GOOGL - Google

[Palantir]

^ Fair enough, I was just taking exception to ValueInv's comments that Motorola is the reason their margins are down....as he was implying Google is now a hardware manufacturer.

 

Anyways, I don't think the loss is that big of a deal if Android gains a lot of traction and marketshare and people keep using their search....which is very profitable.

[Guest valueInv]

How exactly does Google lose money on Android? They're not building and selling hardware.....and before you mention Nexus, that's only a tiny little piece. You're blaming declining margins on being a hardware manufacturer, when that's not the case...

 

Because  at $200 they are pricing out non subsidized Android devices. Remove subsidies and Apple becomes more price competitive and Android loses or Amazon takes over the Android market. Google has painted itself into a corner.

[jeffmori7]

How exactly does Google lose money on Android? They're not building and selling hardware.....and before you mention Nexus, that's only a tiny little piece. You're blaming declining margins on being a hardware manufacturer, when that's not the case...

 

Because  at $200 they are pricing out non subsidized Android devices. Remove subsidies and Apple becomes more price competitive and Android loses or Amazon takes over the Android market. Google has painted itself into a corner.

 

Not necessarily valueInv, because the subsidized devices are more flagship devices designed by Google to show other OEMs what they expect from Android devices. I don't think they want to become large-scale manufacturer. 

[Palantir]

They are only a segment of Android devices. I don't think you have provided any support for your assertion - that Google's declining margins are due to it having similar economics to an OEM because it is turning into an OEM.

[Guest valueInv]

But you don't know the opportunity cost of that. Without Android, google could potentially miss out on the mobile market as they'd remain a niche search provider. Android allows Google to be a "platform" rather than a "product" which plugs into a "platform".

 

For value investors you guys are thinking very short term....A few billion USD is nothing for Google, and in this industry you need to invest a lot of money into projects that have a serious risk of failure to stay relevant. Returning cash to shareholders is not always the answer. MSFT is pouring billions into Bing for similar reasons. They must have presence in this market.

 

You keep doing that and profits keep going down. What pe does MSFT trade at? What happens when google has to subsidize your device, your Internet connection, your books, your content?

 

Do you realize the capex required to build a nationwide fiber network to the home? What happens when you spend that capex and charge a fraction of existing providers? Do the math, compare what Google is making vs what they will end up spending. This is not a "few Billion" dollars.

[Liberty]

Do you realize the capex required to build a nationwide fiber network to the home?

 

Isn't Google Fiber using most dark fiber that the company bought cheaply after the dot com bust? It seems like the only thing left is to provide the last mile connection, which is probably expensive but less so than if they had to build out the whole fiber network. User fees can probably pay for a lot of that last-mile stuff.

[Guest valueInv]

Do you realize the capex required to build a nationwide fiber network to the home?

 

Isn't Google Fiber using most dark fiber that the company bought cheaply after the dot com bust? It seems like the only thing left is to provide the last mile connection, which is probably expensive but less so than if they had to build out the whole fiber network. User fees can probably pay for a lot of that last-mile stuff.

 

Wow!! Google bought fiber into interconnect facilities to reduce bandwidth costs for its data centers. That is a far cry to rolling out nationwide metro and last mile networks.

 

Look up the history of CLECs to see what happened the last time someone tried  a flavor of that.

[txlaw]

Do you realize the capex required to build a nationwide fiber network to the home?

 

Isn't Google Fiber using most dark fiber that the company bought cheaply after the dot com bust? It seems like the only thing left is to provide the last mile connection, which is probably expensive but less so than if they had to build out the whole fiber network. User fees can probably pay for a lot of that last-mile stuff.

 

Wow!! Google bought fiber into interconnect facilities to reduce bandwidth costs for its data centers. That is a far cry to rolling out nationwide metro and last mile networks.

 

Look up the history of CLECs to see what happened the last time someone tried  a flavor of that.

 

Since when is GOOG planning on rolling out a nationwide FTTH operation?

[Liberty]

This isn't something I've researched deeply (I don't hold GOOG anymore, so not following as closely), but I know they've been buying lots of dark fiber since 2005.

 

Let's say hundreds of millions, if not billions, have been spent to lay these fat pipes across the US over many years, but then for whatever reason they stay dark (not needed, bankruptcy of the company that built it, whatever). Google buys those for pennies on the dollar, and then it can offer fiber access to cities that are close to those pipes, with only last-mile connections to do (ie. there was certainly a google-owned dark fiber line running through or next to kansas city, they didn't pick these cities at random).

 

That's expensive, but a lot less expensive than buildings hundreds of miles of fiber across the country..

 

And the nice thing is, after enough places have fiber access like this, it'll force other ISPs/telecoms to try to match Google's offering and invest more in their network (standing on tiptoes at a parade -- once one person does it, everybody has to). That's a nice leveraging of the investment, since Google benefits from increased web usage even if not on its own network.

