Search This Blog

Tuesday, November 12, 2013

$goog - losing focus chatter

Increased chatter about Google slipping in core functions.

- poor local results
- Google Maps loosing share

The obvious concern is that the chatter is highlighting poor performance in search related functions. Google is not suppose to suck at search. It is what affords them the luxury of being a hardware manufacturer and compete with pretty much every industry.

To make matters worse, as core functions decline, new initiatives are not picking up the slack. The Motorola acquisition is proving to be a $7b flop. No profits, declining revenue and a patent chest that is not worth $7b. And with the Moto X declining in price, continues to suggest weak demand, Motorola is not going to pick up the slack anytime soon.

Gone are the days of Google as a pure play to internet advertising.

If core functions fade, their 'moon shot' initiatives, failed experiments and luxurious builds will be punished by the street. These initiative will no longer be viewed as 'innovation'. They will be viewed as distractions.

The street is already pricing the stock as a master-of-the-universe-that-conquers their field of entry. But once the street realizes they have stretch themselves out too thin, the stock will be punished.

Negative sentiment can take the stock between 850-925. (Even this move allows for a pretty elevated trailing PE.)

If the stock is to be priced as a company loosing focus, then the trailing PE has plenty of justification to decline below 20.

No comments:

Post a Comment