GOOGL - Google

[fareastwarriors]

Google Attracts Top U.S. Automakers With Self-Driving Technology

 

http://www.bloomberg.com/news/articles/2015-12-22/google-attracts-top-u-s-automakers-with-self-driving-technology

[Guest glavacem]

Google Attracts Top U.S. Automakers With Self-Driving Technology

 

http://www.bloomberg.com/news/articles/2015-12-22/google-attracts-top-u-s-automakers-with-self-driving-technology

 

A little off topic.....

 

Think of how many people self driving vehicles could put out of work. Cab drivers, truck drivers, bus drivers....and you think the economy is bad now. Wait till future technology keeps wiping out jobs....it's a little scary to think about.

[JayGatsby]

Google Attracts Top U.S. Automakers With Self-Driving Technology

 

http://www.bloomberg.com/news/articles/2015-12-22/google-attracts-top-u-s-automakers-with-self-driving-technology

 

A little off topic.....

 

Think of how many people self driving vehicles could put out of work. Cab drivers, truck drivers, bus drivers....and you think the economy is bad now. Wait till future technology keeps wiping out jobs....it's a little scary to think about.

That's always the case with new technology though and so far we've generally ended up better off. Internet made it tougher for newspapers but created a lot of new jobs. If I spent less time/money behind the wheel or in an uber I'd spend more time/money doing other things. 

 

In some ways there's actually the opposite problem: http://fleetowner.com/fleet-management/truck-driver-demographics-approaching-cliff

 

I've invested in Google a few times and have missed the bigger picture just as many times... Really an incredible company

[LongTermView]

That's always the case with new technology though and so far we've generally ended up better off. Internet made it tougher for newspapers but created a lot of new jobs. If I spent less time/money behind the wheel or in an uber I'd spend more time/money doing other things. 

 

I agree that we're better off now.  http://finance.yahoo.com/news/yahoo-finance-exclusive--what-keeps-warren-buffett-up-at-night-140657435.html has some thoughts from Buffett:

We had 40% of the population on the farms in 1900, we’ve got 2% now. Now, you can say, ‘my all those farmers lost their jobs’ but the truth is they went out and did other things, they’re working at Microsoft or something now. You can’t have progress without increasing productivity per capita and the way you increase productivity per capita is you figure out ways to do more efficiently.

[rkbabang]

It's been tough for blacksmiths and candlestick makers lately too.

[Jurgis]

It's been tough for blacksmiths and candlestick makers lately too.

 

And it's so easy for 5%-tech-and-business types to sneer about job losses in general population.

[rkbabang]

It's been tough for blacksmiths and candlestick makers lately too.

 

And it's so easy for 5%-tech-and-business types to sneer about job losses in general population.

 

Until AI can design a circuit and write code better than I can anyway, which will happen in my lifetime I think.

 

[Jurgis]

It's been tough for blacksmiths and candlestick makers lately too.

 

And it's so easy for 5%-tech-and-business types to sneer about job losses in general population.

 

Until AI can design a circuit and write code better than I can anyway, which will happen in my lifetime I think.

 

Exactly.

 

So do not ask for whom the bell tolls.

[rkbabang]

It's been tough for blacksmiths and candlestick makers lately too.

 

And it's so easy for 5%-tech-and-business types to sneer about job losses in general population.

 

Until AI can design a circuit and write code better than I can anyway, which will happen in my lifetime I think.

 

Exactly.

 

So do not ask for whom the bell tolls.

 

Do not claim that we are immune and the things I say are "easy to say".

 

[LongTermView]

I read some interesting numbers today from http://www.mercurynews.com/drive/ci_29379963/california-tests-self-driving-cars-still-need-human.html.  This part is kind of confusing given the fact that there are still issues:

Google has argued to California regulators that once the company concludes the cars are ready for the public to use, they should not need a steering wheel or pedals because human intervention would actually make them less safe.

 

Here is some data on the issues:

Google said its cars needed human help 341 times over 424,000 miles. That would be the equivalent of about 10 times per year, given the 12,000 miles the average U.S. vehicle travels annually.

 

In 11 of the 341 instances, Google said its cars would have gotten in a crash.

 

The head of the company's self-driving car project said that while the results are encouraging, they also show the technology has yet to reach his goal of not needing someone behind the wheel.

 

"There's none where it was like, 'Holy cow, we just avoided a big wreck,'" said Chris Urmson, Google's self-driving car project leader.

...

Google cars have been involved in nine collisions since September 2014. In each case, the other car was responsible, according to an analysis by researchers at Virginia Tech University.

