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Google Finance, Govt, Policy and Business Issues Forum

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GOOG Stock Down 8% Today
driller41




msg:3585174
 5:13 pm on Feb 26, 2008 (gmt 0)

I see Google's share price has taken a tumble, down from $750 to $450 today - is this the last of the dotcom crashes?

Afterall they have not created the next big idea and are still selling advertising for a living.

Will they bounce back or will investors now take a more realistic look at their business model?

Who knows perhaps Yahoo may even buy them :)


UBS cut its price target on Google Inc after U.S. paid-search data for January showed Google's sponsored clicks, the basis for its advertising revenue, fell 7 percent sequentially, and shares of the Web search giant tumbled more than 8 percent.

"While Google's search volumes were decent (up 39 percent year-on-year), actual paid clicks were flat...continuing a decidedly negative trend," analyst Benjamin Schachter said in a note.

[reuters.com...]

[edited by: Brett_Tabke at 7:22 pm (utc) on Feb. 26, 2008]
[edit reason] added links to story [/edit]

 

shorebreak




msg:3585730
 1:46 am on Feb 27, 2008 (gmt 0)

Really? I'd say the opposite is true. They willingly gave up short-term ad revenue when they introduced AdWords quality scores, for example, and again when they reduced the AdSense click area to discourage accidental clicks. Everything I've seen suggests that they're more into long-term strategy than short-term tactics. (This thread is a good case in point.)
Of course, people who think like day traders may have trouble seeing the bigger picture.

EFV, introducing Quality Score did not hurt short-term revenue, quite the contrary. They introduced it in early August 2005 (fiscal Q3) and were trading at ~$285/share at the time. Subsequent to their Q3 2005 earnings report, however, the stock went through the roof (up to 390 within 2 weeks of the earnings report). The stock went up that much because Google totally blew away Q3 estimates, despite Q3 being one of their two seasonally weakess quarters.

Likewise, the AdSense clickable area change was a reaction to advertisers spending less on AdSense, not a unilateral move for their own long-term good. AdSense as a % of Google ad spend for G's top 5000 advertisers didn't grow in 2007 the way it did in prior years; earning back credibility from burned advertisers does not constitute long-term thinking any more than asking a judge for forgiveness signals remorse.

Webwork




msg:3585748
 2:18 am on Feb 27, 2008 (gmt 0)

12 months ago GOOG's stock price was ~$450.00.

For a long time GOOG traded in the $200 range and many thought that an inflated price. Then GOOG broke resistance and began to trade in the $400 - $450 range - for about 18 months.

Then it again broke resistance (broke with rationality?) at $500 and during only the last 6 months the share price rose from $500 to over $700.

Forgive my lack of excitement or lack of sense of doom but GOOG's price is returning to a range it traded in during the last 12 months.

GOOG's 52 week "price change" is currently ~ +3.4%.

GOOG's price has quintupled since the IPO in ~ September of 2004.

trinorthlighting




msg:3585771
 2:51 am on Feb 27, 2008 (gmt 0)

It will be very interesting to see how Google Check out starts adding to the Google war chest this quarter. That is one thing people are not factoring into stock prices. It might not totally offset things, but now Google will be adding some additional $ to the pot.

inactivist




msg:3585829
 4:41 am on Feb 27, 2008 (gmt 0)

Shorebreak said:
...earning back credibility from burned advertisers does not constitute long-term thinking any more than asking a judge for forgiveness signals remorse.

Brilliant. Thanks!

Web_speed




msg:3585913
 8:24 am on Feb 27, 2008 (gmt 0)

EuropeForVisitors: What's all this fuss about, I'm looking at my trading account right now, and my GOOG shares are at 837.00 a piece.

LOL...i fell off my chair laughing when i saw this...good one.

zeus




msg:3586035
 1:07 pm on Feb 27, 2008 (gmt 0)

If google keeps faling and the dollar also we soon see a local Ice cream store buying the whole google company with a few euros, ha

aleksl




msg:3586055
 1:31 pm on Feb 27, 2008 (gmt 0)

Alot of sites aren't doing as much adwords advertising including ourselves. We never had a positive ROI... it was either break even or lose money.