 

Now I have no idea how much money it'll make, or how exactly one could determine all the indirect ways in which it can help, but as a long-term investment, it has potential IMO.

[fareastwarriors]

This isn't something I've researched deeply (I don't hold GOOG anymore, so not following as closely), but I know they've been buying lots of dark fiber since 2005.

 

Let's say hundreds of millions, if not billions, have been spent to lay these fat pipes across the US over many years, but then for whatever reason they stay dark (not needed, bankruptcy of the company that built it, whatever). Google buys those for pennies on the dollar, and then it can offer fiber access to cities that are close to those pipes, with only last-mile connections to do (ie. there was certainly a google-owned dark fiber line running through or next to kansas city, they didn't pick these cities at random).

 

That's expensive, but a lot less expensive than buildings hundreds of miles of fiber across the country..

 

And the nice thing is, after enough places have fiber access like this, it'll force other ISPs/telecoms to try to match Google's offering and invest more in their network (standing on tiptoes at a parade -- once one person does it, everybody has to). That's a nice leveraging of the investment, since Google benefits from increased web usage even if not on its own network.

 

Now I have no idea how much money it'll make, or how exactly one could determine all the indirect ways in which it can help, but as a long-term investment, it has potential IMO.

 

Well anything has to be better than my current DSL with AT&T. So slow....

 

 

[ItsAValueTrap]

The problem with search is that it's typically not very profitable for businesses paying for ads now that prices have been driven up pretty high. Businesses can easily cut back on thd amount they're spending on Adwords.

That's now how most people on Google advertise.

 

You can track your ads right down to each conversion/sale.  You know how much money you are making from your ad campaigns*.  Based on that information, it becomes an optimization question where you adjust your CPC bid price to maximize your profit.  Google has an algorithm that will do this for you if you let Google take charge of your ad campaign.

 

*Tracking isn't perfect (i.e. blocking cookies, javascript).  Some conversions won't be tracked.

 

It's not like other forms of advertising where you are often unsure of your ROI... e.g. yellow pages, TV, print, etc.

[Guest valueInv]

This isn't something I've researched deeply (I don't hold GOOG anymore, so not following as closely), but I know they've been buying lots of dark fiber since 2005.

 

Let's say hundreds of millions, if not billions, have been spent to lay these fat pipes across the US over many years, but then for whatever reason they stay dark (not needed, bankruptcy of the company that built it, whatever). Google buys those for pennies on the dollar, and then it can offer fiber access to cities that are close to those pipes, with only last-mile connections to do (ie. there was certainly a google-owned dark fiber line running through or next to kansas city, they didn't pick these cities at random).

 

That's expensive, but a lot less expensive than buildings hundreds of miles of fiber across the country..

 

And the nice thing is, after enough places have fiber access like this, it'll force other ISPs/telecoms to try to match Google's offering and invest more in their network (standing on tiptoes at a parade -- once one person does it, everybody has to). That's a nice leveraging of the investment, since Google benefits from increased web usage even if not on its own network.

 

Now I have no idea how much money it'll make, or how exactly one could determine all the indirect ways in which it can help, but as a long-term investment, it has potential IMO.

 

Do some research on what kind of fiber they've been buying.

[DCG]

The problem with search is that it's typically not very profitable for businesses paying for ads now that prices have been driven up pretty high. Businesses can easily cut back on thd amount they're spending on Adwords.

That's now how most people on Google advertise.

 

You can track your ads right down to each conversion/sale.  You know how much money you are making from your ad campaigns*.  Based on that information, it becomes an optimization question where you adjust your CPC bid price to maximize your profit.  Google has an algorithm that will do this for you if you let Google take charge of your ad campaign.

 

*Tracking isn't perfect (i.e. blocking cookies, javascript).  Some conversions won't be tracked.

 

It's not like other forms of advertising where you are often unsure of your ROI... e.g. yellow pages, TV, print, etc.

 

Being able to track and optimize your ads only helps to an extent.

 

For popular keywords within nearly any market, the bid per click to get on the first page or 2 of Google of Google (which is really what you need) can often be $3-$10 per click...and higher. When sites typically convert at below 2%, it is tough for businesses to justify the cost. (ie Spending $100 on Adwords for 1 or 2 orders with a profit margin of maybe $10, for example). For example, I have a (very) small site and spent $150 on adwords ads over the last couple weeks. That resulted in 2 orders, but a total profit about $30. Not a good investment. I'm sure there are things I've could've done better (I'm not new to advertising on adwords though, and have experience optimizing ads), but a lot of businesses are having this same experience. The same keywords that were .35 a click a few years ago, are now around $2.50 per click to get on the first page.

 

You used to be able to bid less on long-tail keywords and get more clicks, but the volume of businesses/sites now bidding on these keywords is now quite a bit larger than it was 5-10 years ago.