[Jurgis]

I read some interesting numbers today from http://www.mercurynews.com/drive/ci_29379963/california-tests-self-driving-cars-still-need-human.html.  This part is kind of confusing given the fact that there are still issues:

Google has argued to California regulators that once the company concludes the cars are ready for the public to use, they should not need a steering wheel or pedals because human intervention would actually make them less safe.

 

Alphabet is just trying to get regulation that allows no-human-control cars before being ready. It makes sense for them: if Cal DMV regulation prohibits cars with no-human-control, it will be harder to test them and it will be harder to change the regulation in the future.

 

OTOH, Cal DMV is trying to go in the opposite direction and prohibit without providing a path towards allowing in the future. That's bad since then there's no path for companies to develop cars with no-human-control, except for lobbying to change regulations.

 

Ideally, the regulation should allow cars with no-human-control but include readiness conditions into approval. E.g. something like "identical cars with emergency human controls has to drive 100K test miles without single human intervention" or something similar. Clearly I am simplifying. But that would be good way to approach it IMO.

[fareastwarriors]

Google Inc.’s Android operating system has generated revenue of $31 billion and $22 billion in profit, a lawyer for Oracle Corp. said in court while disclosing figures Google says shouldn’t have been made public.

 

 

http://www.bloomberg.com/news/articles/2016-01-21/google-s-android-generates-31-billion-revenue-oracle-says-ijor8hvt

 

http://www.bloomberg.com/news/articles/2016-01-22/google-paid-apple-1-billion-to-keep-search-bar-on-iphone

Apple received $1 billion from its rival in 2014, according to a transcript of court proceedings from Oracle Corp.’s copyright lawsuit against Google. The search engine giant has an agreement with Apple that gives the iPhone maker a percentage of the revenue Google generates through the Apple device, an attorney for Oracle said at a Jan. 14 hearing in federal court.

[VAL9000]

Feels good, man:

 

http://www.usatoday.com/story/tech/news/2016/02/01/alphabet-google-apple-market-cap/79652616/

[karthikpm]

Feels good, man:

 

http://www.usatoday.com/story/tech/news/2016/02/01/alphabet-google-apple-market-cap/79652616/

 

Actually not  ;)

 

http://www.marketwatch.com/story/google-parent-alphabet-should-hope-it-doesnt-get-bigger-than-apple-2016-02-01?dist=countdown

 

Disclosure : Long GOOGL

[giofranchi]

Feels good, man:

 

http://www.usatoday.com/story/tech/news/2016/02/01/alphabet-google-apple-market-cap/79652616/

 

A good quarter undoubtedly.

 

AAPL is still massively more profitable: when growth resumes, things will probably change again.

 

This being said, it seems growth at GOOG will stay strong for the foreseeable future. Though not a bargain at these levels, I think GOOG has one of the widest moat and is still led by its unbelievably successful founders. I don’t expect anything exceptional from GOOG in the future, but it clearly has all the right features of a very solid investment.

 

Cheers,

 

Gio

 

[giofranchi]

GOOG is expected to earn $34.5 per share in 2016.

 

Net cash on its balance sheet is $73b – $3.2b (short-term debt) - $2b (long-term debt) = $67.8b.

 

Shares outstanding are 697,025,000.

 

Net cash per share is $97.

 

Ex-cash it is trading at $708 - $97 = $611.

 

Buffett said he looked for a 10% return in year one and growing from there.

 

$34.5 / $611 = 5.6%. One of the widest moat I know of, and also one of the most reliable growth prospects (though of course it is tough to judge the rate of future growth).

 

Given the environment we live in today with very low interest rates, which is certainly very different from the one at the time Buffett said he was looking for a 10% return in year 1, a 5.6% return and growing might not be so bad after all… Surely, it doesn’t seem GOOG is as overvalued as the other FANG stocks.

 

Am I wrong?

 

Cheers,

 

Gio

[blainehodder]

I bought 100 shares today. I think you are right. It is a toll road on the web and it is a great deal right now. Sure some might say you could have bought at these levels just last week, but we didnt know that margins and growth were as impressive as they are last week. And yes, AAPL is WAY cheaper, but this isn't an either or proposition.

 

Also, unlike others I dont think management at Google are poor stewards of capital. I think they just swing hard at big opportunities. Adclick and Youtube have been great. I doubt cars will make big dough, but I feel like fibre will.

 

I really think it is the greatest business that has ever existed and I think it will have no problem tripling in size from here.

[Aurelius]

I realise Alphabet is expected to earn EPS = 34,5 in 2016. Compared to 2015 (16,348/697 = 23,45) that is a 47% gain. Is Alphabet really expected to grow their earnings that much or what am I missing?

