the favorable alternative vs. having some regulatory remedy that structurally changes/impedes their business

[fareastwarriors]

https://www.forbes.com/sites/maneetahuja/2020/09/17/exclusive-ruth-porat-on-leading-through-crisis-and-googles-latest-moonshot-to-rebuild-the-us-economy-one-small-business-at-a-time/#6088f23e44a9

 

Ruth Porat On Leading Through Crisis And Google’s Latest Moonshot To Rebuild The U.S. Economy—One Small Business At A Time

[fareastwarriors]

Google, Fitbit deal set to win EU okay after fresh concessions

 

https://www.reuters.com/article/us-fitbit-m-a-alphabet-eu-exclusive/exclusive-google-fitbit-deal-set-to-win-eu-okay-after-fresh-concessions-sources-idUSKBN26K1PH

[Gregmal]

https://www.cnbc.com/2020/10/29/alphabet-googl-earnings-q3-2020.html

 

Blowout. Still have a nice core position, but regret having sold some of this in the beginning of the year on "valuation" concerns. Yet another reminder, just like with COST and SAM, that buying AND selling quality companies with the prime focus being "valuation", is stupid.

[villainx]

https://www.cnbc.com/2020/10/29/alphabet-googl-earnings-q3-2020.html

 

Blowout. Still have a nice core position, but regret having sold some of this in the beginning of the year on "valuation" concerns. Yet another reminder, just like with COST and SAM, that buying AND selling quality companies with the prime focus being "valuation", is stupid.

 

I wonder how much of it is due to not properly factoring Covid, whether sold before Covid, or not realizing tailwind due to Covid.  I'm sure we all have plenty of examples of reminders.  But what would have been reasonable sells under "normal" times just got upended.  My own example was selling some LULU for valuation reasons just to see it ... become a reminder.

[Gregmal]

Yea I sold a bunch of stuff(or trimmed in most cases) in the November-February lead up solely on valuation concerns as well as concerns about the potential Presidential nominee for the Democrats as for a while it seemed very likely to be a Sanders/Harris/Warren type rather than Biden. Nothing really related to COVID. I guess the question here is, how sustainable are the recent premiums given to some of these names...or do they give any of that back. In the early stages of COVID the issue everyone brought up with GOOG was "OMG ad spend will fall off a cliff"...I personally think the antitrust issues are a bigger thing for GOOG, although those may end up being a net positive and maybe even a catalyst.

[Xerxes]

The former CEO of IBM from the 90s had an interview where he said something interesting about anti trust and Google. It is not so much the breakup or regulatory framework etc that concerns him about Google, it is the lack of innovation because everything has to be viewed by lawyers and constant distraction that concerns him going forward.

[villainx]

The former CEO of IBM from the 90s had an interview where he said something interesting about anti trust and Google. It is not so much the breakup or regulatory framework etc that concerns him about Google, it is the lack of innovation because everything has to be viewed by lawyers and constant distraction that concerns him going forward.

 

Good interview?  And where?  I'm of the mind that stuff like threat of breakup/regulation is more of an overhang, and that's being careful is stifling things a bit, but post any type of action, it'll be a nice tailwind.  With outer limits delineated, easier to avoid or to touch but not overreach. That's also a fairly popular opinion though, right?