GOOG

A Stock Split Steals the Headlines from Google’s Quarterly Results

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Google (GOOG) posted another solid first quarter after the close Thursday, with revenues growing 24% from the same period a year ago and adjusted earnings per share coming in at $10.08 — ahead of consensus estimates. Our thesis on Google (click here) remains unchanged, and we think shares continue to be fairly valued at current levels. We’d grow more interested in adding Google to our Best Ideas portfolio if it registered a higher score on our Valuentum Buying Index. At this time, we’re also quite comfortable with our current technology exposure in the portfolio: Apple (AAPL), Intel (INTC), and eBay (EBAY). Aggregate paid-clicks were up a whopping 39% compared to the first quarter of 2011 (and up 7% sequentially), suggesting Google … Read more

Google’s Fourth-Quarter Misses on European Weakness, Ad Pricing Declines

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On Wednesday, Google announced weak fourth-quarter results that showed relatively disappointing earnings growth, declining cost per clicks (money paid to the firm for its ads) and slowing international revenue expansion. Though we’ll be re-evaluating our intermediate-term projections on the internet giant, we don’t expect to make a change to our fair value estimate at this time. Google’s revenue advanced 25% in the fourth-quarter from the same period a year ago thanks to a 29% increase in ‘Google Sites Revenues’ and a 15% increase in ‘Google Network Revenues.’ Paid clicks jumped 34% in the fourth quarter from the same period a year ago, but average cost-per-click declined 8%. Though there was some currency impact and management blamed “format changes”, we had been … Read more

Google Blows By Expectations; Android, Google Plus Firing on All Cylinders

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On Thursday, Google announced fantastic third-quarter results. We had been expecting a strong showing and are maintaining our $700+ per share fair value estimate on the company. Google is trading up nearly 7% after hours. Our detailed financial report on Google can be found here. Revenue growth accelerated to a whopping 33% thanks to nearly a 40% increase in Sites revenue, which represents 69% of the business. Network revenue (AdSense) – or revenue generated by Google’s partner sites – jumped 18% and represented roughly 27% of consolidated revenue in the quarter. Aggregate paid clicks increased 28% over the third quarter of 2010 and 13% sequentially – solid performance. We were also pleased with the firm’s mobile business (Android), which now … Read more

Ignore Debt Ceiling News, Focus on Corporate Earnings

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Simply put, the United States is not going to default on its debt. In other words, we think any market action resulting from the debt-ceiling issue will be irrelevant in coming months, and resolve itself in due time — as it has with any other crisis. Further, we remain unconvinced that this topic is a legitimate concern for long-term equity investors. The fact that America has a large national debt (and a problem with entitlement programs) is well documented in every history and social-studies textbook in grammar schools across the country; how can this be something that will blindside the markets? We’re not talking about derivatives on complex mortgage instruments here. The debt-ceiling deadline is purely a political issue, one … Read more

Yahoo Reports Dismal Second-Quarter Revenue

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Yahoo (YHOO) reported mixed second-quarter results Tuesday. Revenue, excluding traffic acquisition costs, fell 5%, while GAAP revenue dropped 23%, as softness in display revenue and turnover at the sales level impacted results toward the second half of the quarter. The attractiveness of competing sites like Facebook and Google (GOOG) is becoming increasingly more difficult for Yahoo to overcome, in our opinion. Income from operations, however, still advanced 9%, while net earnings per share jumped 18% from the prior-year period. Cash flow from operations fell 5% from the same period a year ago, while free cash flow shrunk 25% to $96 million during the quarter. We don’t expect a material about-face in Yahoo’s core U.S. operations, with the likes of Facebook and … Read more

Initiating Coverage of LinkedIn at $45 Fair Value

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This article originally appeared on Seeking Alpha. Please view disclosures: https://seekingalpha.com/article/271173-initiating-coverage-of-linkedin-at-45-fair-value Although LinkedIn (LNKD) appears to have carved out a nice niche in the professional-networking arena, the firm has quite a bit of work to do to effectively maximize its revenue platform, and competition from a plethora of potential rivals (including Facebook and Google) may inevitably cause long-term head winds. Still, the firm’s revenue trajectory will be stellar during the next few years, and translating this growth to the bottom line will largely hinge on its ability to leverage infrastructure and marketing costs. I am initiating coverage of LinkedIn with a $45 per share fair value estimate; revenue estimates at $496 million in 2011, $831 million in 2012, and $1.2 billion … Read more

Bullish News for the Apple Ecosystem

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Wednesday night, we encountered a number of positive data points for Best Ideas Newsletter holding Apple (click ticker for report: ) that support our long thesis. Apple on the Offensive Apple marketing chief Phil Schiller provided some interesting thoughts in a Wall Street Journal interview. Since Steve Jobs passed away, we haven’t heard any of the top brass at Apple make negative comments about Android (click ticker for report: ). The timing might not be coinicidental, as the interview was released the day before Samsung unveils its Galaxy SIV. Schiller criticized the user experience, saying: “When you take an Android device out of the box, you have to sign up to nine accounts with different vendors to get the experience iOS comes … Read more

8 Announcements and Top Research You May Have Missed

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8 Announcements. This article was sent to members via email March 27. By Brian Nelson, CFA Hi everyone, Brian here. Trust you are doing great! Here are eight announcements I want you to be aware of: Everything we do is for our members. We’re very proud of the outperformance of the Best Ideas Newsletter portfolio, that we’ve never had a dividend cut in the Dividend Growth Newsletter portfolio, that our high-yield ideas are holding up very well, and the success rates of the Exclusive capital-appreciation ideas and short-idea considerations are running at approximately 80%. We’re proud to be your research partner. The odds of a Fed rate cut are going up as yield-curve inversion continues to threaten. The risks are more behavioral in … Read more

2,350-2,750 on the S&P? Could the Coronavirus Catalyze a Financial Crisis?

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Image: We think a rather modest sell-off in the market to the target range of 2,350-2,750 on the S&P 500 is rather reasonable in the wake of one of the biggest economic shocks since the Global Financial Crisis. The chart above shows how far markets have advanced since 2011, and an adjustment lower to the target range of 2,350-2,750 is rather modest in such a context and would only bring markets to late 2018 levels (note red box as the target range). The range reflects ~16x S&P 500 12-month forward earnings estimates, as of February 14, adjusted down 10% due to COVID-19. When companies like Visa talk about a couple percentage points taken off of growth rates, one knows that … Read more