GOOG: (Larry still sound a bit off, hope he is okay.) Going over Google's number, they beat the street from a revenue and non-gap eps perspective, and adding fuel to the excitement is the overall margins increased. However, the quality of the margin increase seems to have come from:
1. reduction in Administration
2. reduction in R&D
3. lower tax rate (18%)
Although Google beat from a non-gap, I was expecting a bit more from a GAAP perspective. And frankly, I do not understand why they would issue a cautionary note so late into the quarter, via their blog, if they knew Revenue was going to do well.
Google's trailing GAAP eps is now $34.12. The stock at 737 leaves the trailing multiple at 21.6.
Since Google is trading on the higher side of its 2yr multiple range, I am a still cautious. Although the action in the current quarter is suggesting the street is getting over the CPC issue.
I still would like to start trading Google again, but on a pull back toward 680 or so.“Paid click” growth was 24%, year over year, and 19%, quarter to quarter, the company said.The “cost per click,” the rate Google makes money on those clicks, fell 6%, year over year, and rose 2% from Q3′s level, Google said.
IBM: Rocked it. Expanded margins, beat on non-gaap and GAAP and revenue (while currency was a head wind).
With the market entering a new trading dynamic, and IBM's continued share holder friendly stance, I would expect IBM's trailing multiple to retest the high 14s/low 15. This would mean IBM should re-test 207. (Then re-test it high.)
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