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Company: Google (GOOG)
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53%
agree
402 votes

  Google's growth rate is simply too high to sustain

Slowing Growth: Google's growth rate is simply too high to sustain. It cannot continue to grow at even half of its current rate. In part, this is a simple fact: if revenue kept doubling every two years, Google would rapidly become richer than most countries. But more importantly, Google's high growth threatens to undermine its core competence and capacity. Google has not demonstrated an ability to capitalize on its investment in Youtube, which might represent more of a distraction than a goldmine.

It is hard to value higher than $600 due to its spending. GOOG has very high profit margins, but absent from the income statement is capital spending. Capex as a percentage of total revenue has been in the mid-teens for the past several years. R&D as percentage of sales has increased as well, from 10% (FY05) to 13% (FY07). Headcount has also significantly expanded leading to declining sales/employee & income/employee ratios.

The significance- on the margin, each incremental dollar of revenue growth is accompanied by higher costs and investment. Hence, Google’s prospective growth generates less incremental corporate value compared to its past growth. Nothing new here, just the law of diminishing returns taking hold. the company has no fundamental innovation now!

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33%
agree
6 votes

  Google is Big Loser in Irish Bailout Terms of 11-21-2010

Look out below ... Here comes Google

The biggest market loser of the Irish bailout terms may be Google, which, as was portrayed recently in an extensive analysis by Bloomberg, benefited massively by a complex (and perfectly legal) Irish-based tax avoidance trick, which adds up to more than $100/share to the stock price.

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0%
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4 votes

  New successful internet companies take ad revenues and steal talent

New successful internet companies that provide content will take significant part of Google revenues. They will also attract the talent from Google.

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25%
agree
8 votes

  Facebook, Groupon, Linkedin, Zynga will take ad revenues and still talent

New successful internet companies that provide content will take significant part of Google revenues. They will also attract the talent from Google.

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14%
agree
7 votes

  People are getting smart and are not clicking on Ads

Adsense's name was recently changed to AdChoice on all sites carrying Google adsense. Why? The reason is mainly because Goodle would like to fool people to click on its ads when people think they are clicking on the links related to that specific site they are visiting. As a website(s) hundreds of them owner I can tell you confidently that visitors to our sites are getting smarter and are not clicking the adsense ads by mistakes anymore thinking they are links to other pages of the site. This shows me that Google must be making less money from adsense.

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33%
agree
18 votes

  Google will not avoid the trials for copyright infrigements

Google and its competitors are playing the game of the early Peer to Peer providers: Google claim to do not infrige copyrights on all its produts: YouTube, Search engine at least.

Each movie recorded uploaded on YouTube by an individual (you, me) that is playing a copyrighted song must be removed from the website or Google should pay royalties each time someone plays a movie. Until now YouTube didn't find solutions with the majors and the companies managing the royalties to know how creators can be paid. All those trials will cost a lot of money to Google because:

  • they have to pay plenty of lawyers around the world -> an increase of costs for Google to pay the lawyers
  • they will have to find agreements with the creators and pay them each time a movie is played by a user -> an increase of costs for Google to pay a part of their revenues
  • if they don't find a solution they will have to pay fines each time a creator finds a movie that infriges its rights -> an increase of costs for Google to pay the fines
  • they will have to find out the movies that infrige the copyrights -> an increase of costs for Google to hire people

Just for information: Microsoft paid $0.5 billion his lawyers when the United States asked them to split the company because of their hegemony at the end of the '90. Google doesn't have this power today!

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28%
agree
21 votes

  Google revenue growth will subside

As much as I like and use Google and their services, I must agree with others who recognize that as this recession progresses, it will only get worse for businesses that wholly depend on advertising as their income stream. Google will probably fare better than many others, but it is by no means immune from shrinkage of the advertising market in the near term.

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30%
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23 votes

  Will Better Browsers Pose a New Worry for Google?

Most of our Google (GOOG) searches start in our browser box. Browsers also support multiple search engines although 99% of the time we just default to Google. This browser intermediary never caused us much concern until some new browser technology that isn’t really all that new but at some point will catch on.

The key concern with respect to these new browsing technologies is that they expand the layer of functionality between the user and the search engine. It’s not hard to imagine that the click rates from searches might go down quite a bit if you can see the web page without having to click on it.

The Google interface has been a winner through simplicity but it’s possible that we are reaching a point where more sophisticated post-query processing will be just as important. Many of these new tools also offer improved filtering to better match search intention with results.