I must repeat that. G$$gle, listen!

europeforvisitors




msg:3586094
 2:22 pm on Feb 27, 2008 (gmt 0)

If google keeps faling and the dollar also we soon see a local Ice cream store buying the whole google company with a few euros, ha

GOOG's price is climbing again this morning, so don't look for Ben and Jerry to buy out Larry and Sergey just yet. :-)

mikedee




msg:3586151
 3:31 pm on Feb 27, 2008 (gmt 0)

At the beginning of 2000 MSFT shares were trading at around 55, by the end of 2000 they were only trading at 21. Thats a drop of over 60% in one year. I don't think that a stock price is much indication of a companies current worth or its chance of going out of business.

Receptional




msg:3586162
 3:40 pm on Feb 27, 2008 (gmt 0)

SEM4U said:
I agree Lord Majestic. Google have been on top of the search engine pile for about 8 years now. Yahoo can't get close and Microsoft either for that matter.

Google only formed 8 years ago. If that. So if they ruled from day one, then by the same token they are catchable overnight.

Ah, Virtual reality. Still... nobody here has started using Live as their default engine yet, so rumours of Google's demise are somewhat premature!

mikedee




msg:3586173
 3:52 pm on Feb 27, 2008 (gmt 0)

Any predictions on when everyone will start using Live? From what I can see they are still working out the basics of the HTTP protocol, actual searching might have to wait a few years.

Sharpseo




msg:3586303
 6:34 pm on Feb 27, 2008 (gmt 0)

Google is currently undervalued on a PEG (price/earnings to growth) basis. The lower this ratio is, the cheaper a stock is according to expected growth rates, earnings, and valuation.

Current PEGs:

Amazon - 2.05
YHOO - 2.01
Pepsi - 1.75
Google - .64

Personally I think GOOG is a Buy here. Enterprise has huge potential to steal market share from MSFT (it'll take a while). International growth is still robust. They are focused on long-term growth, doing things like reducing clickable area to eliminate accidental clicks.

Most importantly, this fall will serve as a wakeup call to G's mgmt - focus on profitability, Wall St. is fickle.

edit - formatting

[edited by: Sharpseo at 6:35 pm (utc) on Feb. 27, 2008]

Tourz




msg:3586305
 6:35 pm on Feb 27, 2008 (gmt 0)

Alot of sites aren't doing as much adwords advertising including ourselves. We never had a positive ROI... it was either break even or lose money.

The websites may need a work over. Polishing the site to perfection makes a huge difference on whether surfers stay or bounce elsewhere.

Lately I have been clicking on AdWords ads looking for particular service and I've been amazed at some of the crap sites out there that are expecting me to have confidence in their product. Old school messes that are wasting their AdWords budgets. Their prices may be good but no way am I going to sign up when it looks like the site was built back in the 90s or has an information overload.

But this is off the topic of recent profit taking on GOOG stock. Sell high, buy low. But AdWords has a better ROI if you do it right.

the_nerd




msg:3586334
 7:14 pm on Feb 27, 2008 (gmt 0)

$750 for any stock seems way inflated. I didn't even realize that it had gotten that high.

share price doesn't mean anything. It's all about pe and/or peg in the long run and hype in the short run.

If you split the shares 1 by 10 they LOOK cheaper, but they are as expensive as before.

walkman




msg:3586370
 7:55 pm on Feb 27, 2008 (gmt 0)

>> $750 for any stock seems way inflated. I didn't even realize that it had gotten that high

I'll give you $751 for as many shares of Berkshire Hathaway as you can sell me. Honest.

Samizdata




msg:3586380
 8:02 pm on Feb 27, 2008 (gmt 0)

Google only formed 8 years ago. If that.

