GOOGL - Google

[meiroy]

yeah, but what does it mean to own a share of a company and have no voting rights?  That seems almost contradictory. 

 

Anyway, regarding selling the C's--that doesn't really work.  If everyone does that, then it arbitrarily drives the price down, so now I'm stuck trying to evaluate two different types of shares because of this decision.  I'm not sure how much of a difference the price will be though, given that the founders have 66% control with the B shares already.  Mostly, just annoyed with it; they could have just issued them to the employees instead of this dividend...

 

Now I get your meaning, you're right. This split is annoying, at least at first look.

 

[Guest valueInv]

CPCs declined another 12%:

http://gigaom.com/2012/04/12/google-bounces-back-announces-stock-split-plan/

 

They are pitching it as due to the immaturity of mobile ads. However, historically, click through rates are high in the beginning and decline as a

channel matures:

http://andrewchenblog.com/2012/04/05/the-law-of-shitty-clickthroughs/

 

 

 

[Guest valueInv]

More on the CPC decline:

 

http://techcrunch.com/2012/04/15/mobile-paradox/

 

[prevalou]

What is the problem if sales increase more than 20 % and margins improve ?

[Guest valueInv]

What is the problem if sales increase more than 20 % and margins improve ?

Because sooner or later sales will start declining if CPCs and CTRs keep declining. I have argued that once Facebook goes public, they will rev up their monetization engine. This brings an increased supply of channels/ads into the marketplace and will reduce ad rates. Looks like this is already happening:

 

http://techcrunch.com/2012/04/16/facebook-cpc

[prevalou]

not necessarily.  better rates and efficiency for ads can boost demand globally too. Maybe advertisers paid too much according to the efficiency of the ads, are reajusting, bringing more efficiency and inspiring other companies too use adwords.

[cayale]

Perhaps mobile is still in the testing/experimental/tweaking stage.  Once you have proof of concept and proven ROI, prices could rise.  Hence 40% rise in clicks with lower CPC.  Just a theory.

[Liberty]

Perhaps mobile is still in the testing/experimental/tweaking stage.  Once you have proof of concept and proven ROI, prices could rise.  Hence 40% rise in clicks with lower CPC.  Just a theory.

 

I think that's what it might be. It took a while for big corps to become convinced that if they spent millions on online campaigns, they would get results that are worth the expense. We might be in the same stage for online ads, with more cautious and smaller buys.

[cayale]

Because sooner or later sales will start declining if CPCs and CTRs keep declining. I have argued that once Facebook goes public, they will rev up their monetization engine. This brings an increased supply of channels/ads into the marketplace and will reduce ad rates. Looks like this is already happening:

 

http://techcrunch.com/2012/04/16/facebook-cpc

 

I think there's some merit to this, too, over the longer term.  The platforms with critical mass and density should do OK, though, as long as they keep up technologically (which is what makes the business tough).

[Liberty]

Big GOOG infrastructure change:

 

http://www.wired.com/wiredenterprise/2012/04/going-with-the-flow-google/

 

Though Google says it’s too soon to get a measurement of the benefits, Hölzle does confirm that they are considerable. “Soon we will able to get very close to 100 percent utilization of our network,” he says. In other words, all the lanes in Google’s humongous internal data highway can be occupied, with information moving at top speed. The industry considers thirty or forty percent utilization a reasonable payload — so this implementation is like boosting network capacity two or three times. (This doesn’t apply to the user-facing network, of course.)

[DCG]

We got a Asus Transformer tablet running Android Ice Cream Sandwich here at work for troubleshooting purposes. I've been playing around with it a bit over the last few days and am pretty unimpressed overall with Ice Cream Sandwich. There are some good things about it, but there are somethings that im not sure why they changed from older versions of android.I find it pretty unintuitive, and it seems like people new to Android may be confused by it.

 

 

[jeffmori7]

Liberty, thank you for the link, it was a very interesting reading. I appreciate you take the time to share such kind of articles.

[meiroy]

Big GOOG infrastructure change:

 

http://www.wired.com/wiredenterprise/2012/04/going-with-the-flow-google/

 

Though Google says it’s too soon to get a measurement of the benefits, Hölzle does confirm that they are considerable. “Soon we will able to get very close to 100 percent utilization of our network,” he says. In other words, all the lanes in Google’s humongous internal data highway can be occupied, with information moving at top speed. The industry considers thirty or forty percent utilization a reasonable payload — so this implementation is like boosting network capacity two or three times. (This doesn’t apply to the user-facing network, of course.)

 

Very impressive.

