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Google in After Hours Massive Selloff
walkman




msg:1236811
 10:15 pm on Jan 31, 2006 (gmt 0)

OUCH!
[finance.yahoo.com...]
After Hours (RT-ECN): 366.78 -65.8801 (15.23%)

Here are what matters to average investors--the headlines:
"UPDATE - Google profit misses Street target, shares drop"
"Google's quarterly results fall short of expectations"
"Google profit misses Street target"
"Google Earns $372.2M in 4Q, Misses Views"

Goog's valuation was and still is scary: they're worth about half of MSFT, and MSFT makes about $3 Billion a quarter in profit from a gazillion sources.

[edited by: walkman at 10:26 pm (utc) on Jan. 31, 2006]

 

fearlessrick




msg:1236841
 4:37 am on Feb 1, 2006 (gmt 0)

I think this is very good for all involved. The 51-point drop after hours (I've never seen anything quite that spectacular) is evidence of just how wildly overvalued Google was, and probably still is.

The company has one revenue stream and competition building.

As to p/e, the average, long-term p/e of all stocks traded over the past 100 years is somewhere around 12. That includes dogs and darlings. By almost any estimation, especially since many stocks do not today provide dividend returns, stocks are horribly overvalued.

With a growth stock like Google a p/e of 40 or more is tolerable, as long as they keep growing at an accelerated pace. Today is a shining example of what happens in speculative markets.

These high-fliers have a way of making everybody humble. See Yahoo, ebay, Amazon, Enron, Worldcom, etc.

But, overall, as I said, this is a good thing. It wipes $15 billion off of the fantasy capital of Google stock, so they just can't go throwing stupid money around in aquisitions or investments. It will sober up management in a hurry and make them a better and more responsible company in the long run.

It also explodes the impression that Google is invincible, and that's always good, for investors, companies, armies, football teams and kings.

twinsrul




msg:1236842
 5:44 am on Feb 1, 2006 (gmt 0)

fearlessrick, I like your insightful and optimistic thinking. My biggest problem with Google from the get go has been that they don't actually "own" all that much physically speaking. When they bought up some of that dark fiber, I believe that was a step in the right direction. They need to use more of their capital to buy "real" things, not just software and software companies.

HughMungus




msg:1236843
 6:11 am on Feb 1, 2006 (gmt 0)

I honestly can't see why people are in Google for the "long-haul" considering a few years ago, this company didn't even exist. The internet is ever changing and ever evolving. If Google's around and still dominate in 10 years, I'll be very impressed.

Doomed unless they diversify. They seem to be trying but not much so far.

walkman




msg:1236844
 7:00 am on Feb 1, 2006 (gmt 0)

>> The company has one revenue stream and competition building.

I agree. Compare MSFT and Google. We all know how much money they make from Windows, Office, Xbox games, cable boxes, mice, car software etc. etc. etc. In addition, MSFT will soon have the same rev stream as Google. Of course not the same quality, and the market share will be much lower, but let' not forget that with the right approach they can catch up, or at least take away a decent % of share from Google.

They have the money and if they hire the right people, everything is doable. I refuse to believe that all the smart people are either working or will be working for Google :)

Google's "problem" is that the IPO was priced too high, and it grew too fast from there. It was great for the initial employees, but it sucks for the rest, and sets google up for failure as there is a limit on how high the stock can go.

Chico_Loco




msg:1236845
 1:45 pm on Feb 1, 2006 (gmt 0)

Google's "problem" is that the IPO was priced too high, and it grew too fast from there.

I think that the $85 IPO was a relatively decent valuation. It was people that caused Google's problem and brought them to a severely overpriced value of $450+... they got sucked in just like pre 2001. "Ohh Google are marvellous, they can do this, they can do that" yada yada...

According to Google, they want to use the Berkshire Hathaway (Warren Buffet) method and not do stock splits! Considering the recent & current valuations, and the type of company that they are - that's just stupid!

P/E of 95 - stay away.

aleksl




msg:1236846
 2:44 pm on Feb 1, 2006 (gmt 0)

BillyS: Must be a very big player, we're talking $175 million in shares sold.

