Google Earnings Preview: Tickerguy Sez....
The Market Ticker ® - Commentary on The Capital Markets
Posted 2012-04-12 10:18
by Karl Denninger
in Earnings
Ignore this thread
Google Earnings Preview: Tickerguy Sez....
 

This afternoon we will get Google's earnings.

I think you're going to be disappointed.

It has been said that Google has never missed twice sequentially.  I think they're going to.

Cost-per-click is likely to be up, and revenue per impression down.  This is not what the street wants to see, but it looks like what we're going to get.

The problems are two-fold -- a slowdown in general in the economy, whether people believe it yet or not, which is and will continue to filter into advertising revenue.

Second, more exposures are coming on mobile devices.  But mobile devices tend to generate less revenue simply because so many of the exposures take place where the advertisement is not actionable by the consumer.

If I'm sitting in front of my computer and you display something useful to me, I can act on it.  This gets much more dicey when you put up that same advertisement on my phone and I'm sitting in a theater waiting for a movie to start.  Even if I like what you're advertising the odds are overwhelming that you fail to convert that exposure into a sale simply because you advertised into a dead "actionable" period of time.

This, incidentally, is why billboards on the highway aren't very expensive to advertise on, when you figure the number of people who see the billboard and the size (the "pop") of the ad -- billboard advertising is not immediately actionable.

This shift, which is now entering the "real move" phase as devices shift more and more to a mobile format from a fixed one, is only going to continue.  And while Google has a lot of presence in the mobile space the cost for delivery is not much different between your PC and mobile, but the revenue per delivery is much lower on the mobile side.

Those who argue that this is an expansion of the market are wrong; it's a shift, and it's one that comes with significant margin compression.

We'll see if I'm right this afternoon.

Discussion below (registration required to post)
 

Main Navigation
Full-Text Search & Archives
Archive Access
Get Adobe Flash player





Blogtalk 3:30 CT Mondays
Items To Look At


Discuss The Capital Markets along with daily technical analysis with our Gold Donor program.

Where We Are, Where We're Heading (2013) - The annual 2013 Ticker

Links and Blogroll
Our policy on reciprocal links: Send us an email with your information and why you think your blog or news site would make a good addition - in most cases reciprocal link requests will be granted.
Seeking Alpha Certified
Legal Disclaimer

The content on this site is provided without any warranty, express or implied. All opinions expressed on this site are those of the author and may contain errors or omissions.

NO MATERIAL HERE CONSTITUTES "INVESTMENT ADVICE" NOR IS IT A RECOMMENDATION TO BUY OR SELL ANY FINANCIAL INSTRUMENT, INCLUDING BUT NOT LIMITED TO STOCKS, OPTIONS, BONDS OR FUTURES.

The author may have a position in any company or security mentioned herein. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site are your sole responsibility.

Looking for "The Best of Market Ticker"? Check out
Ticker Classics.

Visit the forum to discuss this and other investing-related topics; see the FAQ on the forum for information about Gold Donor status including access to our technical analysis video server.

Market charts, when present, used with permission of TD Ameritrade/ThinkOrSwim Inc. Neither TD Ameritrade or ThinkOrSwim have reviewed, approved or disapproved any content herein.

Market Ticker content may be reproduced or excerpted online provided full attribution is given and the original article source is linked to. Please contact Karl Denninger for reprint permission in other media.

Submissions may be sent "over the transom" to The Editor at any time. To be considered for publication your submission must include full and correct contact information and be related to an economic or political matter of the day. All submissions become the property of The Market Ticker.

Leads on stories of current economic and political interest are always welcome. Our fax tip line is 850-897-9364; please include contact information with your transmission.

 
Comments.......
User: Not logged on
Login Register Top Blog Top Blog Topics FAQ
Showing Page 1 of 2  First12Last
User Info Google Earnings Preview: Tickerguy Sez.... in forum [Market-Ticker]
Jubber
Posts: 13938
Incept: 2007-07-05
Gold
UK
Report This As A Bad Post Add To Your Ignored User List
doesn't this unfathomable move hint at a leak?