 

And a followup to this new capability:

http://thenextweb.com/google/2012/04/16/google-drive-detailed-5-gb-for-free-launching-next-week-for-mac-windows-android-and-ios/?awesm=tnw.to_1E3xU&utm_campaign=social%20media&utm_medium=Spreadus&utm_source=Facebook&utm_content=Google%20Drive%20detailed:%205%20GB%20for%20free,%20launching%20next%20week%20for%20Mac,%20Windows,%20Android%20and%20iOS

 

"Google Drive detailed: 5 GB for free, launching next week for Mac, Windows Android and iOS"

 

 

 

[VAL9000]

It looks like GOOG is really cheap right now.  Market cap, $193 bn.  Cash on hand, $50 bn.  You could buy the whole company for $143 bn giving a P/E of 12.5 based on last quarter's earnings.  Keep in mind those earnings rose by 14% from 2010 to 2011 - a year of "transition" for Google.  Q1 2012 earnings are up 60% over Q1 2011 and up 6.8% over Q4 2012. 

 

Even after the MMI deal closes, we're still looking at a P/E of 13.5 after taking out the $12.5 bn cash for Motorola.

 

I will be buying more GOOG at this price.

[rranjan]

It looks like GOOG is really cheap right now.  Market cap, $193 bn.  Cash on hand, $50 bn.  You could buy the whole company for $143 bn giving a P/E of 12.5 based on last quarter's earnings.  Keep in mind those earnings rose by 14% from 2010 to 2011 - a year of "transition" for Google.  Q1 2012 earnings are up 60% over Q1 2011 and up 6.8% over Q4 2012. 

 

Even after the MMI deal closes, we're still looking at a P/E of 13.5 after taking out the $12.5 bn cash for Motorola.

 

I will be buying more GOOG at this price.

 

Should we back out the cash 100% for Google?

[bargainman]

Remember that some part of that cash stash is overseas, so not accessible unless they pay the repatriation tax, which from what I've read doesn't seem as bad as the corporations make it out to be.  Or at least no different than it is for personal taxes.  You get a tax credit for the foreign taxes, then you pay the difference.  Still, chances are they won't bring it back or can't without a hit to the balance.  I'm not sure how much of it is overseas in the case of goog.

[Guest valueInv]

Google's own Android revenues and projections:

 

http://news.cnet.com/8301-1035_3-57421363-94/is-android-critical-to-google/

 

I guess this settles one part of the debate about how much money Google can make from Android.

In 2011, their planned Android revenue was 1.35% of their actual total revenue. Historically, they have

been making less than half their target. (You can see them lowering their target.) It is likely that their

actual 2011 Android rev formed a smaller portion of their total revenues.

 

This also does not take cannibalization of desktop revenues into consideration.

 

[ExpectedValue]

Google's own Android revenues and projections:

 

http://news.cnet.com/8301-1035_3-57421363-94/is-android-critical-to-google/

 

I guess this settles one part of the debate about how much money Google can make from Android.

In 2011, their planned Android revenue was 1.35% of their actual total revenue. Historically, they have

been making less than half their target. (You can see them lowering their target.) It is likely that their

actual 2011 Android rev formed a smaller portion of their total revenues.

 

This also does not take cannibalization of desktop revenues into consideration.

 

I don't think they really care about making money off of Android directly. It's irrelevant to them. They just want smartphones to be accessing the internet so that they can get exposed to Google's ads.

[Guest valueInv]

Google's own Android revenues and projections:

 

http://news.cnet.com/8301-1035_3-57421363-94/is-android-critical-to-google/

 

I guess this settles one part of the debate about how much money Google can make from Android.

In 2011, their planned Android revenue was 1.35% of their actual total revenue. Historically, they have

been making less than half their target. (You can see them lowering their target.) It is likely that their

actual 2011 Android rev formed a smaller portion of their total revenues.

 

This also does not take cannibalization of desktop revenues into consideration.

 

I don't think they really care about making money off of Android directly. It's irrelevant to them. They just want smartphones to be accessing the internet so that they can get exposed to Google's ads.

How is that different from an iPhone user being exposed to Google's ads? Google is currently the default search engine for the iPhone and also iPhone users visit the same sites with Google's display ads that Android users do. So why invest a enormous amount of money and managerial attention if they

could make almost the same money by simply being the search provider for IOS?

[ExpectedValue]

Google's own Android revenues and projections:

 

http://news.cnet.com/8301-1035_3-57421363-94/is-android-critical-to-google/

 

I guess this settles one part of the debate about how much money Google can make from Android.

In 2011, their planned Android revenue was 1.35% of their actual total revenue. Historically, they have

been making less than half their target. (You can see them lowering their target.) It is likely that their

actual 2011 Android rev formed a smaller portion of their total revenues.

 

This also does not take cannibalization of desktop revenues into consideration.

 

I don't think they really care about making money off of Android directly. It's irrelevant to them. They just want smartphones to be accessing the internet so that they can get exposed to Google's ads.

How is that different from an iPhone user being exposed to Google's ads? Google is currently the default search engine for the iPhone and also iPhone users visit the same sites with Google's display ads that Android users do. So why invest a enormous amount of money and managerial attention if they

could make almost the same money by simply being the search provider for IOS?

