Google Inc. (Nasdaq; GOOG) stock plunged after its earnings report missed estimates.
Thursday after the close, Google's posted Q2 profit of $9.71 billion, or $9.54 a share, up 19% from $8.54 billion, or $8.42 a share, in the same quarter a year earlier. Revenue rose to $11.1 billion from $9.61 billion.
Those numbers came in below the consensus estimates of $10.80 EPS on revenue $14.45 billion. And, the surprising miss spooked investors in Google stock. Shares tumbled 5% in afterhours trading and another 3.38% in early morning trading Friday.
Google still views the explosive shift to smartphones and tablets as a lucrative opportunity for Google stock investors and the company. But, the Internet search giant's second quarter results serve as a stark reminder of just how financially challenging the early stages of that opportunity can be - even with an $11 billion-plus quarter.
In recent days, there was plenty of chatter about Google shares breaking through the $1,000 price barrier, a milestone that now looks a ways off amid the earnings miss.
Can Google Earnings (Nasdaq: GOOG) Push Stock to $1,000 a Share?
Google earnings for the second quarter come out after the bell today - with most analysts expecting a strong quarter.
Google Inc. (Nasdaq: GOOG) is expected to report Q2 earnings of $10.78 per share on revenue of $14.45 billion. That compares with a $10.12 EPS profit on revenue of $9.61 billion in the same quarter a year ago, according to analysts polled by Reuters.
In fact, Money Morning tech specialist Michael A. Robinson told Money Morning members on July 9 how Google stock is poised to gain roughly 50% by the end of 2015, after a stellar two-year run of 70% gains.
Monday, GOOG hit a high of $928. Shares are up 30% year-to-date, compared to the Standard & Poor's 500 Index gain of about 18%. Giddy investors are hoping Q2 numbers will be great enough to propel the stock over the $1,000 per share threshold.
However, even if investors don't get $1,000 a share, they just might get a stock split. Earlier this year, the Mountain View, CA-based company reached a legal settlement allowing it to split its stock for the first time ever.
A Surprise in Google Earnings?
While the Wall Street consensus is for Google to show a 4% decline in cost-per-clicks, in line with historical charts that show seven consecutive quarters of decreasing click prices, that figure is likely to come in higher-much higher.
Looking for Google to post better-than-expected numbers in this crucial segment are two "in-the-know" firms: The Search Agency, the largest independent paid search company in the U.S., and Adobe's digital marketing division, reports Venture Beat.
For the first time in two years, costs per click at Google are going up, not down, data from the two sources reveal.
Figures from The Search Agency show an 8.3% year-over-year increase and whopping 21.2 jump quarter-over-quarter. Adobe's numbers are a bit more modest with a 6% increase in the last quarter and a projected 5%-10% increase for the current quarter.
But the trend is the same - up.
Three Things to Look for in Google Earnings
With all the positivity surrounding Google, it's easy to overlook the details. Following are three things that will impact Google's present and future bottom-line.
The Only Tech Stock You'll Ever Need
When it comes to cutting-edge science that will redefine how we live and work in coming years, there's no shortage of fascinating breakthroughs.
Every week brings dozens of new developments covering everything from bionic eyes to drones the size of humming birds.
Trouble is, very few offer actual opportunities to make money right now, today.
But there is one big-cap juggernaut that provides stock profits to its shareholders while it's busy inventing the tech of the future. And it isn't satisfied pigeon-holed into one specific sector but has its sights set on so many diverse industries (or tech that will affect numerous industries) it's like buying a stock that's an exchange-traded fund (ETF).
Unlike many tech leaders, it isn't sitting on its laurels and market dominance. It's actively looking into cutting-edge sectors to advance its brand. What's more it's product pipeline is blazingly fast and efficient.
We're talking intriguing rollouts in new fields like:
- Augmented human intelligence
- Wearable computers
- Robotic cars
- Machine learning and communication
- Advanced optical networking
In other words, you have to look at this stock like it were a "Future Tech ETF."
Dumping Apple Stock for Google: How Investors Could Get Burned
The trend has some wondering if investors are consciously moving their money from one tech giant to the other.
"There's a lot of money that likes the tech sector, and I think Google has kind of taken over from Apple," Eric Kuby, chief investment officer at North Star Investment Management, told Reuters.
Looking at the charts, it's clear that Google stock is now enjoying the kind of momentum that Apple had for years, while sentiment toward AAPL almost couldn't get any more bearish.
Since Apple stock hit its all-time high of $705.07 in September, it has plunged 40% and lost more than $260 billion in market capitalization. AAPL is down more than 20% year to date.
Google hit several new highs recently, and poked briefly above $840 in early trading Wednesday. Google stock is up 48% from its mid-June low last year, and up 17.5% so far this year.
And at least two analysts recently put a $1,000 price target on GOOG, reminiscent of last year when analysts were rushing to put a $1,000 price target on Apple.
"The bulls are in Google's camp, and the bears are in Apple's camp at the moment," Neil Mawston, the executive director of Strategy Analytics, told CNBC.com, which speculated that Google could be replacing Apple as the dominant tech giant, as Apple supplanted Microsoft Corp. (Nasdaq: MSFT) in the past decade.
But any Apple investors who haven't already dumped shares in favor of jumping on the Google stock bandwagon might want to think twice before doing so now.
Apple iWatch, Google Glass First Shots in New Clash of Tech Giants
Coming less than a year after Google unveiled its Google Glass Web-connected eyeglasses, reports that an Apple "iWatch" is in the works emphatically confirm that the battle is now joined for dominance over the next wave of tech - wearable computing.