A minor point, but I believe the Google website was launched on 27 September 1998 and I expect to see a cake with ten candles on the front of the site on that date this year.

driller41




msg:3586398
 8:18 pm on Feb 27, 2008 (gmt 0)

quote "Personally I think GOOG is a Buy here. Enterprise has huge potential to steal market share from MSFT (it'll take a while). International growth is still robust. They are focused on long-term growth, doing things like reducing clickable area to eliminate accidental clicks."

How is Google going to take market share from Microsoft? Microsoft sells products that are used throughout the World and are in every business, all Google can do is tempt people with online applications - and who is interested in using these, I do not know anyone who is using them - people do not trust them to store information online.

How does Google then make money with online applications - "pay as you go" I hear people say - but do you really want a monthly bill everytime you want to type a document or use a spreadsheet - I know I dont.

I do not think Google is a current buy at $450 - because this year most analysts think the American economy is either going to go in recession or narrowly avoid recession, if that is the case then Google's only real source of income - Adwords is going to take a tumble in profits as businesses reduce their spend.

europeforvisitors




msg:3586578
 10:58 pm on Feb 27, 2008 (gmt 0)

I do not think Google is a current buy at $450 - because this year most analysts think the American economy is either going to go in recession or narrowly avoid recession, if that is the case then Google's only real source of income - Adwords is going to take a tumble in profits as businesses reduce their spend.

A "tumble"? That sounds a bit extreme. Movement of ad dollars from traditional media to online media will help to counter shrinkage in budgets of existing advertisers. (I'd rather be Google than, say, a newspaper in today's advertising marketplace.) Also, why be "U.S.-centric"? One of Google's strengths, compared to some of its rivals, is the fact that it serves international advertisers and audiences.

In any case, whether GOOG is a "current buy" at $450 (or whatever the price is at any given moment) probably doesn't have Brin, Page, and Schmidt quaking in their shoes; they--and Google--are clearly in business for the long haul, and if they've got to hold off trading up from a 767 to an Airbus A380 for weekend ski trips, I imagine they can live with that. :-)

physics




msg:3586596
 11:24 pm on Feb 27, 2008 (gmt 0)

I think one of the interesting things about this is to see the effect the once-extremely-niche market (remember GOTO?) of paid click advertising can have on the stock market today.

US STOCKS-Market falls on inflation worry, Google drag [reuters.com]

Google shares dropped to $454.93, making the stock the top drag on both the Nasdaq and the S&P 500. Apple Inc (AAPL.O: Quote, Profile, Research) was down 3 percent to $116.05.

Google drag sounds much worse than Google dance though...

mikedee




msg:3586688
 1:39 am on Feb 28, 2008 (gmt 0)

Google is not all about online, they have recently been donating to the Wine project to get Photoshop PS2 working perfectly on Linux. There are a few key apps holding back massive business uptake of Linux, maybe Google is looking there for the future?

greenfrog




msg:3586749
 4:38 am on Feb 28, 2008 (gmt 0)

MikeDee

Despite my current despise of Google, I do have hopes that they develop an alt OS based on Linux. And to be honest, I highly suspect that they are. They have many high level open source people, and OS people that they have pilfered from Microsoft. I'm confident, without any real basis for it, that this is their goal. They already have an aliance with Sun for Star Office. You can see this by going to Google Tools.

The question is with all of Google's resources how much would it take to brand their own flavor of Linux?

And what apps do they really need, Photoshop, Eclipse for Dev, Star Office(Sun), and Quickbooks. The obvious stuff linux already has in mail, etc.

Long term, I think that Google is drilling down this path. Why? Just a hunch.

Clark




msg:3586795
 6:27 am on Feb 28, 2008 (gmt 0)

Google reminds me of Altavista a few years ago.

Not as many people vividly remember the enthusiasm because there were less people on the net back then. But I remember it well because I invested in Alta Vista back then and lost a ton of money. Not a mistake I will forget. Google seems as invincible as Alta Vista did. But they have lost track.

Yahoo! was a darling too.

I still love Yahoo!. Google may not turn into Alta Vista anytime soon, but one day they may become Yahoo!

Search quality is ok but has room for improvement.