 

What defines an "enormous" amount of money?

 

They spent $50mm acquiring Android back in 2005 and the maintenance/future development of Android is currently an open source project.

 

Google generated $14bn in operating cashflow in 2011, I think the amount of that that is spent maintaining/developing android is a truly small percentage as they're mainly staffing some developers to work on it while also benefiting from the contributions of the open source community.

 

Why do it at all? That's easy - they realize that mobile is going to be the future of browsing which would directly affect their business as an advertiser. By having a stake in that future they could help shape and direct the way it goes, rather than being dictated terms by other players in the space (like Apple).

 

But that's the key thing to keep in mind -- Apple needs to make money off of their hardware sales because that's what they are, a hardware company. Google doesn't. It's in Google's interest to amass as much marketshare as possible (which is why there are so many different Android devices), even it's at the expense of profit margins, because it enables them to keep getting mobile users to look at/click on ads.

[Guest valueInv]

 

 

What defines an "enormous" amount of money?

 

They spent $50mm acquiring Android back in 2005 and the maintenance/future development of Android is currently an open source project.

 

How about $12.5B for Motorola for patents to defend Android. By the looks of it, Motorola is fast losing share and money. If they follow their hands off strategy, they're not going to make their investment back.

 

What about the 1000 patents from IBM?

 

Here's a list of their acquisitions:

 

http://en.wikipedia.org/wiki/List_of_acquisitions_by_Google

 

By that count, they've acquired 10+ startups for Android. How much did they pay for those?

 

Android may be positioned as open source, but the development burden is fully borne by Google and is not free. All it means is that you can download the source code once its released and modify it.

 

Google generated $14bn in operating cashflow in 2011, I think the amount of that that is spent maintaining/developing android is a truly small percentage as they're mainly staffing some developers to work on it while also benefiting from the contributions of the open source community.

 

Again, the development of Android is closed. People outside don't even know what features are going to be included in the next version let alone contribute code to it.

 

How do you account for the legal costs and the fact that their top management is spending most of this month in court defending Android? Android has a lot of costs involved other than the team of engineers developing it.

 

Why do it at all? That's easy - they realize that mobile is going to be the future of browsing which would directly affect their business as an advertiser. By having a stake in that future they could help shape and direct the way it goes, rather than being dictated terms by other players in the space (like Apple).

 

But that's the key thing to keep in mind -- Apple needs to make money off of their hardware sales because that's what they are, a hardware company. Google doesn't. It's in Google's interest to amass as much marketshare as possible (which is why there are so many different Android devices), even it's at the expense of profit margins, because it enables them to keep getting mobile users to look at/click on ads.

Thats the story that management is spinning. People see the same ads on the iPhone, go to the same sites and perform searches on the iPhone too. Apple was not interested in the advertising business until Google entered the mobile business.

 

It sounds great that they want to control their own future - except that they are not making money doing it. If Coke finds that a significant part of their output is being sold at Seven Elevens should they buy them? What is the downside to that?

 

Google's advertising is orthogonal to the device for the most part. They depend more on being the dominant search provider and on having publishers on their platform. That is why 2/3rds of their mobile advertising revenue comes from Apple despite selling more Android devices.

[Guest valueInv]

More Android numbers at the bottom:

 

http://www.theverge.com/2012/4/25/2974909/google-wanted-to-sell-10m-android-tablets-a-year-in-2011-have-33-percent-marketshare

 

Suffice it to say, they are at about half of what they projected.

[rkbabang]

Google, automakers in talks on self-driving cars

 

"Google could make an announcement as early as next year on when it might offer the self-driving technology"

 

"All options are open. From giving the technology away to licensing it to working with Tier 1s, Tier 2s, working with the OEMs, building a car with them, everything is open and we're trying to figure out which paths make the most sense,"

 

I'm wondering how google makes money from this, especially if they give it away for free.  It is awesome though.

 

[VAL9000]

I'm wondering how google makes money from this, especially if they give it away for free.  It is awesome though.

 

If you're not driving, you have plenty of time to watch ads ;)

 

That comment is really only half in jest.  Part of the deal could be, if you run our free self-driving car tech, then Android runs the in-car hardware (touch displays, hotspots, etc.)

 

I think Google is in a philosophical struggle when it comes to going to market with some of their products.  On one hand, they really love free and they're very good at making money on free.  On the other hand, some things just work better as pay-to-play.  They're gaining some knowledge with Google Apps for Business, but I think that whole model is both uncomfortable and secondary for them.  Maybe they just need to realize that charging for things doesn't make you evil.

[Rabbitisrich]

Touch display advertisements mid-transit sounds dangerous. It would be interesting to integrate Pandora/Spotify/Sirius type services to provide discounts and such when you approach participating stores.

 

One day we might see neighborhoods effectively compete for drivers through the "radio" and "cell phones" (whatever form they take in the future).