 

It y

[ItsAValueTrap]

DCG... that's called competition?

 

Why would the guys with the top spots on Adwords bid less?

So that they can make less money?

So that they can be nice to you and give you a break?  ;)

[DCG]

DCG... that's called competition?

 

Why would the guys with the top spots on Adwords bid less?

So that they can make less money?

So that they can be nice to you and give you a break?  ;)

 

Huh? That's not really how adwords work. Anyone can bid to be in the top spots (for the most part..bid amount isn't the only criteria google uses for ad placement). Just because someone is bidding for a top spot at any given moment does not mean it's profitable for them in the long run.

[ItsAValueTrap]

I guess I am making the assumption that the top bidders are measuring their ROI and optimizing it.  They're being stupid if they aren't profitable.

 

*There are companies out there that advertise for branding purposes with uncertain ROI.  I don't think that Google is vulnerable to these advertisers going away because I assume that Google doesn't have a lot of them.  Facebook could have this problem though.

[Guest valueInv]

I guess I am making the assumption that the top bidders are measuring their ROI and optimizing it.  They're being stupid if they aren't profitable.

 

*There are companies out there that advertise for branding purposes with uncertain ROI.  I don't think that Google is vulnerable to these advertisers going away because I assume that Google doesn't have a lot of them.  Facebook could have this problem though.

 

Take a look at googles % of display ad revenues and where they expect much of their advertising growth to come from.

[ItsAValueTrap]

Of all the advertising mediums out there, Google probably has the least amount of dumb advertisers as customers (ignoring affiliate networks).  You guys are focusing on irrelevant noise.

[rkbabang]

Kurzweil joins Google to work on new projects involving machine learning and language processing

 

"Ray Kurzweil confirmed today that he will be joining Google to work on new projects involving machine learning and language processing. 'I’m excited to share that I’ll be joining Google as Director of Engineering...I’m thrilled to be teaming up with Google to work on some of the hardest problems in computer science so we can turn the next decade’s ‘unrealistic’ visions into reality.'"

 

[Palantir]

Looks like the FTC probe is ending in no repercussions...GOOG continues its steady march up.....

[txlaw]

YouTube Capture:

 

 

Yet another example of why GOOG is an infrastructure company -- and why YouTube was a brilliant acquisition. 

[Guest rimm_never_sleeps]

goog sells the modem business

 

http://9to5google.com/2012/12/19/google-gets-2-35b-of-its-motorola-purchase-back-with-its-sale-of-motorola-home-to-arris/?utm_source=feedburner&utm_medium=twitter&utm_campaign=Feed%3A+9to5Google+%289to5+Google+-+Beyond+Good+and+Evil%29

[rkbabang]

goog sells the modem business

 

http://9to5google.com/2012/12/19/google-gets-2-35b-of-its-motorola-purchase-back-with-its-sale-of-motorola-home-to-arris/?utm_source=feedburner&utm_medium=twitter&utm_campaign=Feed%3A+9to5Google+%289to5+Google+-+Beyond+Good+and+Evil%29

 

That puzzles me a bit.  I thought they wanted that business.  With their fiber to the home project it seemed like a good fit, not to mention I think Apple will be going after the Television next in a big way.

[txlaw]

goog sells the modem business

 

http://9to5google.com/2012/12/19/google-gets-2-35b-of-its-motorola-purchase-back-with-its-sale-of-motorola-home-to-arris/?utm_source=feedburner&utm_medium=twitter&utm_campaign=Feed%3A+9to5Google+%289to5+Google+-+Beyond+Good+and+Evil%29

 

That puzzles me a bit.  I thought they wanted that business.  With their fiber to the home project it seemed like a good fit, not to mention I think Apple will be going after the Television next in a big way.

 

I think that GOOG is less interested in being in hardware then you might think. 

 

They want GoogleTV to succeed as a platform, no doubt, but I'm sure they will be happy to partner with Sony, Samsung and other hardware manufacturers to get onto the TV screen.  They will probably have reference devices that are manufactured by others, just like with the LG Nexus 4, but I'm not so sure they want to be selling set top boxes. 

[Guest rimm_never_sleeps]

goog sells the modem business

 

http://9to5google.com/2012/12/19/google-gets-2-35b-of-its-motorola-purchase-back-with-its-sale-of-motorola-home-to-arris/?utm_source=feedburner&utm_medium=twitter&utm_campaign=Feed%3A+9to5Google+%289to5+Google+-+Beyond+Good+and+Evil%29

 

That puzzles me a bit.  I thought they wanted that business.  With their fiber to the home project it seemed like a good fit, not to mention I think Apple will be going after the Television next in a big way.

 

that's a legacy technology business. I believe goog sees a lot of disruption in that business and wanted to exit.