Of course experienced users know how to use more advanced search techniques like "and" or "not" operators but the average public doesn’t. There’s a good bit more to the Google story than raw search. Disintermediation isn’t a good thing for companies. iTunes is a good example in music and entertainment. Maybe Microsoft (MSFT) (with IE) and Apple (AAPL) (with Safari) have a little more potential in search than we first thought. It will be interesting to see to what extent they try and leverage their client software positions.

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14%
agree
14 votes

  How to be a Big Corporation

Google isn't good at being a Corporation with a capital C yet. It's starting to act like one, swaggering around the industry and snapping up tasty morsels like Android and YouTube, but can it deal effectively with corporate inefficiency, antitrust, and the declining cool factor? Corporations as well-adjusted as Apple are few and far between, and Google doesn't currently look like the next one.

Once upon a time, Google could depend on word-of-mouth and militant fan support from the young-people crowd, the techies, and the open-source diehards. But since then, it's been pushed around a bit by the Chinese government, poked and prodded by antitrust alerters, and it hasn't really done anything life-changingly cool since Google Docs (which remains not useable for sensitive content). And have you played with Google Maps recently? The way it sorts locations into separate Saved Places and Maps is positively stupid. Gross.

The fact is, it's hard to stay indie-cool when you're swallowing little companies whole. And it's hard to stay at the top when people are realizing, slowly but surely, that maybe you were on the cutting edge--one year ago.

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29%
agree
24 votes

  The Competition will not sit quietly eating bananas!

Yahoo and in particular deep-pocketed Microsoft and other smaller search companies will not sit idle and watch Google rob them of their share and become a 100 percent monopoly. They will channel more resources into market expansion and innovate to rope in new markets under their canopy. S.V. Char

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25%
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20 votes

  Margins unsustainable

Falling Margins: Google still has impressively high profit margins, at 70% in 2006. However its margins are down from 60% in 2003. The falling margins are in part due to growth: when Google installs its search technology in other websites like MySpace, it has to share a portion of it revenue with the hosts, so profit falls.

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7%
agree
13 votes

  Google overextended technically not to mention fundamentally

Even with the great earnings from Google and Amazon this week, Google is up over 10 in 1 months and is right near it's 52 week high and it's trajectory in the last month is almost double what it was in September.

Fundamentally it is trading at 21 times 2010 earnings and 35 times est 2009 earnings. Does anyone believe that they will continue to grow at over 22% per year. You can only leverage growth so far and soon you will have to begin creating other businesses.

I would look for at least a pullback to $533 to fill the gap left earlier this month in the near term. Once the gap is filled it could turn and go higher.

Update 11-05-09

Gap has been filled and price is headed higher. Fundamentally I believe this stock is overvalued, but do not get in the way of the trend.

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21%
agree
19 votes

  Search gap is decreasing

Virtually there is no difference between Google, Yahoo, and Microsoft search. So it is a matter of time when the competitors sort out their houses. Google margin will stall.

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23%
agree
21 votes

  market slowing for online advertising

"Growth in online advertising is slowing as advertisers cut back on marketing, raising questions about Google's moneymaking machine."

"Greenwald said the lucrative niche will still likely suffer as consumers spend less and ad prices drop. As a result, there's little reason to believe that Google's shares will rise significantly for up to a year, he predicted."

http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/12/26/BUG714UUP4.DTL&feed=rss.business

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21%
agree
19 votes

  Ad market growth is slowing

Slowing Growth: Google's growth rate is simply too high to sustain. It cannot continue to grow at even half of its current rate. And the ad market in 2009 doesn't look strong.

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17%
agree
17 votes

  Microsoft Challenge

Google makes nearly all its money from one thing: online advertising. And it's getting to be rather complacent about its advertising platform. This is bad news, stockholders. Microsoft's challenge to Google Ads is not the joke I expected it to be.

Did you know that Facebook runs on the new Microsoft adCenter? That Digg.com just switched from Google to Microsoft? That reviewers are calling Google's text-based ad display system the "plain Jane" to Microsoft's "innovativeness" [1]? Microsoft's not content with these initial successes, either--it's courting aQuantive for good measure.

There's buzz about Google no longer having incentive to develop the best search engine and advertising platform. It's already the leader of the pack, and now it seems to want to coast for a while. Well, they've underestimated the Microsoft threat. Don't you do the same.