Exactly right - mutual funds, large institutional investors and HUGE speculators (think hedge funds) start trading at 3:30pm. Sometimes even Feds...oops, I forgot, this is "free market" :)

oldpro




msg:1236847
 3:26 pm on Feb 1, 2006 (gmt 0)

P/E of 95 - stay away.

24 years to recover my initial investment...I agree. As I stated in another thread on this subject a couple of months ago...the "irrational exhuberance" surrounding Google's stock is based solely on its rate of earnings growth. When earnings growth slows below expectations...watch out and take cover.

After 2 quarters of not meeting forecasts may be the time to think about buying.

blaze




msg:1236848
 3:31 pm on Feb 1, 2006 (gmt 0)


Goog's valuation was and still is scary: they're worth about half of MSFT, and MSFT makes about $3 Billion a quarter in profit from a gazillion sources.

I think the OP needs to look into MSFT's SEC filings. Trust me, it's not a gazillion sources. It's really: two

[sec.gov...]

The OS and Microsoft Office.

Operating income/(loss)

Client $ 2,637
Information Worker 2,275
Server and Tools 909
MSN 110
Microsoft Business Solutions 11
Mobile and Embedded Devices 15
Home and Entertainment (294 )

Between the client (os) / Worker (office) that's 4.9B, 909M for server which is mostly visual studio and then sql server, etc after that.

Xbox is a loss at 294M, services and mobile are nothing.

The big thing about MSFT isn't the number of sources of income but rather the network effect they have with the OS.

As more people use windows and office, more people need to buy windows and office to be compatible with other people on the network. They in turn, increase the power of the network effect.

eBay is kind of like this as well. I will not be surprised to see them dominating in 10 years.

Google has a network effect of sorts for advertisers, and while that helps them get revenue it doesn't help them survive, it just makes them rich.

I can go and use Yahoo or MSN or anything really and there is no switching cost. Just because my friends use Google doesn't mean I have to.

Really, google needs to pour its heart and soul into programs like AdSense.

They need to stop creating new services like Google earth or whatever, and start finding ways to get people using their ads.

They need to get rid of their old company motto, organizing the world's information, and grab a new one - your advertisements everywhere.

[edited by: blaze at 3:51 pm (utc) on Feb. 1, 2006]

peterdaly




msg:1236849
 3:48 pm on Feb 1, 2006 (gmt 0)

I rode the ride from $299 -> $413 then cashed out.

Just bought back in @ 396.81 when I saw the headlines (buy on the dips!)...we'll see in a few days if that was a good decision.

If nothing else, I'm gambling my previous GOOG gains.

HughMungus




msg:1236850
 5:38 pm on Feb 1, 2006 (gmt 0)

In addition, MSFT will soon have the same rev stream as Google. Of course not the same quality

How so?

Kirby




msg:1236851
 8:33 pm on Feb 1, 2006 (gmt 0)

The only sure thing this signals is that the free ride that most of the Wall Street analysts gave Google is over.

SEOPTI




msg:1236852
 9:21 pm on Feb 1, 2006 (gmt 0)

I sell now, before it's too late.

mcavic




msg:1236853
 1:44 am on Feb 2, 2006 (gmt 0)

Given last night's plunge, today was a good day for GOOG. The stock was due for a 8-12% drop, and considering the gains of the last 4 months, that really doesn't constitute a massive sell-off.

Only time will tell if it's a good stock, but the earnings are excellent, and there's quite a bit of over-reaction here. It's the expectations that were off, not the earnings.

If Google's around and still dominate in 10 years, I'll be very impressed.

In 10 years, I expect to see Google still around and still dominating in ways that we've barely thought about.

My biggest problem with Google from the get go has been that they don't actually "own" all that much physically speaking

It's not about what they own, but what they can do. That's where their triumphs will remain.

They need to stop creating new services like Google earth or whatever, and start finding ways to get people using their ads.

