Research archive for GOOG

There was an interesting announcement from Google last evening, after the market closed: Google Announces Plans for New Operating Structure. The holding company is Alphabet, the website is abc.xyz. That is pretty cool, and the design is clean, G is for Google. Larry Page will be running Alphabet, Sergey Brin will be his partner, not much changes there. Sundar Pichai will run Google, he is highly regarded and got tweets of encouragement from the likes of Satya Nadella, the Microsoft CEO, Tim Cook, the Apple CEO and Google Chair, Eric Schmidt. He comes with a top pedigree, is only 43 years old, born in Chennai, I am just guessing that he is a huge MS Dhoni fan.

Google has been a serious laggard, in terms of their price performance relative to the market. As I speak to many people about companies it is human nature for us to look at share price performance and translate that to internal company dynamics and quite quickly come to the conclusion that Google "is not doing that well", we are ALL guilty of that. Don't beat yourself up, we all do it. Revenue growth of 11 percent year over year (when measured against Q2 last year), serious currency headwinds in there, constant currency revenue growth was 18 percent. 17.7 billion Dollars in revenues for the quarter is pretty impressive, currency impact was a whopping 1.6 billion Dollars, with the benefit of modest hedging that was reduced to 1.1 billion Dollars. GAAP diluted EPS clocked 4.88 on GAAP net income of 3.351 billion Dollars. 9 out of every 10 Dollars are still from advertising, check out the revenue breakdown:

YouTube turned 10 unofficially yesterday. On the 23rd of April 2005, the first ever post titled "Me at the Zoo" was uploaded by Jawed Karim, the co-founder of YouTube. The clip itself is terrible. It is shocking actually. I guess the company has been a success beyond their wildest dreams. Check this out, the first and only ever video, as per below the link.

Oh! That is interesting, the fact that Google have managed to drag a Wall Street type across the country from New York to the Googleplex, which is in Santa Clara County for any of you that have ever been close to that part of the world. Well, do you know the way to San Jose? Ruth Porat better know the way, she has landed the job of CFO at Google, leaving the same job at Morgan Stanley. Check out the Google release: Ruth Porat to Join Google as Chief Financial Officer. The only thing that sticks out for me is that when Porat joined Morgan Stanley in 1987 (an interesting year for equity markets) Larry Page and Sergey Brin were 14. They were going through their geeky years at high school, we all remember those.

Google. You can use it as a verb. As in the "old" days when I asked my pops what something is or was, he said, go look in the dictionary or the encyclopaedia. Now days you can use the company name as a verb, in other words, go Google it! The company turns 17 this year, in September, the founders Larry Page and Sergey Brin are still at the helm, the ex CEO and now chairman, Eric Schmidt is still large and in charge at the business. Recently Google has had some slippage, some questioning that they only have the one business. Whilst looking at their business revenues, it becomes clear that it is all about internet and search.

When Larry met Sergey in 1995 at Stanford University and by 1996 they had built their first search engine. The name Google is a play on the word googol which is a mathematical term for a 1 followed by 100 zeros (nerd alert). Today Google is a regular in everyones vocabulary. It has an answer for everything and more importantly it has the answer that you were most likely looking for.

Google released their second quarter numbers post the bell yesterday, they were very good, in my opinion. You can download the .pdf: Google Inc. Announces Second Quarter 2014 Results and Management Change. Revenues for the quarter of 16 billion Dollars (an increase of 22 percent), operating income was 4.26 billion Dollars, 27 percent of revenues. Nice. On a non GAAP EPS, excluding stock-based compensation (SBC) expense (what the hell?) that number was 6.08 Dollars.

Google are having a proper go at their competitors, currently there is the Google I/O developers conference on the go at a place called the Moscone Center, a 65 thousand square meter centre in San Francisco. Day 2 of the conference ended yesterday. If you want to watch the Google I/O 2014 - Keynote, of course you can do so on YouTube.

One of our core holdings in the US, Google has announced that they are buy video monitoring and security company Dropcam Inc for $555 million. The actual buyer of the company is Google's subsidiary Nest, the "smart appliance" division. The long term goal is to have all your house appliances controlled by a cell phone running the Android software.

Holy smokes. This is probably the most amazing video you will watch all day. And if you do watch something more amazing, please share with us. It is titled A First Drive and contains the prototype vehicle. The first thing people notice when they get in the little bug, that looks not too dissimilar to the Smart Car. And then the big one, no steering wheel, and no brakes. The brakes could be a bit of a problem, don't you think? Or not. The having more time with one another is important, but whether or not that time is well spent or not, that is important too. What is the point of everyone fiddling on their smart device when sitting with their backs to one another? These are still for urban and suburban spots, no speed here.

Last week while South Africans were slowing things down in anticipation for the long weekend, Google released their results. We gave you the brief highlights from their release with the promise of a more detailed analysis this week.

Nooooooo (slow motion one), what is going on with Google? You saw right, the price halved, but that did not mean that your value halved. Simply, because two years after announcing that, the founders and essentially controllers of the business, Larry Page and Sergey Brin, would split the shares and control the company through their special voting rights B shares, the stock has finally split.

Last night we received an announcement from 2 of our recommended stocks listed on the NYSE. Its very exciting actually, Google Glasses have struck up a relationship with Sunglass manufacturer Luxottica. Remember I did a write up on Luxottica, the manufacturer of brands such as Oakley, Ray-Ban and Arnette sunglasses in a piece titled Lifting the shades on eyewear.

Google reported numbers post the market last evening, these were for the full year and fourth quarter. Cash on hand, and this always amazes me, is 58.72 billion Dollars. As a percentage of their market cap it is around 15 percent. Nowhere near as high as the hardware manufacturers, like Apple and Cisco and the like, but not too dissimilar to Facebook, as you will recall yesterday. Whilst you could classify Google as a software company, they posses an enormous amount of hardware and patents for hardware. When did Google ever fall over and you were not able to search the internet? Never. Or perhaps a long time ago.

Over the past couple of years Google has become our 6th biggest position in New York. This has been the result of constant additions as well as a fast appreciating share price. The stock was up over 50% last year. The businesses initial focus is on advertising revenue through people using their search site. That makes sense as a very profitable business model. But the company has bucket loads of cash ($57bn at the end of last year) and a very ambitious and innovative management team.