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The Google logo is seen at the Google headquarters in Mountain View, California. on September 2, 2011. AFP PHOTO/KIMIHIRO HOSHINO (Photo credit should read KIMIHIRO HOSHINO/AFP/Getty Images)
It's actually neither. Rather, it's Google being Google. The mighty search colossus missed earnings badly the other day. Meanwhile, Apple just crushed it, earnings-wise. And of course the Facebook IPO looms. Google can't be content to operate like the world's greatest technology lab anymore. It needs to leverage what it's great at or lose out to the competition.
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Google reported fourth quarter earnings today and missed Wall Street's estimates by a country mile. Investors were looking for $10.51 per share. They got $9.50. This immediately gave some Google bears justification for cutting their target prices for the Internet search giant — and for making even more drastic pronouncements. For example (this is from MarketWatch):
“Is the post-Google era upon us?” asked analyst Scott Devitt of Morgan Stanley in a note to clients. He cut his price target to $590 from $642 while leaving his rating at equal-weight, or neutral.
Other analysts are keeping their calls for Google in the stratosphere. But the fourth quarter miss might be signaling something more ominous — or optimistic, depending on your perspective — than the end of the Google Age.
The beginning of the Facebook Age.
If Facebook stages, as expected, an IPO later this year, it could become overnight a $100 billion company, by market capitalization, raising $10 billion in the process. There's every possibility that investors are preparing for this earthshaking event. Google's struggles provide an ideal excuse for them to trim their Google positions to prepare to move into Facebook.
Facebook shares will be prices at a premium, given that the company probably isn't planning on selling very much of itself in its IPO, continuing a recent trend of tech companies limiting the initial "float" of shares to command a higher valuation.
So Google is under pressure at almost the same time that Facebook is poised to capture investor attention and shift the tech world decisively toward a more social, less search-driven model. Web and mobile users are spending their time on these sites and with their apps, so this is where the action is. The big question is whether they'll be able to make money off advertising in the same bountiful way that Google has from search.
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The House that Jacob Goldman built. The innovator died on Tuesday, at age 90.
Established in 1970 in an industrial park next to Stanford, PARC researchers designed a remarkable array of computer technologies, including the Alto personal computer, the Ethernet office network, laser printing and the graphical user interface.
The technologies would later be commercialized by both Apple Computer and Microsoft, among others, and Xerox would be criticized for not capitalizing enough on the technologies it had pioneered...
So Xerox didn't bring us the personal computing revolution. But at least the right people were around to capitalize on the research. If there's a lesson in Goldman's life, it's that research matters. And it really matters when it's funded by big companies, even if they don't wind up knowing what to do with the innovation that it enables.
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Black Friday at Macy's in Manhattan: Shoppers lined up.
Welcome back! I hope everyone had a happy Thanksgiving. In fact, it appears as though many of you did enjoy the holiday — enough to hit the malls in force on Black Friday. According to the LA Times, retail activity was up 16 percent over last year. And the markets are responding: all the major stock indexes have climbed this morning.
Meanwhile, the neverending eurozone crisis appears to have entered a new phase. We keep waiting for an endgame here, with the likely demise of the euro single currency. But then Germany and France get together to pull the eurozone back from the brink. This dynamic has caused predictable volatility in world markets for months now. But in the U.S., there's at least some improving news, giving markets the chance to rally on their own and somewhat ignore Europe.
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Welcome to your friendly neighborhood investment bank. Do you want them to leave room for...return on investment?
Here's an idea that's going to get people talking — and funding small businesses. The New York Times' Joe Nocera writes his column today about Starbucks' plan to partner with microfinance organization Opportunity Finance Network to solve a major American problem: a lack of small-scale lending. The project is called Create Jobs for USA. It's a great idea, but it has at least one significant problem: return on investment for the Starbucks customers who would be putting up their money.
Starting November 1, while waiting for you nonfat vente caramel latte, you can donate, say...$5 to the cause. You'll receive a red, white, and blue "indivisible" bracelet (the bracelet is an inevitable piece of viral marketing these days). Starbucks will seed the fund with a $5 million donation. As Nocera points out, this will enable Create Jobs for USA and OFN to borrow against this fund, utilizing a 7-to-1 leverage ration. Presto! Your $5 becomes $35.