----------

“The problem with socialism is that, sooner or later, you run out of other people’s money.” Thatcher
Trades50
Posts: 4214
Incept: 2007-10-30
Silver
Land of Tax and Spend
Report This As A Bad Post Add To Your Ignored User List
Just announced,

Regarding raises for this year from a major market tech company:

Quote:


Our business environment is still very challenging with economic activity in financial services still heavily constrained and our customers are still making significant cuts in personnel and expense. They then approach us to provide even greater value. In Asset Management we are not immune to these business pressures and in my recent discussions with our customers the cost pressures they experiencing are significant.

Against this backdrop we reached the decision to keep pay rises to a minimum thereby enabling us to continue to make investments and deliver services to our customers without fundamentally increasing the prices we charge. This is an important point since the likely alternative would be fuller pay increases but a reduction in staff numbers.



----------
When the people fear the government, there is tyranny. When the government fears the people, there is liberty. - Thomas Jefferson

Drench
Posts: 28631
Incept: 2009-11-10
Green
Report This As A Bad Post Add To Your Ignored User List
But... but... but Google+ is so popular.
Crzymorse
Posts: 1186
Incept: 2010-06-25

Maryland
Report This As A Bad Post Add To Your Ignored User List
The google driverless car has huge upside. You an watch their ads all day while the car drives for you...
Bagbalm
Posts: 4251
Incept: 2009-03-19
Green
Just North of Detroit
Report This As A Bad Post Add To Your Ignored User List
People are switching their feelings about Google as it demonstrates it is invasive to your privacy. That is very off-putting. I won't reward such behavior.
Lowbeyond
Posts: 16866
Incept: 2008-02-11
Green A True American Patriot!
CO aka West NJ/East CA
Report This As A Bad Post Add To Your Ignored User List
Bagbalm wrote..
People are switching their feelings about Google as it demonstrates it is invasive to your privacy.

Bull**** ! Their motto/policy is:

Do No Harm

----------
Maybe it was a birdy bread-bomber from the future?!
Goforbroke
Posts: 5333
Incept: 2007-11-30
Gold A True American Patriot!
Just call me 'Comrade'
Report This As A Bad Post Add To Your Ignored User List
What will prop them up are the Obama ads, which appear absolutely everywhere I go on the web.

----------
We have met the enemy and it is us. -- Pogo
Sparticlebrane
Posts: 287
Incept: 2009-08-25


Banned
Report This As A Bad Post Add To Your Ignored User List
Quote:
What will prop them up are the Obama ads, which appear absolutely everywhere I go on the web.

Adblock Plus with Easylist is your friend.

Nelstomlinson
Posts: 124
Incept: 2011-12-21

Juneau Alaska
Report This As A Bad Post Add To Your Ignored User List
Lowbeyond, I thought the motto was ``don't be evil.'' Whatever it is, their powers of rationalization are amazing, because their policy doesn't seem to have slowed them down much on the harm/evil front.

But it's not the evil that's going to hurt them, it's the ``creepy'' factor. When people think about what Google is doing, and say: ``That's creepy,'' Google has a problem brewing. I've been hearing non-technical people say that.
Lowbeyond
Posts: 16866
Incept: 2008-02-11
Green A True American Patriot!
CO aka West NJ/East CA
Report This As A Bad Post Add To Your Ignored User List
hmm maybe you are right. i will go with, meaning is close enough and exit stage right ! ha

----------
Maybe it was a birdy bread-bomber from the future?!
Bsfootprint
Posts: 960
Incept: 2011-02-27
Green
Report This As A Bad Post Add To Your Ignored User List
Big G's motto might as well be: Don't Be Evil Until Big Enough To Get Away With It -- for one thing, in this so-called culture, Big Corp/Business == Evil. For another, it's in the nature of of the beast -- they'll do harm even if they don't really mean to. After all, they're going to expand as far as they can in order to maintain their growth.

