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Google Blows Q2: Multiple Compression to Continue |
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| Jul 24, 2008 05:13 PM UTC |
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Tracked Blogger
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7/17 - "Gross revenue and net revenue in line, EPS light. Most of EPS miss from interest income and higher G&A, which isn't that big a deal. Massive CAPEX ($698 milllion) once again hammered free cash flow, which has been flat for four quarters (Where on earth is all this money going?). Revenue benefitted heavily from FOREX, and certainly wasn't the upside surprise the Street was looking for. Sergey said the company may have overdone its quality control efforts in the quarter (reducing the number of ads), and the reversal of this could provide a modest accelerator to Q3." "Bottom line: Far from a disaster, but clear that the days of OMG outperformance are over. In light of ongoing revenue deceleration and margin compression, stock multiple should continue to compress. We continue to think fair value is 25X-30X free cash flow ($400-$450ish) vs. the 40X everyone has gotten used to." 
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Analysts See a Buying Opportunity in Google
7/18 - "So, there are a couple of ways to think about Google’s (GOOG) big post-Q2 sell-off this morning. For starters, as I noted last night, there seems to be increasing evidence that online advertising is actually feeling the effects of the slower economy...On the other hand, the legion of analysts with Buy ratings on the stock almost universally believe investors are being given an opportu...
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N/A risk: moderate |
Google Keeps Scoring
7/18 - "Google’s growth rate has decelerated while its annual revenue has jumped from $3.2 billion to $16.6 billion in the past three years. Last quarter (Q1 2008) the company’s revenue rose 42% in a difficult financial environment. Approximately 51% of this revenue came from international markets, whose contribution increased to 52% in the second quarter, but the company had to spend more ...
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Deutsche Bank: Pullback in Google "Way Overdone"
7/21 - "The recent pullback in shares of Google Inc., is “way overdone,†says Jeetil Patel, analyst at Deutsche Bank Securities, adding that he still has a buy recommendation for the giant of the search engine world.
“The company is leveraging balanced growth across three phases of the model, including distribution, monetization and optimization,†he says in a note to clients. Mr. P...
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