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32%
agree
31 votes

  One trick pony

One-trick Horse, Microsoft challenge: Google earns 99% of its revenues from advertising. Although licensing and its other product lines may promise future income, they do not currently offer much. Google's lack of diversity leaves it exposed to real threats within the industry, as well as from Microsoft's charge from behind in the online ad business.

The way Microsoft has won in the past was by copying the creator of a popular product category, then outspending and outmaneuvering that creator. Think Lotus 1-2-3 being trumped by Excel, WordPerfect by Word, Netscape Navigator by Internet Explorer, and the Apple (AAPL) OS by Windows (but that story isn't over yet). Microsoft has managed to work its way into home gaming against Sony (SNE), a tough competitor, as the Xbox grows in popularity against the PlayStation. It could do so because it has a nearly bottomless bank account.

If Microsoft taps the power of that bank account with the old Bill Gates kind of smarts instead of the ever-more-disappointing Steve Ballmer kind of smarts, it seems to me that it would be able to damage Google tremendously in one fell swoop. Are you ready? Here it is:

Offer free advertising.

Remember, advertising is all of Google's revenue. That's all it does, which is fine and not without precedent. It's like saying the only way Krispy Kreme (KKD) makes money is by selling doughnuts and the only way ExxonMobil (XOM) makes money is by selling oil. That's their business. Google's business is selling ads.

The difference is that nobody can take all of Krispy Kreme's doughnut lovers away by offering free doughnuts at a different store, nor can anybody take all of ExxonMobil's customers away by offering free oil. Why? Because no company can afford to give away doughnuts or oil. Microsoft, on the other hand, can afford to give away advertising.

For now, it has a fabulous income from its hard-drive based software franchises Windows and Office. Google has no other income streams beyond advertising. Microsoft can bankroll its online efforts with its software business, make Live.com better, put more content up, and otherwise increase page views.

At this moment, Live.com and MSN.com are ranked 4 and 5 in Alexa's Global Top 500 websites, behind only Yahoo.com, Google.com, and YouTube.com. Microsoft gets more traffic than MySpace, Wikipedia, Facebook, and everywhere else online except for Yahoo and Google. So, it's not like Microsoft is a no-show on the Internet. It's third in the world.

That's why from day one advertisers would be there. For free, why not? I'd put ads up. I'd stop campaigns in other places, try the free ads at Microsoft, and see what impact it had on my business. It's possible that free ads at Microsoft would not create enough business to be better than paid ads at Google, but I'd sure give them a shot. So would millions of others.

Google's revenue would plunge, people would use Microsoft's properties more, even if just to see their own ads showing up, and mind share and maybe even actual market share would increase. If enough traffic came from the effort -- and presumably other marketing efforts run in parallel -- then Microsoft could later begin charging modest fees or look into other ways to monetize all those advertisers.

Giving away a competitor's product is a classic way for a dominant company to win. To Microsoft, advertising is not important yet. To Google, it's everything.

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7%
agree
13 votes

  The Google Illusion

Sometimes it seems like Google can do no wrong. They're partially open-source, they're free, they make fluffy cool things like Google Earth, and even those crazy SNL people have to put in a snide little cut at Mapquest on behalf of the hip young crowd that Google represents.

But whenever the whole investing community falls in love with a hot stock, you'd better be digging deeper. And although I too admit to being rather charmed by Google's Harry-Potter-worthy company motto, charm and indie-cool isn't going to pull Google out of its first forays into corporate quagmire unless it does something big--and soon.

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11%
agree
17 votes

  Wiki's are undermining GOOG's search

Even today, when I want to learn about something, i use google as a gateway to wikipedia. Before wikipedia, google's value was tremendous! It actually pointed me to the best resources on the web for each topic. Today the best resource for factual data is almost always wikipedia. So no more google competitive advantage there... I still use google for other things, but i think that we slowly realize that humans, working in mass-collaboration, can organize information in a much better way. The best algorithms today cannot detect spam reliably, and a human can detect it in a snap of a second. This is why you hardly ever see spam in wikipedia.

It's interesting to note that mass-collaboration is microsoft's biggest problem as well.. (Open source software)

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0%
agree
14 votes

  MSFT's Bing May Erode Google's Search Dominance

MSFT claims that its Bing will provide better, more relevant searches than Google and thus may erode Google's strangle on the search marketplace.

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