(Funny, never hear MSM talking about Big Government == Evil -- I wonder why?)

----------
When I hear central bankers are blowing bubbles, I like to picture a large, happy and well-endowed male chimp named 'Bubbles'...

Seobook
Posts: 35
Incept: 2010-09-05
Green
Report This As A Bad Post Add To Your Ignored User List
I think the lower CPC but more clicks stuff will continue...this trend is largely driven by them getting branded advertisers to buy their own branded keywords & using larger ad units with ad sitelinks (there is a limit to how much Google can charge Sony for "Sony" before they don't buy the ad & just get most of the organic traffic free).
Connieg
Posts: 860
Incept: 2008-06-08
Green
Houston, TX
Report This As A Bad Post Add To Your Ignored User List
People got completely bonkers in this market.
I was looking the AH tape and I saw 651, next second $630, next second $660. WTF?

----------
"Go long...something" Me
Digitlman
Posts: 328
Incept: 2011-03-04

Report This As A Bad Post Add To Your Ignored User List
Looks like they were on target. And:

GOOGLE TO CREATE A NEW CLASS OF NON-VOTING CAPITAL STOCK
GOOGLE PROPOSES MEASURE EFFECTIVELY SPLITTING SHRS 2-FOR-1
Genesis
Posts: 130679
Incept: 2007-06-26
Admin A True American Patriot!
Report This As A Bad Post Add To Your Ignored User List
The "split" is hinky ****. Market is digesting...

----------
I don't care if it makes sense -- only if it makes money. -- Me
Bank (n): See scam, fraud and theft. Eat a bankster -- they're low-carb.
What part of "shall not be infringed" was unclear?
Digitlman
Posts: 328
Incept: 2011-03-04

Report This As A Bad Post Add To Your Ignored User List
Please explain this "hinky" **** to us laymen.
Striker754
Posts: 671
Incept: 2009-07-09

Report This As A Bad Post Add To Your Ignored User List
It's really no different than their current structure. The voting stock is still the same. It is a stock split and the main reason they did it was change equity based compensation from voting shares to non voting shares. Obviously the publicly held class A share count was getting a little too high for their liking due to insider selling and equity comp so they made a change.

The market doesn't need to digest anything. The structure is the same. The same votes as before but the class A will have roughly half the price of before. The employees who are given stock as compensation will not get voting rights with those anymore, but it didn't really matter in the first place since the insiders hold a majority of the votes.

Griff
Posts: 80
Incept: 2007-10-25
Silver
Chicago
Report This As A Bad Post Add To Your Ignored User List
Taken from Yahoo message board:

PEOPLE ON THIS BOARD DO NOT UNDERSTAND THE STOCK SPLIT

Let me explain it to you this way..

If GOOG never had a split then lets say 6 months from now GOOG is trading at 800.

So 6 months from now your one share of GOOG is worth 800.00 in your trading account.

NOW lets say for the sake of argument that GOOG split the stock in a traditional way 2:1.
This gives you 2 shares of GOOG. beacuse of the split GOOG (one ticker symbol) is worth 400.00 each. So you account has 800.00.

fair enough.

Now lets look at the new class of shares.

lets call it GOOGa

On the day the stock splits, lets say it is trading at 700. That means that you get one GOOGa share that is worth 350 and your original GOOG is 350.

Now from my example above, lets say that the stock moves up in value to 800.00. For you to realize the 800.00 in your trading account, both GOOG and GOOGa needs to be trading at 400.00.

But how is that possible? These are TWO SEPERATE ticker SYMBOLS. Yes, they are linked to the same COMPANY, but who in the world would want to buy the non-voting rights of the company if both symbols (GOOG & GOOGa) are the exact same price?

It's like saying that a knock off shirt is selling for 15.00 and a Pollo shirt is selling for 15.00. And both shirts were made from the same company. Why would you buy the knockoff shirt? What advantage is it to choose the nockoff? There isn't any advantage.