According to the reports, Apple Inc. (Nasdaq: AAPL) has 100 people working on an iWatch users would wear on their wrists, but that would have many of the same capabilities as an iPhone.
But wearable computers could enable new uses, particularly in the area of healthcare, while perhaps providing the spark to encourage some promising technologies that have yet to catch on, like contactless payments.
Four of the biggest names in tech - Apple, Google Inc. (Nasdaq: GOOG), Sony Corp. (NYSE ADR: SNE) and Microsoft Corp. (Nasdaq: MSFT) - either are selling, have announced, or are known to be working on wearable computing ideas.
The Tech Play That's Better Than the "Next Google"
I probably spend more time than anyone searching for hot young startups that will make money for my readers - even as the companies themselves change the world around us.
I'm talking about firms like Google Inc. (Nasdaq: GOOG), which in nine years has grown from a newly public company into a Web search, digital advertising, and online video juggernaut with a market value of $230 billion (and a stock price of $705 a share).
But I'm going to let you in on a secret that I've learned from my three decades in Silicon Valley.
You don't always have to find the "next Google" to make big money.
In the near term you can reap windfall profits by searching for the beaten-down tech stocks that the institutional players seem only too happy to ignore.
Those laggards are often hidden gems ... can come roaring back ... and turn the market on its ear when they do.
This Hiring Coup Could Jump-Start Google's Stock
Futurist Ray Kurzweil is one of the world's busiest people.
And that's no surprise. A best-selling author and subject of a major documentary, Kurzweil has an unmatched talent for explaining how cutting-edge technology is going to change our lives.
That means this "A-list" speaker is always on the go, traveling the globe as he spreads his futurist technology gospel.
That's why I made sure to buttonhole Kurzweil at the recent Singularity Summit technology conference. As he headed into the San Francisco lecture hall to share the newest insights into how the brain works, I was able to walk along with him and have a quick chat.
As we talked, little did I know that Kurzweil was working on something that would stun the tech world in a manner that's usually reserved for one of his predictions.
No, I'm not talking about the buzz that's been generated by his new book, How to Create a Mind, the Secret of Human Thought Revealed.
Kurzweil, as it turned out, had accepted a major position at none other than Google Inc. (Nasdaq: GOOG), the Web giant that is to search what the tech futurist is to prognostication.
And Monday was Kurzweil's first day on the job as the company's new Director of Engineering.
A lot of investors have glossed over this news. That's a big mistake. As I see it, this single hire speaks volumes about how Google views itself, and how it intends to keep building shareholder value.
If you're interested in Google, this is a bit of strategic intelligence that you absolutely have to know.
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Can Google's (Nasdaq: GOOG) Nexus Dethrone the Apple iPad?
When Google Inc. (Nasdaq: GOOG) launched its new line of Nexus tablets a couple weeks ago, it was a shot across the bow of Apple Inc.'s (Nasdaq: AAPL) dominant iPad.
Even though Hurricane Sandy forced Google to cancelan event planned to show off the new gadgets, it went ahead and launched its new products anyway.
The timing was no coincidence.
Google's latest salvo came less than a week after Apple introduced a smaller, less expensive iPad Mini with a 7.9-inch display to compete against the Nexus 7 tablet.
It's no wonder these guys are at war. Tablet sales are expected to hit $29.1 billion this year, according to the Consumer Electronics Association.
That number is $10 billion higher than projected in January, escalating the battle to a whole new level.
Clearly both companies are feeling the heat.
And even though Apple is the clear leader in market share, Google has rolled out cheaper devices that are attracting many users-especially price-conscious ones.
The question is: Do Google's Android-powered devices have enough firepower to crack Apple's grip on the tablet market?
It's still too early to tell, but there's good reason to believe the Internet search giant may just pull it off.
Here's a look at what the new tablets have under the hood.
Google (Nasdaq: GOOG) Nexus 7 Tablet a Poorly Aimed Shot at Rivals
While impressive in many ways, the Google Inc. (Nasdaq: GOOG) Nexus 7 tablet unveiled today (Wednesday) will struggle in a market already teeming with offerings from other tech titans.
Key competitors include tablet market leader Apple Inc. (Nasdaq: AAPL), Samsung Electronics Co. (PINK: SSNLF), Amazon.com (Nasdaq: AMZN) and as of last week, Microsoft Corp. (Nasdaq: MSFT).
The 7-inch Nexus 7 certainly has a lot going for it, primarily its 1,280 x 800 pixel high-definition screen, a powerful quad-core NVIDIA Corp. (Nasdaq: NVDA) Tegra 3 processor and a reasonable $199 price tag. It will run a new upgrade to Android called Jelly Bean.
Apparently the Google tablet, actually built by Asustek Computer (PINK: AKCPF) and co-branded with Google, is intended to re-energize a moribund Android tablet market that has failed to dent the dominance of the iPad.
"The tablet market is a major challenge for Google at this point," Clayton Moran, an analyst at Benchmark Co. told Bloomberg News. "They need to have a competitive product with the iPad."
Another goal for the Nexus 7 is to show other Android tablet makers how Google thinks it should be done. Analysts suspected similar reasoning behind the Microsoft Surface tablet unveiled last week.
Finally, Google said it wanted to use the tablet to push users toward its services like YouTube and promote sales of its apps through its Google Play store. With the Nexus 7 priced so low, Google will need to sell such extras to make any money.
It's ambitious, but a flop could end up doing more harm than good to the Android platform.
The central problem for the Nexus 7 is not that it's a poor product, but that it doesn't have an obvious niche in today's crowded tablet market. The Google tablet faces established competition from top to bottom - and especially at the bottom.
Here's the breakdown:
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