Sunday, March 13, 2011

Google Plunges Through $600 (Chart) *Lowest close since 12-3-10* GOOG


Google announced on March 11, 2011 plans to increase the YouTube staff by 30%
Google previously announced plans to hire 6,000 additional YouTube staff in 2011

Google Overview

Google Inc. GOOG closed at $576.71 on Friday, March 11, 2011. Google was -3.98% for the week, is -5.98% for March, is -2.91% for 2011, and is up +98.26% since the March 9, 2009 market cyclical low. GOOG is down -9.84% from the 2011 and multi year closing high of $639.63 on January 18. That was the highest close since $653.82 on January 14, 2008.

S&P 500 By comparison, the overall market, the S&P 500, at 1304.28, was -1.28% for the week, is -1.73% for March, and is +3.71% for 2011. SPX is +92.79% since the March 9, 2009 market cyclical low. SPX closed at a multi-year closing high of 1343.01 on Friday, February 18, 2011, the highest close since the June 17, 2008 close of 1350.93. GOOG is outperforming the overall market long-term since the March 9, 2009 market bottom, underperformed the market in 2010, and continues underperforming the market in 2011. A review of the S&P 500 is here [S&P 500 Down -1.28% on Global Uncertainty (Chart) *Rallies above 50 day average on Friday*].

Google Fundamentals Google reported excellent calendar Q4 2010 financial results on Thursday, January 20, 2011. Google financial data, charts, and review is at the Google Financial Performance page, updated for the latest calendar Q4 2010 financial results. A review and analysis of the Q3 2010 earnings call is at the Google Earnings Conference Call page and will be updated soon for the Q4 2010 earnings call. Our updated valuation and target price for GOOG stock is posted at the Google Stock Valuation page. Revenues from outside of the United States were 52% of total revenues in the fourth quarter of 2010.

Google Product News Executive Chairman Eric Schmidt announced in February that 350,000 Android devices are being activated daily worldwide. Google announced One Pass on February 16 to counter the Apple announcement the previous day of an App Store subscription service. It does appear that Google is offering more favorable terms to publishers than Apple. Google was in the news in December as a result of the Google Chrome Event on December 7. In addition, Google announced the launch of the Samsung Nexus S Android (Gingerbread OS) smartphone and the opening of the eBooks Store. At the Google Chrome Event, the Chrome Web Store was launched, the Chrome Notebook was unveiled, which is planned to be consumer-ready by mid-2011 with Acer and Samsung as the first manufacturers, and Google announced the Chrome browser user base had increased +300% in 2010 with a conservative count of 120+ million active users. More innovation is coming for the Chrome browser, based on speed via Chrome Instant. Finally, Andrew Rubin tweeted on December 9 that 300,000 Android phones are being activated daily, which is a blowout number. This number - 300,000 Android activations - was reiterated by Jonathan Rosenberg, Senior Vice President of Product Management, during the Q4 2010 earnings call on January 20, 2011. This was after the negative news that the EU had launched an anti-trust investigation.

Economic and Market News Information about the USA and world economies is posted at Boom Doom EconomyFinancial Controls, and Baidu Planet. Additional current commentary on both the overall stock market and economy is posted at Matrix Markets.

Google Daily Chart

Google Daily Chart Below is the GOOG daily chart since January 3, 2011 (all of 2011).

Noteworthy Closing Prices
Current Close: $576.71
2011 and Multi-Year High: January 18 $639.63
2011 Low: January 31 $600.36
2010 High: November 8 $626.77
2010 Low: July 6 $436.07
YE December 31, 2010: $593.97
YE December 31, 2009: $619.98
Cyclical Low November 24, 2008: $257.44

Google Chart Review
Intermediate Term Trend: 25d sma < 50d sma, bearish
Long Term Trend: 10 month ema = 563.45, bullish
Resistance: 583 area, 590 area, 594-595 area, 600, then 100d, 20d, 50d sma's
Support: 570 area, 563 area, 555 area, 200d avg 548
Moving Averages: below 20d, 25d, 50d, 100d sma's, above 200d sma
Uptrend Line: above, from 11-24-08 cyclical closing low 257.44 up thru 7-6-10 closing low 436.07
Downtrend Line: below, from 11-6-07 closing high 741.79 down thru 1-18-11 closing high 639.63
RSI 14 day = 18.10 is extremely oversold, lowest since 8-24-10
RSI 28 day = 40.83 is near oversold
MACD (12,26,9) = -3.76, descending, lowest since 12-6-10
Volume: high 3.0M latest day, 20 day avg = 2.6M, 50 day avg = 2.6M

Conclusion Bullish sentiment vanished for Google this past week as GOOG closed at the lowest since 12-3-10. GOOG could not stay above $600. Google tends to languish between earnings reports, as investor interest wanes, but this was more of a drop than we expected. Google reported excellent Q4 2010 financial results, record-setting, on Thursday, January 20 which are reviewed on the Google Financial Performance page  The announcement of a management restructure is reviewed earlier in this post and also here. We do not believe this is ultimately negative news. A review and analysis of the most recent Q4 2010 earnings call is at the Google Earnings Conference Call. The Great Google continues as an extraordinary cash flow machine! Google has set the bar high for the future and EPS growth. The intermediate-term trend turned bearish on Wednesday, March 9, 2011. The long-term trend continues bullish, but a further price drop would threaten this. More about Google the value of GOOG stock on the Google Stock Valuation page.

Disclosure We were stopped out of our long GOOG position this past week. Currently we have no position in GOOG. We are still bullish on GOOG for 2011.

About Google

Google's market capitalization is now the 9th largest in the USA at $185.43B. This is behind #1 Exxon $407.20B, #2 Apple $324.28B, #4 Microsoft $215.77B, and and #6 International Business Machines $198.09B. Google is the 4th largest technology company in the USA by market capitalization behind Apple, Microsoft, and IBM. Current Google financial data is at the Google Financial Performance page. A review and analysis of the most recent Q4 2010 earnings call is at the Google Earnings Conference Call page. More about the value of GOOG stock on the Google Stock Valuation page. Headcount: On a worldwide basis, Google employed 24,400 full-time employees as of December 31, 2010, up from 23,331 full-time employees as of September 30, 2010.

Google describes itself in press releases as, "Google's innovative search technologies connect millions of people around the world with information every day. Founded in 1998 by Stanford Ph.D. students Larry Page and Sergey Brin, Google today is a top web property in all major global markets. Google's targeted advertising program provides businesses of all sizes with measurable results, while enhancing the overall web experience for users. Google is headquartered in Silicon Valley with offices throughout the Americas, Europe and Asia."

Google's Mission Statement: "Google's mission is to organize the world's information and make it universally accessible and useful. The first step toward fulfilling that mission came when our founders, Larry Page and Sergey Brin, working out of a Stanford University dorm room, developed a new approach to online search that quickly spread to information seekers around the globe. Google is now widely recognized as the world's largest search engine -- a free service whose utility and ease of use have made it one of the world's best-known brands almost entirely through word of mouth from satisfied users."

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