Therefore demand in this example will go down for the knockoff shirt. And in the same way GOOGa will hardly ever be the same price as GOOG. Therfore you loose value. Perhaps not a lot, but non the less you will have less money in your account, had the split never occured.

That's how I'm reading this. They are not doing a regular 2:1 stock split. That changes everyting.

http://messages.finance.yahoo.com/Stocks....


----------
"He will come like a thief in the night"
Striker754
Posts: 671
Incept: 2009-07-09

Report This As A Bad Post Add To Your Ignored User List
The number of shares of voting stock is staying the same = you have the same voting power

voting power in google hasn't and probably never will mean anything due to the dual stock structure = shares will trade together as they are the exact same thing yet one has worthless voting attached to it
Pitz
Posts: 860
Incept: 2010-04-08

voluntary resigned
Report This As A Bad Post Add To Your Ignored User List
For all the cash they claim to generate, where the hell is the money?

This latest stock 'dividend', what a scam.

And quite frankly, the idea of a company attacking its shareholders through a dual class share structure is rather disgusting. "Do no evil", yeah right. Try more like pure evil.

Mannfm11
Posts: 3535
Incept: 2009-02-28
Gold
DFW, Tx
Report This As A Bad Post Add To Your Ignored User List
I recall an interview with Mark Cuban years ago on CNBS. Maybe it was a print interview, but what I recall him saying was he would never buy stock in a company that being a shareholder didn't give him influence in a company with which he did business or that he couldn't make enough noise at the shareholders meeting to influence how the company was run. He said that the typical average Joe that owned stock was a sitting duck. I think time has proven him correctly. The biggest factor as to whether your stock goes up or down is just plain old inflation, whether it be pure asset inflation or CPI inflation. All the bull crap we hear is secondary. Idiots run many of these companies and crooks run many of them, siphoning off money that should go to the owners of them. Funds managers are really only interested in how much money they can attract and thus draw fees from. Who is minding the shop?

The post above covers some really great territory. Who would buy a share where they had no representation? Not the money that moves markets.

----------
The only function of economic forecasting is to make astrology look respectable.---John Kenneth Galbraith

Striker754
Posts: 671
Incept: 2009-07-09

Report This As A Bad Post Add To Your Ignored User List
@Pitz,

GOOG has been a dual share structure since the IPO. This is nothing new. You didn't start the corporation; they did. They decided to keep control of it. If people don't like that, don't buy the stock. Nothing evil about it. This stock split changes nothing other than dilution from stock compensation will not threaten their voting control.

@Mann,

Who would buy a share where they had no representation? Anyone who has bought GOOG. Anyone who buys Facebook, etc, etc, etc. You are telling me that the big boys aren't buying GOOG or Facebook? BS.


Hell I don't even have anything in GOOG, but I think some of you hate just to hate.
Peterm99
Posts: 4981
Incept: 2009-03-21
Gold
SoCal
Report This As A Bad Post Add To Your Ignored User List
What fraction of stockholders actually show up at annual meetings?

What fraction of stockholders, if they even bother sending in their ballots at all, do other than merely approve a designated proxy?

I expect those fractions to be miniscule for most companies. Thus, in the final analysis, I believe the voting vs. non-voting share issue is probably not a big deal to most people.

Disclosure: Never have owned, nor do I intend to own, any Google shares.

----------
". . . the Constitution has died, the economy welters in irreversible decline, we have perpetual war, all power lies in the hands of the executive, the police are supreme, and a surveillance beyond Orwell’s imaginings falls into place." - Fred Reed
Genesis
Posts: 130679
Incept: 2007-06-26
Admin A True American Patriot!
Report This As A Bad Post Add To Your Ignored User List
Well the shareholders seem to think this is a raspberry, as the stock is down $16 (2.5%) today.

----------
I don't care if it makes sense -- only if it makes money. -- Me
Bank (n): See scam, fraud and theft. Eat a bankster -- they're low-carb.
What part of "shall not be infringed" was unclear?
Login Register Top Blog Top Blog Topics FAQ
Showing Page 1 of 2  First12Last