Saturday, May 7, 2011

Google Below 200 Day Average Since April 15 (Chart) *Down -9.88% for 2011* GOOG


comScore announced May 6, 2011 that Google Android was the top USA smartphone platform with a 34.7% market share for the quarter ended March 2011

Google Overview

Google Inc. GOOG closed at $535.30 on Friday, May 6, 2011. Google was down -1.62% for the week, is down -1.62% for May, was down -7.27% for April, is down -9.88% for 2011, and is up +84.02% since the March 9, 2009 market cyclical low. GOOG is down -16.31% 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 1340.20, was down -1.72% for the week, is down -1.72% for May, was up +2.85% for April, and is up +6.56% for 2011. SPX is up +98.10% since the March 9, 2009 market cyclical low. SPX closed at a multi-year closing high of 1363.61 on Friday, April 29, 2011, the highest close since the June 9, 2008 close of 1404.05, and is now -1.72% below that peak. GOOG is underperforming the overall market long-term since the March 9, 2009 market bottom, underperformed the market in 2010, and has underperformed the market in 2011. A review of the S&P 500 is here [S&P 500 Tests 20 Day Average on Increasing Uncertainties (Chart) *USA and Global economic expansion slows*].

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 comScore announced May 6 that Google Android was the top USA smartphone platform with a 34.7% market share for the quarter ending March 2011. 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 September 24, 2010 to illustrate recent price interactions.

Noteworthy Closing Prices
Current Close: $535.30
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 less than plunging 50d sma, bearish
Long Term Trend GOOG less than 10 month ema = 556.68, bearish
Key Resistance 20d avg 543, 200d avg 564, 50d avg 568, 100d avg 590, benchmark 600
Key Support 534, recent low 521-522, 513-516, 508
Moving Averages below all averages monitored: 20d, 25d, 50d, 100d, 200d sma's
Uptrend Line now just above; above since 4-26-11; 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 = 54.82 is reasonable, strongly ascending
RSI 28 Day = 37.71 is oversold, ascending
MACD (12,26,9) = +1.37, continues ascending
Volume low 2.1M latest day, 50 day avg = 2.9M
Price Earnings Ratio (ttm) 19.62, below historical average of 21-22+

Conclusion GOOG has dropped to September and October 2010 prices, which was just before the gap up on Q3 financial results reported October 14. GOOG plunged 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 Google Co-Founder Larry Page as CEO. The Q1 2011 earnings call is reviewed on the Google Earnings Conference Call page. Google should have better financial performance ahead in 2011. 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 $172.11 billion. This is behind #1 Exxon $410.03 billion, #2 Apple $320.58 billion, #3 Microsoft $218.16 billion, #6 International Business Machines $204.56 billion (IBM passed $200B the week ended April 1, 2011), and #13 Oracle $176.46 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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