Adsense leaves a lot to be desired although it has its place.
Adwords ditto.
Youtube is a great success. But not a financial one.

Google is much weaker than they always seemed. Their PR was always one of their best qualities. But at some point they will need more beef than adwords/adsense.

Commerce




msg:3586819
 7:16 am on Feb 28, 2008 (gmt 0)

Wow, I did not expect my temporarily suspending adwords would have such an impact. When the new version is out, I'll start them again...

Kidding aside, that last algo change really hurt... and certainly had a part in driving that decision to pause things for a while.

Although G may have a "great wall" between adwords and search, keep in mind that the narrow minded advertisers out there (like, say me) may not view things quite the same way.

-Commerce

driller41




msg:3586878
 9:01 am on Feb 28, 2008 (gmt 0)

If their next big thing is Linux then how will they be able to command a premium price - like Microsoft does for their stuff for something that is free/low cost at the moment?

I am just trying to see where Google will go to make money, two analysts were talking about Googles massive 20year potential like a mantra without specifying where the profits will be made outside Adwords.

europeforvisitors




msg:3587160
 3:34 pm on Feb 28, 2008 (gmt 0)

I am just trying to see where Google will go to make money, two analysts were talking about Googles massive 20year potential like a mantra without specifying where the profits will be made outside Adwords.

Why do you think they want to acquire DoubleClick?

AdWords is just a small slice of the growing online advertising pie.

Clark




msg:3587221
 4:23 pm on Feb 28, 2008 (gmt 0)

Doubleclick was a good one. Has the media touched on it's profitability as a Google entity? Did that deal actually close/pass the Gov'ts approval?

europeforvisitors




msg:3587314
 5:47 pm on Feb 28, 2008 (gmt 0)

Did that deal [DoubleClick] actually close/pass the Gov'ts approval?

As I recall, it passed muster with the U.S. government but is awaiting approval from the EU (whose regulators are harder-nosed than their American counterparts).

greenfrog




msg:3587436
 8:12 pm on Feb 28, 2008 (gmt 0)

I think the problem with Linux, in all Flavors is that is was designed by programmers and techs. I equate it to the ANTI-apple. What is intuitive about apple computers has always been lacking in linux. For any old school linux people out there, you probably remember having to "Mount" your cd drive before it would work. And unmounting it before it would open the drive again. It is little changes to stuff like this that would make a linux alternative more viable, and profitable.

There is significant enough market for it, just not the backing of a solid, and smart company like google. Can you imagine the Google OS offered on Dell computers?

Call it a hunch but...

Intuit's QuickBooks Enterprise Solutions Embraces Linux
Thousands of Mid-market Companies Using Open Source to Have Access to Powerful Business Management System
SAN DIEGO, Calif. June 13, 2007

quickbooks for linux...
Photoshop for linux...
A strong parthership with sun...and Star Office.

Hmmm. Maybe they are basing it on unix and not linux...who knows.

Microsoft Loses Key Windows Architect to Google...read more.
[eweek.com ]

The question is why does Google need a heavyweight Windows architect?

nippon




msg:3587603
 11:32 pm on Feb 28, 2008 (gmt 0)

Let's not forget that google isn't king in several key markets - China and Japan.

All they really have is popularity in western nations.

mayor




msg:3587921
 12:10 pm on Feb 29, 2008 (gmt 0)

You know what they say on The Street "Bulls make money, bears make money, pigs get slaughtered".

Applies to investors and corporate greed alike.

Sharpseo




msg:3588182
 5:23 pm on Feb 29, 2008 (gmt 0)

Google reminds me of Altavista a few years ago.

Sorry, but this comparison always drives me nuts. Altavista was a neglected stepchild of a company. There was no money in search in their day.

They didn't get the funding they needed from their parent company, so they couldn't innovate. Management changed a bunch of times, dotcom crash, etc etc.

Is Google innovating in search? Yes. Well-funded? Yes.

There's always the possibility of someone startup revolutionizing search tech the way they did. But I think it's highly unlikely for the foreseeable future.

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