 

With regards to cash — should we not discount the value of international cash by some percentage? 

[blainehodder]

One big risk for $GOOG that has been going through my head a lot lately is the risk of mass adblocker adoption, particularly if bundled in iOS and Safari.  While Chrome, Android, and IE/Spartan are unlikely to bundle adblockers, I don't see why Apple would not.

 

If you are invested in Google, I highly recommend you download ublock, adblock, and an ios adblocker to see the kind of impact it can have on stripping the web of ads. Just something to think about.

 

Regardless I love the company and think mass adblocker adoption is a risk, but not a huge risk.

[giofranchi]

I realise Alphabet is expected to earn EPS = 34,5 in 2016. Compared to 2015 (16,348/697 = 23,45) that is a 47% gain. Is Alphabet really expected to grow their earnings that much or what am I missing?

 

I guess $34.5 is Non-GAAP. Last year they earned $29.58 per share Non-GAAP. That would be a 16.5% growth.

 

Cheers,

 

Gio

[blainehodder]

I realise Alphabet is expected to earn EPS = 34,5 in 2016. Compared to 2015 (16,348/697 = 23,45) that is a 47% gain. Is Alphabet really expected to grow their earnings that much or what am I missing?

 

I guess $34.5 is Non-GAAP. Last year they earned $29.58 per share Non-GAAP. That would be a 16.5% growth.

 

Cheers,

 

Gio

 

Yup, and with 25% rev growth and expanding margins it should be easily doable as long as the USD doesn't go to the moon.

[giofranchi]

While Chrome, Android, and IE/Spartan are unlikely to bundle adblockers, I don't see why Apple would not.

 

And why would Apple do that? To make Google suffer? Aren’t there better ways Apple could capitalize on a thriving Google? Like the huge fee Google has recently paid Apple?

 

Cheers,

 

Gio

 

[Picasso]

I realise Alphabet is expected to earn EPS = 34,5 in 2016. Compared to 2015 (16,348/697 = 23,45) that is a 47% gain. Is Alphabet really expected to grow their earnings that much or what am I missing?

 

I guess $34.5 is Non-GAAP. Last year they earned $29.58 per share Non-GAAP. That would be a 16.5% growth.

 

Cheers,

 

Gio

 

Because VRX hasn't taught us anything about non-GAAP measures right?  You also have to consider ex-cash valuation don't usually work that well on tech stocks for various reasons.  I'd consider stock expense a real expense as well.  Their recent share repurchase is a small drop in the bucket.  I'm more interested in the long-term FCF growth of Google and I have no idea what that is.  The current price requires strong long-term FCF growth for it to make sense as an investment.  Same goes for the likes of Facebook.  It probably happens but doesn't look like low hanging fruit to me.

[blainehodder]

I realise Alphabet is expected to earn EPS = 34,5 in 2016. Compared to 2015 (16,348/697 = 23,45) that is a 47% gain. Is Alphabet really expected to grow their earnings that much or what am I missing?

 

I guess $34.5 is Non-GAAP. Last year they earned $29.58 per share Non-GAAP. That would be a 16.5% growth.

 

Cheers,

 

Gio

 

Because VRX hasn't taught us anything about non-GAAP measures right?  You also have to consider ex-cash valuation don't usually work that well on tech stocks for various reasons.  I'd consider stock expense a real expense as well.  Their recent share repurchase is a small drop in the bucket.  I'm more interested in the long-term FCF growth of Google and I have no idea what that is.  The current price requires strong long-term FCF growth for it to make sense as an investment.  Same goes for the likes of Facebook.  It probably happens but doesn't look like low hanging fruit to me.

 

comparing VRX, who's core business strategy is under massive threat vs $GOOG, who is showing increasing margins, strong rev growth, and a 20 yr history of non stop increases in FCF, rev, GAAP & non GAAP income,and an incredible moat with massive demographic tailwinds is a bit of a stretch.  The price might not be a dead easy giveaway, but hoping for that is like hoping for a KO 10 PE in my opinion.

[giofranchi]

Because VRX hasn't taught us anything about non-GAAP measures right?

 

Huge non-GAAP earnings and zero GAAP earnings is somewhat different than non-GAAP earnings that are 20-25% higher than GAAP earnings. Also JNJ reports non-GAAP earnings that are meaningfully higher than GAAP earnings. Practically every public company does. Are they all liars?

 

Given the amuont of cash they reinvest immediately, fcf is very difficult to ascertain imo.

 

Cheers,

 

Gio