Saturday, April 23, 2011

Google Languishes Below 200 Day Average (Chart) *Uncertainty about management, expenses* GOOG

GOOG!


Google Management Team (L-R): Larry Page (Co-Founder & CEO), Eric Schmidt (Executive Chairman, former CEO), Sergey Brin (Co-Founder & Strategic Projects)


Google Overview

Google Inc. GOOG closed at $525.10 on Thursday, April 21, 2011. Google was down -1.06% for the week, is down -10.51% for April, is down -11.59% for 2011, and is up +80.51% since the March 9, 2009 market cyclical low. GOOG is down -17.91% from the 2011 and multi-year closing high of $639.63 on January 18, 2011. 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 1337.38was up +1.34% for the week, is up +0.87% for April, and is up +6.34% for 2011. SPX is up +97.68% 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 underperforming 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 Rallies on Corporate Earnings! (Chart) *VIX lowest since June 2007*].

Google Fundamentals Google reported disappointing calendar Q1 2011 financial results on ThursdayApril 14. Google financial data, charts, and review is at the Google Financial Performance page, updated for the latest calendar Q1 2011 financial results. A review and analysis of the Q1 2011 earnings call is at the Google Earnings Conference Call page. Jonathan Rosenberg, Senior Vice President of Product Management, announced on April 4 he would be leaving Google "in the coming months". 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 53% of total revenues in the Q1 2011, up from 52% in Q4 2010.

Google Product News Executive Chairman Eric Schmidt announced in February that 350,000 Android devices are being activated daily worldwide. This was confirmed at the Q1 2011 earnings conference call on April 14. 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 July 6, 2010 to illustrate recent price interactions.

Noteworthy Closing Prices
Current Close: $525.10
2011 and Multi-Year High: January 18 $639.63
2011 Low: April 19 $521.53
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 plunging 25d sma < plunging 50d sma, bearish
Long Term Trend GOOG < 10 month ema = 557.97, bearish
Key Resistance 200d avg 561, 20d avg 566, 50d avg 585, 100d avg 594, benchmark 600
Key Support 521-522, 513-516, 508
Moving Averages below all averages monitored: 20d, 25d, 50d, 100d, 200d sma's
Uptrend Line at line, been above since 9-1-10, line from 11-24-08 cyclical closing low 257.44 up thru 7-6-10 closing low 436.07
Downtrend Line below since 1-18-11, line from 11-6-07 closing high 741.79 down thru 1-18-11 closing high 639.63
RSI 14 Day = 20.41 is very oversold, descending
RSI 28 Day = 37.80 is oversold, ascending
MACD (12,26,9) = -5.38, ascending
Volume low 2.5M latest day, 50 day avg = 2.9M
Price Earnings Ratio (ttm) 19.23, down from last week, below historical average of 21-22+

Conclusion GOOG is now back to September and October 2010 prices, just before the gap up on Q3 financial results reported October 14. GOOG plunged last week after the Q1 financial results disappointed and are reviewed on the Google Financial Performance page  Higher operating expenses offset higher total revenues and there is uncertainty over the management restructure that placed Larry Page as CEO. The Q1 2011 earnings call is reviewed on the Google Earnings Conference Call page. The intermediate-term trend became bearish on Wednesday, March 9, 2011. The long-term trend became bearish the week ending April 15. More about Google the value of GOOG stock on the Google Stock Valuation page. Google is down, but not out.

Disclosure We have no position in GOOG. We continue bullish on GOOG for 2011. All is not lost. If Google can break through the $600 benchmark price, we will most likely enter a long position with a trailing stop.


About Google

Google's market capitalization has dropped to the 14th largest in the USA at $168.83 billion. This is behind #1 Exxon $428.22 billion, #2 Apple $323.09 billion, #4 Microsoft $214.43 billion, #6 International Business Machines $205.22 billion (IBM passed $200B the week ended April 1, 2011), and #12 Oracle $175.85 billion. Google is the 5th largest technology company in the USA by market capitalization behind Apple, Microsoft, IBM, and Oracle. Current Google financial data is at the Google Financial Performance page. A review and analysis of the Q4 2010 earnings call is at the Google Earnings Conference Call page and the Q1 2011 earnings call will be posted soon. More about the value of GOOG stock on the Google Stock Valuation page. Headcount: On a worldwide basis, Google employed 26,316 full-time employees as of March 31, 2011, up from 24,400 full-time employees as of December 31, 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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