I agree that ads are most important as a revenue stream. But it's the tinkering with miscellaneous new services that might lead to the next killer app. And what Google needs is services they can provide that others either can't or haven't thought of.

walkman




msg:1236854
 2:02 am on Feb 2, 2006 (gmt 0)

>> I think the OP needs to look into MSFT's SEC filings. Trust me, it's not a gazillion sources. It's really: two

hehehehe. They have two becuase they CAN afford to sell at a loss thanks to Windows and Office to keep /gain market share.

Hollywood




msg:1236855
 3:04 am on Feb 2, 2006 (gmt 0)

None of the holders will like what I have to say but Google is bound for about 300 per share as that is the support and it needs to even quite possibly fill the gap... not to mention it is overvalued and pumped and dumped by all the Wall Street gurus that love taking your money and leaving you with the bag. (The charts NEVER lie)

I have traded for a few decades now and did full time through the dot com pop and bust, knew when to get out, took the money and opened three companies, one is a well established SEO firm… so I follow SEO and technical analysis on the big boys like ASKJ, GOOG, YHOO, LOOK, etc.

After all the hoopla & BS over GOOG look for a company like YHOO that is fairly undervalued in my opinion, they got a whole lot more going on’ and always get it right in my opinion. (I hold the shares myself, never would hold GOOG here.)

Of course trust in your own judgments but I have seen many go this route.. with the Feds talking rate increases and oil so high (People trading food for heat - really)... oh and Exxon making 1 Billion a day and calling it a profit on luck not gouging (BS)! oh and BS again.

Buy a huge company that proves itself, I think even GE is undervalued.. and I still like JDSU. (JDSU a GOOG needed source for traffic & bandwidth, the ole timers will understand)

Of course always an opinion!

-Hollywood

aleksl




msg:1236856
 4:14 am on Feb 2, 2006 (gmt 0)

Hollywood, as in any world of opinions I hold one against yours. GOOG is surely overvalued and overspeculated, BUT so is the whole stock market. That what stock market is - speculation.

Yes, GOOG is a one-product company right now, and they need to step in and create a second product, and if they do (and oh boy they can) - see ya at $600/share. Now, this is all, of course, is based on Google delivering - and from where I sit they can turn on a dime and deliver 2 or 3 solutions into niches that proved to be highly profitable.

How about Google vallet? Just look at the integration of everything - AdWords and AdSense on the same password, Gmail - I'd say if this isn't something that Microsoft failed to do i.e. Passport, plus MONEY STREAMS, all under one roof then I don't know what I am looking at. No other non-technology company has an opportunity to invest so little money to have such a high earning potential. GE is not even in the same league.

hdpt00




msg:1236857
 5:10 am on Feb 2, 2006 (gmt 0)

All of the market is not specualtion. I have many safe dividend plays.

mcavic




msg:1236858
 5:24 am on Feb 2, 2006 (gmt 0)

from where I sit they can turn on a dime and deliver 2 or 3 solutions into niches that proved to be highly profitable

That's what I'm saying. Anything that they put their mind to will happen very quickly. Yahoo, on the other hand, has nice established services, but as I see it, lacks the motivation for innovation, or even improvement of their current services.

All of the market is not specualtion. I have many safe dividend plays.

There are some great dividend opportunities out there. But anything that's exchange-traded has at least as much risk as the S&P 500.

Kirby




msg:1236859
 6:16 am on Feb 2, 2006 (gmt 0)

My biggest problem with Google from the get go has been that they don't actually "own" all that much physically speaking

Warren Buffet was once asked about his preferred business model. He answer was "a toll road". While he was referring to companies like Qualcomm, and in some ways, MS, who make a ton from royalties, a gateway model like Google is a close second.

Expectations that were off, not earnings

Yep. Amaizing how much influence those analysts can have on a company's stock. Another company missed the Street's target this week by just a few cents and dropped 4%.

I wouldnt worry until Google's earnings drop to the 40% range from the 80%+ they are at today, then maybe people can claim that the sky is falling with somewhat of a straight face.

Hollywood




msg:1236860
 8:36 pm on Feb 2, 2006 (gmt 0)

Yet it all comes down to three things for the real money traders (Smart Money) to buy any shares, all three GOOG does not have.

