Google Proves Mortal; Opportunity Knocking?
Posted by Eric Savitz, at Tech Trader Daily, Barron’s Online.
Excerpt: "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. One quarter earlier, the company had denied that it was feeling the effects of the macro slowdown, but that no longer seems to be the case, and the Street is adjusting its perceptions of the company accordingly. On the other hand, the legion of analysts with Buy ratings on the stock almost universally believe investors are being given an opportunity here to buy the stock on the cheap.
It is also worth noting that the big reason for the EPS miss in the quarter was not the weaker economy, but rather lower interest income, as the company used a substantial chunk of cash to pay for its acquisition of DoubleClick. While that’s a non-operating factor, analysts are adjusting their models for lower interest income going forward, so even some of the bulls are reducing earnings estimates as a result.
The big issue here is not really the EPS miss; it is the revelation that Google lives here in the real world with the rest of us, where businesses of every stripe are cutting back on spending in many areas – including online advertising – in response to a rough macro environment. The Internet, while an alluring advertising medium in so many ways, turns out not to be impervious to economic malaise. But here’s the good news: if you believe in Google’s long-term promise, the stock today just went on sale. Maybe you ought to stock up.
Here’s a look at some of what the Street is saying about GOOG this morning: Read more here.