1) A good stock chart (There are no technical analysis perks)
2) Low PE
3) Oversold Conditions - Filled GAP

So in short as of now the stockis up, I think it will close down as all indicators of smart money trading say this stock is over-bought still and has a long way to go to become healthy.

Hollywood

aleksl




msg:1236861
 4:17 am on Feb 3, 2006 (gmt 0)

What are these Google Stock Units (GSU) that I keep hearing about, that Google prints in just under $100 million dollars each quarter? Is that "paper money"? It seems to be essentially stock options, but they don't call it such so they can keep it under the radar? If all this is true, Google essensially borrows against it own future, and that COULD affect stock.

Hollywood




msg:1236862
 10:05 pm on Feb 3, 2006 (gmt 0)

NASDAQ: GOOG ¦¦ Just 81 (and one half) more points to go down till 300, then it is time to buy again... maybe... or at least reevaluate from that position, glad the nose bleed is over. (Felt like I was in Denver a while)

Hollyweird

aleksl




msg:1236863
 5:47 pm on Feb 5, 2006 (gmt 0)

Who cares about "target price", we both know it's a made-up BS.

However, the fact that Google practically "prints" stock options with their GSUs, and that U.S. Government doesn't like when someone says "no" to them - those 2 could be a BIG issues afecting stocks IMHO.

Acuity




msg:1236864
 5:25 am on Feb 6, 2006 (gmt 0)

You're waiting till 300? How do you figure that? I see support for Google coming up at 370 but more likely I believe the stock will re-trace to 360 before the bulls are back in charge.

Hollywood




msg:1236865
 12:16 am on Feb 8, 2006 (gmt 0)

Acuity

Doooh.... below 370 and falling.

GOOG [Last Trade price $367.92]-17.18 Points or -4.46%

See ya at 300

frontpage




msg:1236866
 9:22 pm on Feb 12, 2006 (gmt 0)

Google shares may fall another 50 pct-Barron's
Sun Feb 12, 2006 1:25 PM ET

SAN FRANCISCO (Reuters) - Shares of Web search leader Google Inc. (GOOG.O: Quote, Profile, Research) -- off 24 percent from highs set last month -- could face a further 50 percent decline, Barron's said in the financial weekly's February 13 edition.

[today.reuters.com...]

BillyS




msg:1236867
 12:17 am on Feb 13, 2006 (gmt 0)

>>Google shares may fall another 50 pct-Barron's

I saw this earlier today. Not much in the way of news, I mean someone basically stating that with such a high P/E even small dips in earnings are going to send Google downward. Thanks for the lesson in finance.

Google and some of their employees benefited greatly from the run up. The company's got a very bright future, but at $470 / share, it's not exactly a good value (right now).

GOOG is currently trading (after hours) around 353. With a P/E of 72 and a forward P/E of 42, I'd say that $180 is about right and a good value for speculators.

andrea99




msg:1236868
 12:22 am on Feb 13, 2006 (gmt 0)

I'd say that $180 is about right and a good value for speculators.

If it gets that low, yes. There will be false recoveries before it hits its final low. For someone who missed the first run up, picking a low should be more fun than picking the high... :)

frontpage




msg:1236869
 12:32 am on Feb 13, 2006 (gmt 0)

Google and some of their employees benefited greatly from the run up.

Your not kidding.

There has been massive insider SELLING of Google stock, not purchasing.

Take a look at these stats. These folks are cashing out now at the highs.

Look at these stats - Google Insider Transactions

[finance.yahoo.com...]

skibum




msg:1236870
 9:45 pm on Feb 13, 2006 (gmt 0)

That's a pretty sweet deal, sell tens of millions of dollars worth of shares and then take advantage of a non open market opportunity to get more shares for $0.00 to sell shortly thereafter.

walkman




msg:1236871
 10:18 pm on Feb 13, 2006 (gmt 0)

>> That's a pretty sweet deal, sell tens of millions of dollars worth of shares and then take advantage of a non open market opportunity to get more shares for $0.00 to sell shortly thereafter.

Once again: they didn't make the rules. Everyone does the stock option things, and I would do the same. Actually, I would've messed up and sold at least 30% of my shares at $85...

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